“Our success in moving from a freemium offering to department selling to enterprise selling all came from getting really good at personalizing value for individual partners,” says Jeremy Dean, Vice President and a founding executive, at Hypothesis.
Hypothesis offers a social annotation technology that gives college faculty a new way to build student course engagement through collaborative and social learning. The annotation technology was launched initially as a free downloadable application.
In less than 12 months, faculty at 225 colleges and universities were using the free application. But the company had only a handful of paying customers. Jeremy, his CEO, and the rest of the leadership team wanted to commercialize this promising learning technology by building a repeatable revenue model.
“We were looking to increase velocity from an early adoption by an individual faculty member to an enterprise deal – developing strategies to convert existing freemium users into paying customers and then expanding across campuses,” says Jeremy.
Many companies try to use a freemium model as the starting point for “upselling and cross-selling” to larger contract values. Many try, most are unsuccessful.
However, Hypothesis successfully monetized its freemium model. Its Initial success led to ~200 paying clients and $1M in Annual Recurring Revenue (ARR) in about 18 months.
And these customers are renewing at a 90%+ rate.
I recently spoke to Jeremy to learn his four keys for moving a freemium model to enterprise value.
Positioning into persona-specific value 🙋🏽♀️
“Our success all started by focusing not on selling a ‘cool’ new technology, but instead focusing on aligning with the goals and challenges of various stakeholders across campus in leveraging that technology,” notes Jeremy.
For faculty in different disciplines, social annotation encouraged students to complete their assignments and come better prepared to class. The type of assignments that might be the focus of social annotation varied from English to History to Biology to Chemistry.
For Teaching & Learning Centers leaders, a key value of social annotation was the way it could contribute to student in-course success and deepen peer learning. For academic and student success leadership, by contrast, social annotation was a way to increase student retention through better course engagement.
Personalizing outbound campaigns 📧
The second element of the repeatable revenue model was building personalization into an outbound demand generation approach.
“The goal was to generate interest in new pilots among faculty who were not ‘walking in through the front door,’” is the way Jeremy put it.
The joint Hypothesis-Winalytics team developed an outbound prospecting model to engage around ~2,500 contacts a month in email, call, voicemail, and social prospecting. Building specific value by discipline into outbounding was key to new buyer engagement.
Sales playbooks and coaching on best practices 🏆
The third element of the repeatable revenue model was developing and implementing sales playbooks. “The sales playbooks were designed to capture team best practices and make it easier to position value and create competitive differentiation,” says Jeremy.
The agreed-on sales playbooks supported individual and team-based skills coaching for a sales team that grew to 12 members. Playbook-based training helped professionalize and operationalize a consistent value-based sales strategy and process.
Expansion playbook and subscription value 📖
The fourth and final element of the repeatable revenue model was a new expansion playbook designed to increase the subscription value at existing campus partners.
The goal was to turn an initial adoption by a single faculty member or handful of faculty members into a campus-wide adoption. Academic Technology, Student Success, and Teaching and Learning leadership became allies in moving from department to department.
The structure and strategies of a land and expand model to move from a freemium offering to department selling to enterprise selling will vary from one company to another.
However, what the success of Jeremy and his team shows is that the foundation of every land and expand model focuses not on selling a product or service but personalizing the value of your product or service to each buyer.