From Freemium to Phenomenal: How Hypothesis Achieved 70% CAGR and 90%+ Renewals by Personalizing Value
“Our partnership with Winalytics helped us develop a repeatable revenue model across the entire buyer and customer journey – from developing strategies to convert existing freemium users into paying customers to build an outbound demand generation process to new faculty and campuses as well as identifying campus expansion strategies to deepen account value.”
- Moved from $0M in Annual Recurring Revenue (ARR) to $1M in Annual Recurring Revenue (ARR) and 90%+ Renewal Rate within 18 months of engagement start.
- Implemented a proactive outbound demand generation approach, engaging around ~2,500 contacts monthly through targeted email, call, voicemail, and social prospecting.
- Established comprehensive sales training and playbooks that captured best practices for various stages of the sales process to ensure a consistent, high-quality approach.
- Introduced an expansion playbook to amplify subscription value at existing campuses, transitioning from individual adoption to campus-wide implementations.
Hypothesis offers an 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.
The CEO, board, and leadership team wanted to commercialize this promising learning technology by building a repeatable revenue model. “We were looking to improve across the entire buyer and customer journey – from developing strategies to convert existing freemium users into paying customers to build an outbound demand generation process to new faculty and campuses as well as identifying campus expansion strategies to deepen account value,” says Jeremy Dean, the Vice President at Hypothesis, who built the initial sales and expansion processes.
Hypothesis and Winalytics worked together over an 18-month period of time to build out a repeatable revenue model across the entire buyer and customer journey. There were four major elements of this repeatable revenue model.
- Positioning into persona-specific value. The first element of the repeatable revenue model was on building messaging and positioning to position value to different buyers on campus. For those closest to instruction, including faculty and Teaching & Learning Centers leaders, the main value of social annotation was the way it could contribute to student in-course success. Social annotation encouraged students to complete reading assignments and come better prepared to class, while supporting peer-to-peer learning and making it easier for more reserved students to participate.
Academic and student success leadership, by contrast, were looking for an edge in increasing student retention through better course engagement. These campus leaders liked the role of purposeful peer interactions in creating deeper in-course and cross-course connections between students. For first-gen students, in particular, peer-to-peer interactions are perceived as less threatening and can increase participative learning. Campus leaders also liked having an additional, real-time set of analytics with early indicators of student disengagement.
- Outbound demand generation approach. The second element of the repeatable revenue model was an outbound demand generation approach. “The goal of outbound demand generation was to continue to build 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.
The outbound strategy included net new, expansion, and remarketing campaigns. The net new campaigns included individual sales team members targeting the Top 100 new campuses in their territory as well as campaigns to public university systems with existing Hypothesis reference accounts. Expansion campaigns focused on broadening awareness among new faculty at existing Hypothesis pilot or subscription campuses. Remarket campaigns focused on campuses, schools, and faculty who previously demonstrated engagement, but did not convert to a pilot partner.
- 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 share. We capture best practices for positioning value, competitive differentiation, buyer discovery, deal qualification, closing and pricing, as well as account expansion strategies,” says Jeremy.
The agreed on sales playbooks then led to on-going individual and team-based skills coaching for a sales team that grew to 12 members. Playbook-based training helped professionalize and operationalize a consistent sales strategy and process across the sales team. Winalytics as a third-party partner helped to accelerate team onboarding and skill development in the absence of an experienced sales leader.
4. 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 by moving from department to department and targeting account growth to 25%-30% teacher penetration. A key element of the expansion playbook was creating the basis for coordinate action on account deepening across the sales, account management, and customer success teams.
The partnership with Winalytics helped Hypothesis successfully build out several new elements of its repeatable revenue model. It supported the development of a continual pipeline of new pilot customers, converting these existing pilots to paying customers at a higher rate, and then expanding many of these paying customers to campus-wide adoptions.
Jeremy’s short summary on the impact of the partnership: “Within 18-months of the engagement start, Hypothesis had moved meaningfully away from the freemium model toward monetizing our product. We had reached a critical mass of more than 200 paying clients and $1M in Annual Recurring Revenue (ARR). These customers were renewing at a 90%+ rate.”
The high renewal rate set up the next phase of growth. Access to a critical mass of faculty partners on 200+ campuses helped increase subscription value at existing campuses. Access to a critical mass of referral clients and success stories made it easier to engage new campuses. With a critical mass of faculty and campus partners, Hypothesis entered a new growth phase over the next two years, experiencing compound annual growth (CAGR) of ~70% and growing to close to 400 campus partners.