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We are witnessing the rise of a class of enterprise technology products which employees adopt for free, at their own free will, and then begin using immediately. These enterprise freemium products have been contributing to the Consumerization of the Enterprise movement by disrupting old incumbents in the areas of communication, collaboration, productivity, and back-office tools. When IT and business stakeholders at a company encounter these products, their first reactions are often negative. They’re worried that a product they didn’t vet has gained traction in their organization, or that the product isn’t secure or compliant enough for their industry. Neil will argue that these products should be embraced because they have successfully solved the problem that plagues most IT deployments of user-facing technology -- Employee Adoption. Enterprise freemium offerings provide significant advantages to the vendors that offer them. Neil will describe how enterprise freemium offerings can help vendors optimize their product offerings, shorten their sales cycles, and more effectively compete against entrenched competitors using examples from Yammer’s experiences and observations of other enterprise freemium products.
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Consumerization of the Enterprise
• “The emergence of consumer markets as the primary driver of information technology innovation is seen as a major IT industry shift, as large business and government organizations dominated the early decades of computer usage and development.” Wikipedia
• “But while this trend may be true when it comes to the technology itself, the differences in business models and go-to-market strategies seems more distinct than ever.” Ben Thompson, 2013
Bring Your Own Apps (BYOA)
• First, users became more comfortable using their personal devices for work email.
• Mobile app, web app, and desktop app adoption exploded.
• Users have become comfortable using these apps for work.
• Enterprise freemium is a business model built for BYOA.
Contrasting business models
• Boxed software sales (traditional)
• Time-limited trials
• Consumer freemium => enterprise
– Gmail/Google Docs => Google Apps
– Dropbox => Dropbox for Business
– Evernote => Evernote for Business
Who does enterprise freemium benefit?
• Users - they can adopt the product and start using it right away without any obstacles.
• Customers - they know a product is getting adoption so they know it’s a worthwhile investment.
• Vendor - it can use modern methodologies to prove out ideas and grow.
The rest of the process
• Implementation
• Validation
• Migration
• Internal launch event
• Training
• Don’t forget to deliver on those sales commitments!
Most Importantly: Pray for Adoption
Coffee Cup Takeaways
• Current process rewards complex checkbox products.
• Complex products are usually unusable for end users => users don’t like them.
• Users rebel and use consumer alternatives => hurts adoption for selected product.
The freemium acquisition process
• Users and teams adopt the products that they want to use without involving IT or other stakeholders.
• When a product gains adoption, the users or company upgrades it as necessary.
• Bonus: Users feel empowered because autonomy kind of has that effect.
The role of IT
• Product Selection
– Enterprise freemium reduces their role in this.
• Security
– Here be dragons.
• Supportability
– Worst case scenario: more products to support, but they are easier to support than complex alternatives.
Advantages for the product
• Get into organizations where there is an entrenched competitor.
• Get into organizations where enterprise buyers are skeptical about the product.
Unfair advantagesB
uye
rs c
are
Users care
High
Low
HighLow
Checkbox features
Analyst attention
User adoption
Press
Existing relationships
Cost
Security
Tactics for enterprise freemium
• Sign up flow
• New user onboarding
• Virality and social proof
• Reengagement tactics
Build the right signup flow
• Ask users to sign up with their work account.
• Don’t blindly minimize friction – require some investment by the user.
• Introduce concepts from your product.
• Borrow heavily from consumer product patterns.
• Useful: http://www.useronboard.com/
Freemium revenue
Economics of Freemium, Peter Fishman, 2014
Data Informed Methodology
• Choose a metric to try to improve – success will result in more revenue.
• Opens the door for data-informed product management:
– Clear feature goals
– Defer non-impactful features
– A/B testing to measure success
How engagement becomes revenue
• Sell to small teams – credit card upgrades
• Sell to the whole company – traditional sales cycle
– Takes longer, but deals will be bigger.
– “56% of respondents indicated that either the CIO/top IT executive or the IT department were the primary leader in driving change through the consumerization of IT at their organizations.” Reference
Using your unfair advantage
• Your signed up users have voluntarily shared their contact information with you, transforming them into free leads – find executives to reach out to.
• Some users have already adopted the product with no help from IT – find champions by looking at usage activity.
Objection handling
• “Your product is not secure.”
– 90% of enterprises say that the use of consumer services used for work is pervasive today.
– 41% of these sites are used without IT approval.
• “We already have a product that does <x>.”
• “We don’t have the resources to support your product.”
source of metrics
Common sales requests
• “Can we do a Proof of Concept? It’s part of our acquisition policy. Also, we need to block all users from using your product until the POC users have finished evaluating it.”
• “Can we turn off <feature x> for our users? They already have that feature in a different product that we’ve invested significantly in.”
• “Now that we’ve purchased the product, can we turn off invites? IT can handle onboarding all the users.”
Should you offer freemium?
• Adoptability
– Easy to use with no formal training?
– Doesn’t require IT to set it up?
• Network effects
– Helps make it more likely that the product will gain adoption.
Thanks for coming!
• Neil McCarthy, @hardkornelius
• Christina Fan, @cfanimal
• Related resources
– The Economics of Freemium, by Peter Fishman
– New Sales Models, by David Sacks
– Testing Yammer’s Signup Flow, by Neil McCarthy