5 ms·

You know it, you're a smart dude > If you're not directly making profit off of me, I'm either a marketing expense in your acquisition process or you're using o

You know it, you're a smart dude > If you're not directly making profit off of me, I'm either a marketing expense in your acquisition process or you're using our relationship to derive profit elsewhere. That "elsewhere" might be the word-of-mouth on steroids that I talked about in the article. Send me an email, tell me more about what you do, interested in hearing - daniel@chagency.co.uk

cosmie 8y ago
> That "elsewhere" might be the word-of-mouth on steroids that I talked about in the article. I'd argue that still falls under being a marketing expense. Word of mouth on steroids is a fantastic thing, especially so as a strategy for rapidly generating market awareness and validation of your product. But after that initial validation in the market, it's entirely possible to find your business in a position where it no longer get much value from more word of mouth. Particularly if you've shifted from a passive to an active sales org or shifted upmarket to enterprise sales. Optimizely[1] is a solid example of that. They used to have a free Starter plan, and had priced plans that scaled from hobbyist pricing level through to small/medium business pricing levels. They've shed all of that at this point in time, and now have three unpriced plans listed on their site and an enterprise sales process could rival Oracle or IBM in the level of self-assured salesmanship and abrasively aggressive price discrimination/discovery. Having used them at a previous company (starting with the free plan and moving to a ~$400/month plan), I was pretty shocked when I reached out to them more recently to adopt at a new company. Budgets less than $50k/year aren't worth more than a one-liner "no thank you" from their sales staff, budgets between $50k - $100k may be enough for them to do you a great favor in allowing you to become a customer, and budgets above $100k/year will at least get them on the phone long enough for them to tell you what the price floor is for your industry and company size (with actual usage volume being next to irrelevant). Word of mouth on steroids became irrelevant to them to the point where they completely shed not only their free tier but also all of their legacy small/medium business customers, too. And it didn't actually hurt their business any, and likely helped it in the eyes of the high margin customers they're going after now. Contrast that with Cloudflare. Offering a free tier has real costs associated with it. But those free accounts also serve a valuable purpose to their product, and the word of mouth benefits are just icing on the cake. A core selling point of their product is the advanced threat detection and security capabilities that are enabled by the sheer size and scope of their network. The loss of their free tier customers would drastically reduce the visibility they had and in turn degrade the offering to their enterprise customers. Their free tier is a fundamental component of their business/product itself, rather than just an acquisition/marketing/pr cost. Which insulates me as a free user from feeling like the rug is going to get pulled out from under me at any moment when their sales strategy shifts.
- gingerlime 8y ago
  The optimizely story was also a slap on the face to me. Maybe their business justifies it, but throwing away your paying customers just feels gross to me. On the bright side, I would never have created an open source alternative[1] without this happening, so ended up with a better solution for virtually free and hopefully helped others in the process... [1] https://github.com/Alephbet/alephbet https://github.com/Alephbet/alephbet

cosmie 8y ago

> That "elsewhere" might be the word-of-mouth on steroids that I talked about in the article. I'd argue that still falls under being a marketing expense. Word of mouth on steroids is a fantastic thing, especially so as a strategy for rapidly generating market awareness and validation of your product. But after that initial validation in the market, it's entirely possible to find your business in a position where it no longer get much value from more word of mouth. Particularly if you've shifted from a passive to an active sales org or shifted upmarket to enterprise sales. Optimizely[1] is a solid example of that. They used to have a free Starter plan, and had priced plans that scaled from hobbyist pricing level through to small/medium business pricing levels. They've shed all of that at this point in time, and now have three unpriced plans listed on their site and an enterprise sales process could rival Oracle or IBM in the level of self-assured salesmanship and abrasively aggressive price discrimination/discovery. Having used them at a previous company (starting with the free plan and moving to a ~$400/month plan), I was pretty shocked when I reached out to them more recently to adopt at a new company. Budgets less than $50k/year aren't worth more than a one-liner "no thank you" from their sales staff, budgets between $50k - $100k may be enough for them to do you a great favor in allowing you to become a customer, and budgets above $100k/year will at least get them on the phone long enough for them to tell you what the price floor is for your industry and company size (with actual usage volume being next to irrelevant). Word of mouth on steroids became irrelevant to them to the point where they completely shed not only their free tier but also all of their legacy small/medium business customers, too. And it didn't actually hurt their business any, and likely helped it in the eyes of the high margin customers they're going after now. Contrast that with Cloudflare. Offering a free tier has real costs associated with it. But those free accounts also serve a valuable purpose to their product, and the word of mouth benefits are just icing on the cake. A core selling point of their product is the advanced threat detection and security capabilities that are enabled by the sheer size and scope of their network. The loss of their free tier customers would drastically reduce the visibility they had and in turn degrade the offering to their enterprise customers. Their free tier is a fundamental component of their business/product itself, rather than just an acquisition/marketing/pr cost. Which insulates me as a free user from feeling like the rug is going to get pulled out from under me at any moment when their sales strategy shifts.

gingerlime 8y ago
The optimizely story was also a slap on the face to me. Maybe their business justifies it, but throwing away your paying customers just feels gross to me. On the bright side, I would never have created an open source alternative[1] without this happening, so ended up with a better solution for virtually free and hopefully helped others in the process... [1] https://github.com/Alephbet/alephbet https://github.com/Alephbet/alephbet