How Vendasta used Freemium as a Growth Engine

Posted on May 12, 2020

In this episode of the GrowthTLDR, we talk to Jaqueline Cook COO of Vendasta about how they moved to a product-led business.

We talk about how Vendasta used a self-serve model to monetize a large segment of their market, how their CAC dropped by 50%, conversions rates increased, and why the success of growth is as much about organization design as running experiments.

We also get into how Vendasta has organized their growth team into squads, and the importance of squads in product-led companies.



Summary

[3:30] – Before being the COO at Vendasta, Jacqueline was VP of growth, where she had a team experimenting on finding ideas that would have a 10x impact on the company as COO Jacqueline’s mission is to grow the companies mid-market business.

[6:50] – Jacqueline talks through the reasons Vendasta created a self-serve model. They saw a lot of demand for their product from mid-market companies, but their go-to-market unit economics meant they couldn’t serve them. Launching a self-serve option was a way for them to monetize that demand with unit economics that made business sense.

[10:40] – One of the challenges with adding a self-serve model to an existing sales-led business is trying to create a barrier between your self-serve demand and sales team. Jacqueline’s team created triggers self-serve users would need to hit before sales could reach out to them. Vendasta saw their CAC drop by 50%, and conversion rates increase because prospects qualified themselves via product usage.

[13:25] – Examples of how Vendasta qualifies free users for sales are through demographic data, product usage, and hand-raisers.

[16:25] – One of the best qualification events for Vendasta is when one of the users uploads their customers into Vendasta’s platform. Jacqueline talks to how adding freemium have changed how Vendasta thinks about who a great fit business is for their paid products.

[19:25] – One of the complexities of adding freemium to your business is determining the value your product should deliver to customers from free up to enterprise. Jacqueline talks about how Vendasta did this for their freemium business.

[22:05] – Organizational design is one of the critical pieces of being successful at growth. At Vendasta, there are cross-functional teams (squads/pods) aligned around essential parts of the business – acquisition, activation, retention & growth. Each of those teams operates in an agile way and do almost daily stand-ups to keep aligned.

[24:55] – To create your squads/pods, you need first to understand what are the growth levers at your company. The squads/pods are how you take those key metrics and make an impact against them. Jacqueline walks us through how this works at Vendasta, including their north star metric.

[28:00] – Metrics are management when management isn’t around. Jacqueline talks about what it’s like to build a leadership team for an organization structured around pods/squads.

[31:00] – Jacqueline talks about some of the mistakes Vendasta made when moving to a freemium business. Something important when undertaking a large initiative is teams should agree on the mission, but not overly debate the right path to get there. You often don’t know the way until you start the journey, so it results in a lot of wasted time and effort.

[33:35] – We talk about the four stages of growth and how it slows down the progress on a new initiative within a fast-growth company.

[35:00] – True growth teams don’t have people who ask ‘who’s job this is’; they’re instead focused on figuring out of the new initiative will have an impact against their metrics.


Jacqueline on Twitter / LinkedIn
– Kieran on Twitter / LinkedIn / Medium
– Scott on Twitter / Linked / Medium