Today Genius.com announced a free version of their Marketing Automation system. Only about a month ago, Loopfuse also started offering a free version of their Marketing Automation system. What does this mean for companies interested in adopting Marketing Automation?
How Much Is Free?
Let’s first look at the features of the free versions:
| Loopfuse | Genius.com | |
| Users | unlimited | 5 |
| Emails / month | 5,000 | 2,500 |
| Contacts | 2,500 | 3,000 |
| Pageviews / month | 100,000 | unlimited |
| Support | community-driven | community-driven |
So these offerings are closely matched. Both are meant as ‘freemium’ offerings. They are great for small companies and small initial projects, but they’re too limited for normal projects. Companies will have to upgrade to the paid version as their initiatives grow. And of course, that’s what Loopfuse and Genius.com hope for.
Why Free?
Why are they doing this? Loopfuse gives as the main reason that adoption rate of Marketing Automation is still very low (5-10%), and that a disruptive offering is needed to get the remaining 90-95% on board. This is supported by the main trends in the Marketing Automation market:
- The product scope of all marketing automation vendors is quite similar
- There is severe competition (30+ vendors)
- Land grab is common, where vendors lower prices to get customers on board
- Industry consolidation is starting (Market2lead acquired, LeadGenesys refocused)
My take: even though your project may be too large for these free versions, you may get a better deal for paid versions from whichever vendor. Just realize that this may not be a sustainable situation. Some vendors will sell below cost to gain market share, so higher prices or acquisitions may follow.
Will Other Vendors Follow?
Because the cost of offering a free version is low, other vendors may also want to create a free offering. But it’s not without its challenges. The key to success of a freemium model is to make the free version functional enough, while making premium version attractive enough so that a significant percentage of users will upgrade. Some of the other challenges:
- The gap between the free and paid versions may be too big
- ‘Free’ customers may lack the expertise to be successful
- There may be too much cost in the vendor’s business model (e.g. expensive sales teams)
Loopfuse has published pricing for their paid products, and they have a low-overhead sales model. Also, their founders came from Red Hat, which has a very similar strategy of offering both free and premium products. Few other vendors are in a similar position, so my prediction is that free versions are not going to be a trend.
So What Does It Mean For You?
If your company is looking to adopt Marketing Automation, count on paying for your Marketing Automation system. Either you will go over the limits of the free version, or you will require support. Instead of focusing on free or cheap, choose a vendor that you trust, that best meets your requirements, and that provides excellent support.
Does that mean that these free versions are irrelevant? No. It’s great to try out marketing automation without the limits of a trial period or for small projects. Also, it may be a good solution for small and savvy organizations. But the overall impact on the market will be limited. So I don’t think it’s going to be a general trend. What is your take? Please leave a comment with your prediction…
Jep, great analysis, thanks. At Genius, we think the Freemium model will, as they say, “separate the men from the boys” in marketing automation.
Lots of companies claim to be easy to use and deploy, but only the ones that REALLY are can afford to offer a free version. Kudos to Loopfuse for taking this approach as well.
We are seeing too many customers buy into some competitors’ hype based on easy-to-manipulate demos and facile sales pitches — only to see the solution take months to deploy and then fail to deliver the promised value!
Churn rates are too high in this market and leave customers with a bad taste in their mouths. We think its time for vendors to put their money where their mouth is. Marketers need to USE and SUCCEED before making a big commitment to such a critical investment as marketing automation.
Genius has built its reputation on instant-on deployments and great results based on real usage on the platform, so we are happy to help blaze a trail where many competitors fear to go.
Jep, thanks for the terrific post on freemiums in the marketing automation space. I applaud both Loopfuse and Genius.com for setting up free plans for prospects and clients — it’s very good for the space as a whole. It is such a nascent market right now and anything that drives adoption of the technologies available (and more importantly the best practices surrounding those technologies) is terrific for anyone in the space.
Most of us (I am with Pardot, another marketing automation vendor) offer a free trial, test drive, etc. to one degree or another but the freemium model allows very small companies to use a system free of charge, indefinitely. Very cool! I look forward to hearing more about both programs and how they impact our market.
I’m inclined to agree with you Jep, marketing automation will not be free.
Making the software free and charging for support would seem at odds with claims of ease and usability. If it’s truly easy then there shouldn’t be a need to pay for support. That said there’s still room for offerings such as these for micro-size firms and try-before-you-buy.
I’ve got no crystal ball at my disposal, but my current thought is that freemium offerings will be used
1) by customers whose needs don’t justify even a nominal monthly fee and…
2) by qualified prospects as extended free trials
We’re pretty liberal about extending free trials to ensure customer’s have a meaningful interaction before subscribing. I can only assume that many other vendors take the same accommodating stance.
On another note, these offerings would seem to encourage a practice we’ve seen elsewhere. We’re aware of some companies using, for example, Constant Contact’s free offering by uploading a number of contacts that’s under the maximum threshold, launching an email, removing those contacts and uploading more contacts, etc. until you’ve hit all your contacts.
Churning contacts like this in a marketing automation system would be in direct opposition to the practices that lead to sustainable ROI.
We too will be watching to see what impact these offerings have in the coming months. Great post Jep.
I am a huge fan of freemium models when they work, and some great companies have been built in this way. But for freemium offers to generate any real momentum, the product capabilities and the business use case need to align, and users need to be able to adopt the product almost on a whim. I don’t think this is going to work with marketing automation. (Full disclosure, I am CEO of Marketo, a leading marketing automation vendor).
Marketing automation *products* can be easy to use, and this is certainly one of our claims to fame at Marketo. But the frank truth is that marketing automation as a business process is not easy. Achieving true success with marketing automation requires a long term commitment to designing and maintaining effective lead nurturing and lead scoring programs. It requires continuous creation of high-quality content to “feed the machine”. It requires an ability to test alternative strategies and drive incremental improvement. It requires organizational commitment and buy-in from both marketing and sales leadership. If companies try to jump on the marketing automation bandwagon on a whim by choosing a freemium product, they are almost certainly setting themselves up for disappointment.
Finally, freemium models work when they are used from a position of strength as a fundamental business strategy. Examples of great companies built from ground up around freemium include Survey Monkey and SolarWinds. But that’s not what’s going on with the companies noted in Jep’s post. These are cases of freemium being introduced as a “hail Mary” pass when other business models haven’t worked out so well. The marketing automation market maturing and shaking out, and this is perhaps an inevitable phase of that shake out. But I’m convinced that marketing automation is a very high value, strategic application and people are going to be more than willing to pay for this value.
As usual, a great post, Jep!
Echoing a bit of what David Thompson stated, the goal of a freemium model is to provide an easy-to-implement no-risk adoption model for customers. In the end, I believe most vendors in the space will benefit from this move, as the space will inevitably become commoditized. A rising tide raises all ships as they say, and unless your hull is full of leaks, you have nothing to worry about.
At LoopFuse, we understood that a frictionless, or “instant-on”, (can I use that?) ;-) adoption process is core to successful freemium and commoditization plays. Congrats to Genius for following along in that regard. I truly believe this is a new dawn for marketing automation.
Great post! I love all the comments from the other vendors. My full discloser? Simply a user and customer of marketing automation tools (Eloqua to be exact).
I completely agree that the adoption rate of marketing automation is rather low; having worked in marketing for about 5 years. Oddly enough, when I describe the power of marketing automation to people, they generally perk their ears up in interest. I’ve never quite seen something as powerful as marketing automation (save for social media).
By offering a ‘freemium model’, I think the bigger players (Marketo, Silverpop, Eloqua) have actually more to gain. People will try out the free version and eventually need something better as they experience growing pains. However, this dramatic cost reduction may encourage the big guys to lower their prices.
Pingback: Marketing Automation Software: Free Versions Available? | Rob T. Woods
Thank you all for leaving comments.
@David: definitely good to see that the Genius.com product is easy to learn, and very suitable for a freemium model.
@Adam: totally agree that this will help adoption of marketing automation technology. Personally, I will also spend some extra time playing around with these free editions
@Michael: agree with those usage scenarios for freemium.
@Phil: I agree that a freemium model is not universally applicable. Marketing Automation requires a lot of knowledge and skills to do successfully (otherwise I wouldn’t see a healthy demand for my consulting services ;-)
@Roy: I saw a Loopfuse demo, and I think you’ve done a great job making it easy, including the way the documentation is done
@Rob: as a consultant, I get excited about free versions because it makes it easier for me to stay up to date on the major marketing automation products, and because it may increases adoption of marketing automation. However, free versions may also give the impression that everyone can easily get the benefits, without understanding good lead management practices. I guess I’m happy that there are some freemium products, but I don’t expect (nor hope) that other vendors will follow.
An interesting yet peculiar post by Phil(Marketo CEO) highlighting a shallow understanding of how Freemium models work.
Freemium is a software distribution model. It doesn’t pretend to be anything more or less. Every product feature and service Genius and LoopFuse competitors offer are *also* offered under our respective Freemium models, ie. Support and Professional Services offerings are available under Freemium models. Freemium distribution models help grow the space by removing barriers to entry for customers, be it high-touch sales processes or difficult-to-implement products. In fact, we’ve launched our innovative Partner program just today to augment the FreeView offering, to illustrate my point: http://www.loopfuse.com/partners.php
The net effect is that marketing automation software (the application) is going to be a commodity, despite the luddite comments. Consultancies should rejoice at this thought, as it provides an even wider pool of customers.
The “Hail Mary pass” comment is just ridiculous FUD-spreading, undeserving of comment, and I personally would expect more tact from the CEO of funded company.
Jep,
Great post, and excellent discussion. Looking at how to best grow the overall market and engage with more marketers is certainly a topic we are all looking at. We (disclosure, I’m with Eloqua) looked quite deeply at what the best path to customer success is, and the customers who are really driving success are those who have engaged with two main ideas (a) rethinking of marketing from the perspective of the buyer, and (b) engaging with their sales teams to better engage with the right prospects.
Both of those key factors for success are business process changes, rather than just technology pieces.
So, in looking at how to “take the risk out” of the decision for buyers, we have gone with an approach that is more than just technology. We get clients started with a process called SmartStart that gets these business process changes off the ground (while also jumping into the technology, of course). We then offer a Money Back Guarantee to clients who don’t see the success and results. (details: http://www.eloqua.com/services/getting_started/)
This has given us a great balance between delivering success, rather than just technology, to clients, and at the same time taking the risk out of the decision for them (in the same way that a freemium tries to do). We found that leaving clients on their own to dig into a technology platform, regardless of which vendor, and try and find success on their own was not a great model for customers.
We definitely applaud Genius and Loopfuse for driving forward with this experiment, and we do look forward to seeing if they are able to use it in a way that benefits customers and the market ecosystem.
Steve
While Phil sounds a lot like he’s quoting chapter and verse from the evangelists of the out-dated, complex, Professional Services-based marketing automation solutions Marketo claims to displace, I do agree that marketing automation is in fact a complex operation and requires TLC from both the customer and vendor in order to be successful.
As a vendor which has a history of providing easy-to-use email marketing with integrated web tracking and real-time sales alerts, we’re uniquely positioned in the space to meet more customer needs without overwhelming them with complexity of software or solution.
What we’ve seen too often in the Marketing Automation space is that 1) vendors are unprepared to provide sufficient support to customers (and have complex software that’s hard to use) and 2) customers don’t yet fully understand the entire “algorithm” for a successful deployment of lead nurturing, scoring etc. This toxic brew leads to very high churn and customer dissatisfaction and gives the whole space a black eye.
At Genius we’ve seen many customers veer away from adopting full on marketing automation out the chute towards a “walk before you run approach”. That’s why we have carefully segmented our product to meet these needs. Our Freemium product is the mid-tier product we offer called “Genius Demand Generation” and takes care of all a marketer’s inbound/outbound marketing needs including lead capture, tracking, CRM integration, auto-response emails and email marketing while holding back the more complex functions like scoring and nurturing. We’re happy to engage with those customers who seek those features as well, and provide additional services and expertise in those cases.
Let the games begin!
Things have been too lethargic in the marketing automation space for too long. No doubt inside our space we’ve all been drinking the Kool-aid about what we can do for marketers, but we’ve been unable to get enough of the outside world to notice or understand. Kudos to Loopfuse for giving us all a kick in the butt to get things moving.
Clearly though, this is only the beginning of what’s to come. Arguably, though, things actually got started with Oracle’s acquisition of Market2Lead. Whose next? How much longer will SFDC stand on the sideline? If not them how about Microsoft? or even Google?
I also wonder about the impact of the evolution of email marketing on the space. Being email is at, or very near the heart of all the automation vendors what happens if large ESP’s like Responsys, Lyris or Alterian move to a pay for performance model? Is CRM integration, scoring, and flows worth the cost versus an enterprise class email tool that is virtually free?
It’s going to be an interesting year. A year from now we may not even recognize the space. For sure though, Free is here to stay.
– Tewks
TheMarketingMojo.com
I’m excited to see this move by Genius and Loopfuse. It’s a smaht business move, as we say in Boston.
I’m willing to predict that other marketing software companies will follow suit soon, bringing modern marketing technology and processes to the masses of SMBs that need it.
Jep,
thanks for starting the discussion. As a professional services firm that implements marketing automation platforms for clients, the introduction of two freemium platforms presents positive opportunity. We’re checking out the Loopfuse platform under this program.
While Allinio (my company) mainly deploys platforms like Pardot and Silverpop that don’t have free, no-time-limit versions, we see this as a chance to test free platforms to see how they really work and whether their usability is fit for a typical marketing organization. Additionally, If an end customer is insistent on “free,” service providers can still charge monthly recurring or hourly rates to manage the platform for them.
However, the fundamental issue on the success of a free or paid platform is what others like Steve Woods have mentioned – processes and commitment.
Until an organization makes a *strategic* decision to fundamentally transform and align its sales and marketing organizations, just getting a free platform will end most probably end in failure and abandonment.
To this day, despite the success of companies like Salesforce, CRM implementations still fail because of issues like executive buy-in and training.
The choices that need to be made regarding launching a marketing automation platform can be overwhelming – what are the workflows needed? How does one go about cleaning the data? Is there enough content to have a drip campaign that really has impact and who will create it?
While free is great, time will tell whether marketers can adopt with minimal support on using a free tool; but the bigger learning curve is coming up with the programs for which to configure the platform; That’s where marketers are going to need help – how to manage the platform and what to actually do with it. That’s why both LeadSloth and Allinio are here – to help customers do that – with a freemium platform or a paid platform.
Cheers
I’m a bit late to this discussion (been at an offsite strategy session on pricing ) but I’d still love to chime in. I’m the CEO of Silverpop and one of the things I love about business is that the rules are constantly changing. You can always learn and there are big rewards for taking smart risks. I’m sure we’ve all read Chris Anderson’s book, “Free”, that popularized the idea of freemiums. In particular, his “one-percent rule” (one-percent of freemium customers will convert to paid) makes a bunch of sense for consumer products with millions of prospective customers and even for small-business products with a million+ potential customers.
I’m very interested to learn how it will work for sophisticated B2B oriented products with much smaller customer bases. Will the conversion rates be dramatically different? Can a large base of free users generate enough cash flow to re-invest in products to ensure they remain competitive? Is a freemium offer that much more compelling than approaches like free trials and pilots? If we are going to “give stuff away”, can things like education and training help the industry even more? Will customers be comfortable “betting their businesses on us” if we tell them a lot of what we offer is free?
Collectively, we are all helping drive a revolution in B2B marketing and sales. It’s appropriate that our industry be on the cutting edge in areas like pricing models. However this plays out, whatever we learn, we will all be wiser as we coach our customers into this brave new world.
As for Silverpop, we love to innovate as much as anyone but, in situations like this, we subscribe to the old adage, “the early bird gets the worm but the second mouse gets the cheese” . I tip my hat to our esteemed colleagues who are willing to break from the pack. Whether Freemium is a gimmick or our collective future, our industry and our customers will be better off because off their efforts.
Thanks for sparking the discussion.
The conventional wisdom is that freemium models mostly work only in B2C (and not B2B). I think that conventional wisdom is wrong. Disclosure: I’m from HubSpot and a big fan of freemium.
In the marketing software space, I think freemium is going to be a bit challenging, because the industry is relatively new and familiarity with the problem and solutions is not pervasive. Challenging, but not impossible.
I echo Joe Z’s sentiments about the real challenge of marketing automation. As a consultant helping companies make the transition to Marketing Automation the cost of technology is not the only issue. Once the appetite for sales and marketing alignment exists clients no longer want the ‘cheapest’ system but the one the fits their needs.
To challenge the ‘freemium’ model here’s my concern. Companies need help to make MA work – it’s not easy on that I think we all agree. That’s where channel partners come in (disclosure Biz-Builders is a MA Channel Partner). Here in the UK companies need intermediaries to support them (as so few of the vendors have a physical presence here). I also think that many companies outside of the US could happily function on a ‘freemium’ model without ever needing to upgrade to higher volume pay model.
We’ll happily recommend a good MA system to clients and take a % of the monthly revenue plus on-going support and our consulting fees. We get behind the best products and vendors we trust and who support us.
I’m simply not interested in working with companies who are reluctanct to spend money on the technology piece. It indicates a lack of commitment. Does the channel have to work for free too?
I remember a similar debate when Sun Microsystems launched ‘free’ Star Office to displace Microsoft Office. Who won that battle?
Let’s focus on value. I believe an investment in MA (technology, consulting and content creation and support) delivers an ROI. That’s the conversation to have not who’s got the cheapest widgets.
Continued great discussion. Good job, Jep.
Quick observation: some people are talking about barriers to entry (lowered by freemium) while others are talking about barriers to success (skills and effort required; not affected by freemium). Useful distinction?
See my blog http://bit.ly/aBHGOo for a closer look at the Genius free offering and its implications.
Interesting offers from Loopfuse and Genius, and from what I’ve seen, the biggest complaint we hear from companies who adopt marketing automation and aren’t happy is that the support from the vendor “sucks”. There may be truth to what Phil Fernandez asserts about the “hail mary” pass from these two companies… only time will tell, as the marketing automation environment matures.
I’m the President of Genoo, a marketing automation company focused into the needs of the small-to-midsize business market, and we offer a comprehensive, all-in-one marketing system, that includes email marketing, lead nurturing/auto-responders, lead scoring, lead tracking, social share tracking, as well as landing pages and microsites (or full-blown websites) all for a low price of $199/mo.
I think we’re one of the only vendors in the space that is not venture funded – but growing organically. How we do this, is by offering terrific functionality and technology, but also providing excellent customer service – working with our customers to make sure they get any/all questions answered, so they can get the most out of the tools. And we don’t charge extra for the customer service.
We don’t limit number of leads, or whether the site needs to be housed within our CMS or is an external site — we offer ALL of the capability,tracking, and scalability for the one-low-price subscription.
I agree with everyone here who talked about the need for marketing process – the need for marketing CONTENT which fuels the good utilization of marketing technology. We also believe that SMB’s need good solutions — but we believe they need FULL solutions and not limited ones that require large subscriptions once you expand beyond the limited scope of what is being given away for free.
The truth is, once you have success with marketing automation, and you’ve got all of the tracking, etc. on your leads, will it be easier to upgrade or to lose all of that and start again with another/different vendor? I believe that the bet for the freemium, is that companies will pay rather than switch. But they won’t think that through ahead of time — thinking they are getting something for nothing.
So it will be interesting how it all plays out…
First of all, thank you all for commenting. This turned into a very nice discussion, and a who’s who of Marketing Automation. Some remarks:
@ Dharmesh: I feel the Hubspot Website Grader is already a good example of a freemium model. It’s free but delivers really useful functionality. To get the full functionality you need to upgrade to the paid version. And I bet you are tracking how many Website Grader leads turn into business. If you can share, please do so!
@ David Raab: I like your distinction between ‘barrier to entry’ and ‘barrier to success’. Personally I feel the ‘barrier to success’ is the hardest part.
@ John: I agree. As a consultant I would also be hesitant to work with companies that don’t spend on technology. If they’re cheap on technology, they’re also going to he cheap on me. Already today, I don’t see any serious consulting requests from customers who pay less than $1000 per month for their marketing automation system.
My conclusion: lack of expertise and time are still the main barriers, not the price of the system. Some organizations realize this and create a budget to hire consultants to ensure success. However, most try to figure it out by themselves, sometimes with good results, but often not.
My question: When will lead management consulting be a standard budget item, just like PR and lead gen?
Jep & David – now I think that gets to the heart of the matter. A tremendous amount of the value in marketing automation is tied up in the services that go around it.
Yes, the freemium pitch is creating a lot of buzz, but that’s not the real story. As David picked up in his past coverage on the Loopfuse announcement (http://customerexperiencematrix.blogspot.com/2010/06/loopfuse-offers-free-marketing.html) the story is really about the pricing structure around the paid offerings.
The idea is to split the needed service budget out of a bloated software figure to focus on where it’s needed most around the process.
Without the right implementation support the likelihood of success is slim. Loopfuse is funneling a significant share of the revenue to the partners (http://www.loopfuse.com/partners.php) because that is where so much of the critical value is created.
– Tewksbum
http://www.themarketingmojo.com
MA Consultant (1st) / LF Board (2nd)
The dominant trend in the market is a totally human one: the rising wave of transition from B2B marketers being primarily PR and branding people to becoming database marketers who embrace metrics-driven process. Oh yes, and they’ve still got to be creative, too.
It’s not about the bike. It’s the rider – and the team (and the sales guys and the CFO, …)
As a former vendor (CMO of Eloqua), I was happy to promise marketers that they’d be hugely successful if they bought my product. In fact, only a small percentage of marketers who buy, or freemiate, marketing automation products really succeed. And it has nothing to do with the product.
Several of us were at the (first!) MOCCA East meeting today to talk Marketing Ops. This is an entirely new function of B2B marketing, with its own costs, its own managerial requirements and leadership needs. Most new automation buyers don’t even realize the need for Ops when they make their purchase decision.
And this is just one example of the organizational and cultural change that is only now gaining momentum.
SaaS now allows the marketer to buy Big Software independently. The outcome is the mayhem described in this discussion. But as the automation decision involves the CIO more and more, it will eventually become a rational and planned process – so consulting will become a budget item, not a surprise. But until then, the automation decision leads to organizational turmoil – and costs or transition.
But it will remain the Wild West for a while, I expect, with B2B marketers buying product for the Revenue Promise of Marketing Automation, then discovering the cultural and organizational transmogrification they must go through to succeed.
So, as long as this cultural transition is in play, which will be for several years at least, the non-product costs of successfully adopting marketing automation will dwarf the product expense.
I have a few perspectives – I could write 10 paragraphs me-tooing the comments, disagreeing with some, marveling at others….
As an end-user, SaaS gives me access to big-company technology at small-company prices. My marketing automation vendor gives me a service for under $2k/month that would have cost me $100k+ just a few years ago. It was one of the easiest ROI decisions I’ve made in my career as a marketer. I’m nowhere near taking advantage of 75% of the features, I think a lot of the features are bullshit, but I don’t have to because it serves me so well. I’m happy that enterprise customers are in essence subsidizing my low-cost usage of the service – that never worked with SAP. I hope free customers feel the same way.
As a SaaS vendor (GoodData), freemium lets me serve a broader market, gain distribution, and most importantly allow my product to sell itself, instead of using webinars, white papers, conferences, paid content, sales reps, sales engineers, success teams, partner ecosystems … all of which is tremendously expensive. If you can make freemium work, it can be magic. If you can’t, you’d better execute flawlessly, because the economics of SaaS can be brutal if your CAC is high.
Oh, since I have a rare audience of marketing automation vendors talking about free service, let me know if any of your would like to offer your customers free dashboards and advanced analytics for your service. Freemium for us, but free for you. We just turned on 300+ Zendesk customers in 2 weeks: http://bit.ly/cMk5xA
-Sam
sam@gooddata.com
Pingback: Closing the Technology Innovation Vs. People/Process Stagnation Gap in Modern B2B Demand Generation | Demand Generation Blog
@Jep In response to your last comment.
Many HubSpot customers using our Small ($250/mo) and Medium ($750/mo) products pay their agencies $1,000+/mo in consulting fees.
Of course, our software includes SEO, blogging, social media, etc functionality. So, the services that customers need are much broader and span everything from web design to link building to landing page development to social media setup to inbound PR. Last I checked, we’ve referred around $0.6M dollars worth of services to our certified partners. Our partners also helped us acquire a decent portion of our customer base, and they usually attach services fees to that of about 3-5x the cost of our software.
In summary, there’s a lot of services potential for SMBs. A lot.
IBM to acquire Unica.
Big news in this space.
http://unica.com/about/IBM_to_Acquire_Unica_Corporation.htm
fwiw, I think Freemium is generally a bad strategy in the marketing app space.
Price is not a barrier compared to Training and Education. Just because you can get VC’s to fund Freemium trials by junior people doesn’t mean it’s a good idea or that there will ever be adoption or paid-version upgrades. Having a young marketer understand, let alone execute, effective drip marketing, segmentation, ROI, LTV, etc takes more than a dial on a dashboard or a feature on the menu. And if they can’t turn it into a business driver, you’re out the moment the executives turn their head the other way.
My experiences implementing everything from websites to SFA/CRM systems, social media to cross-media analytics are that software is neither the big cost nor the value driver – Users are the cost and Users drive the value. Free tools do not help in either case.
Maybe you all are seeing a better conversion rate from Freemium than the marketing app vendors I know. Seems to me that those that offer Quick Start packages and integrated consulting as part of the fee are going to go farther than those chasing Freemium registrations and trials.
And to be clear, I’m all for innovation and competition. I simply believe that giving away your product for the prayer of long term market share is a market crashing, losing proposition.
As a former sales rep of technology systems, I have to agree, Jep, with those who say – why bother.
You know the kind of learning curve, system assessment, needs analysis that goes into trying a project like this?
You’re gonna spend zillions of hours looking at this, comparing, costing, getting IT, Marketing and C-level involved, do meetings, etc, only to “try it out?”
As someone on both sides of this process, do yourself a favor and don’t try a free program just because it’s free.
It’s the same thing I tell my girlfriend when she wants to buy some gadget or useless trinket just because “oh, you can’t beat this price! Lar!”
No honey, get ’cause you need it or want it, not soley because of it’s cost.
PS referred here by Ion tweet
I love the “hail mary” comment. When in doubt, disparage the competition as desperate. Classy.
To understand the real impetus behind LoopFuse’s move to freemium see my original blogpost “Why Free? Why Now?”
http://www.loopfuse.com/blog/2010/06/30/why-free-why-now/
Matthew Quinlan
LoopFuse
Desperate? Matt, you’re being arrogant, and maybe foolish.
To equate your product with PayPal or as an open source savant is silly. To suggest that a free taste is going to shift a firm’s core customer database from a CRM or Billing system is stupid. I know you’re in sales, but have you been involved in any actual implementations at a company that isn’t a software start-up chasing blog leads? Dude, get real. Marketing automation is just one of many organizational process parts that need serious work. You’re just diminishing how serious it is.
Great to see such a lively discussion here. As someone else said earlier, it’s been awhile since we’ve had this much excitement in the space! I posted some of this over on the Silverpop blog post by Adam Needles (http://bit.ly/bOHI2Z – you’ll need to scroll through the virtual advertisement for their B2B University, which is a great program, by the way), but thought I should post here as well since this is where the “action” is =)
Nobody disagrees that marketers need to understand concepts that we in the industry are very familiar with – lead nurturing, content marketing, etc, etc. We’re all putting out reams of thought leadership on the subjects and many of us have our own “university” or “Academy” and what not. We all can and do offer free education (or, as Adam says on the Silverpop blog “Education … That’s our Freemium!” – nicely said).
What most vendors can not do, however, is offer a product that is easy – not only to use, but to get to the point of using. With the free version of our demand generation product, a much larger percentage of marketers will begin to be exposed to the concepts we in the industry are well familiar with and constantly evangelizing. Oh by the way, they’ll be exposed to Genius.com or Loopfuse as the vendor capable of giving them the goods they need to get started without the pressure of a trial period or a sales rep marching them through milestones on the way to signing a contract.
Yes, they’ll need education, but we believe that with our seamless setup, intuitive UI, and the ability to track any activity, including social media through to revenue really really easily, they’ll be ramping up the learning curve sooner than later.
And, if you ask me how I feel that they may be using Genius.com as they take their baby steps and maybe stumble, I’ll tell you I like our chances. Yes, there are many great competitors out there, including some of the FUD-tossing QBs commenting here. However, we’ve built our business in a different way than they did, focusing on technology that is instant-on and easier to use to enable marketing success in a way that some vendors cannot imagine, and we’re confident this translates well to our free version.
@Coach Dave: I encourage lively discussion, but please keep it nice. Calling a respected member of the Marketing Automation community arrogant and foolish is a step too far. And not entering your real name is not very classy either.
Wow, what an interesting discussion!
I am excited that the benefits of marketing automation have already become more affordable for mid-sized and smaller companies.
The recent availability of “Free” but limited use marketing automation might offset the fact that most B2B marketing budgets currently don’t include a number for licensing marketing automation software, effectively removing that barrier to adoption (or “barrier to entry” as David Raab puts it) for some companies.
However, I agree with a number those who commented earlier: Success with marketing automation is another matter entirely.
Thinking back, “Free” has been used successfully by a number of companies in the software industry. Salesforce.com, Google, and even Microsoft have successfully used “free” to move the market in their direction, or to get a foothold for their products in the multi-user business market.
Only time will tell if this “Free” tactic will work in the marketing automation industry too.
Just to clarify, I was disappointed to read the “hail mary” comment because it implied that companies like Genius and LoopFuse were using it in desperation rather than as a strategic move. I was not calling anyone else desperate… quite the opposite.
What an interesting conversation! Reading the first several (many?) postings sounded a bit like an old time “my car is faster/house is bigger/spouse is better looking” contest over a bar top, with all due respect to the marketing automation luminaries who have graced this discussion. In the spirit of full disclosure, I am not a CEO or any other type of representative of any marketing automation software provider, consulting company, or purveyor of MA implementation services. I am an educated and savvy user who went through the pain of selecting a marketing automation provider for the technology consulting company for which I work.
This discussion has brought to mind an old adage that I was taught when I first got into professional sales – “something given for nothing has no value.” I think that is the inherent risk of “freemium” is that free software is easy to jettison, easy to dump, easy to not invest much in because it’s free anyway. When “freemium” is a lesser set of services, it becomes even more problematic, in my mind. How can I truly evaluate a platform when I don’t see everything that it does? But even that is really beside the point.
The earlier poster who said “it’s about the rider, not the bike” hit the nail right on the head. An uneducated consumer who tries something for free is likely never to be a great customer – for anyone. Marketers need to determine what they want a marketing automaton platform to do for them, then find the software that will afford them the best chance of success. I am inundated with automated emails and email newsletters that have been sent, in many cases, by people who have clearly not thought out their true purpose and who are using software that they don’t understand. I actually scan through my spam folder looking for “lessons learned” and “what not to do.” (I actually have received several personalized emails that are personalized to someone other than me, and one came with “Dear Test” as the salutation! MA FAIL)
A marketer can’t learn how to do marketing automation by implementing a tool. Doing so will cause many of those marketers to give up on marketing automation because it “clearly doesn’t work.” (We see this happen with project management processes and systems ALL the time, so I’m speaking from some level of experience here.) While offering free software will perhaps get a few tiny companies into marketing automation without having to make a real investment, in the long term the entire market could well be de-valued. (Why would I pay X when I can get it for free over here?)
Marketing automation is easy, according to the ads I hear on the radio on my way to work every day, and the emails I get from nearly every company who has posted here. Marketing automation that can be effectively used by organizations to truly impact their market is hard. And, frankly, the tool selection pales in comparison to the need to create, format, and publish great content.
I was lucky (and diligent). I found a great marketing automation provider who has enabled me to design a fully integrated marketing platform for my company that really works for us. I took advantage of their thirty day fully-functional free trial to teach myself as much as I could possibly absorb. The folks at this company held my virtual hand to get me up to speed. I have nurturing tracks and sequences, lead scoring, landing pages, RSS feed capabilities, social media integration, and oh-so-much more. As I have had marketing “challenges,” they have added features (and never increased the cost). I am thrilled to be a valued client of a little company called Genoo. But whether it’s Genoo, or Marketo, or Silverpop, Eloqua, Genius or Loopfuse, an educated and capable marketer really needs to start with a vision, create a plan, and find the right product to support that plan.
As a fairly adept marketing automation user, I would like to respectfully suggest that all you MA providers out there quit making it sound like it is so easy! For those who want to send newsletters and call it a day, perhaps it is that easy. But for those of us who want to truly nurture a not-ready-to-buy-yet contact list, learn when a contact’s interest perks up, and offer those contacts multiple non-sales ways to interact with our company (especially in the B2B space), it requires a lot more than a tool, a logo, and some graphics. And those marketers, like me, who are willing to sign up for that will not be tempted by a “freemium” service that offers less than full marketing automation functionality.
I was going to say “just my two cents” but it seems that I have typed a quarter. Great conversation; thank you for allowing me to participate in it.
Margaret, thank you for adding your perspective as a marketing practitioner! Best, Jep
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Hello Jep,
I learned about your post in the LinkedIN discussion group “DemandGen Specialists”. Thank you for posting this analysis. It made me feel better that I made the right decision to go with a paid solution!
In any corporation, large or small, it’s easy for some accounting person to look at an investment and question “why would we pay if we can get it for free?”. Well, free is good for trial, but for the longer term, you need support.
From my own limited Marketing Automation implementation experience, MA requires dedication and persistence. It,s so easy to give up because there is no silver bullet… you have to try, make mistakes, tweak, test… And free models don’t allow you the analytical tools to sustain this approach in the long term.
I do applaud LoopFuse and Genius for taking the approach, though. Let’s hope it spurs more adoption in the long term.
Jep:
Great post and have enjoyed reading the subsequent comments. While “free” always catches someones eye, I do not know that adding the message of easy when it comes to marketing automation is one that does any good for the buyer.
I agree with Steve’s comments above that the success of marketing automation does not lie solely with the technology, but is in the development of sound fundamental business process and ensuring you have the right people/skill set to operate the solution.
Whether the solution is free or easy does not negate that you will have to define process and find the right people. Companies who go for free thinking it is plug and play will most likely be as disappointed as their counterparts who have paid for a system and are not using it to its fullest capacity.
Here’s a post with an opinion about freemium models in B2B SaaS environments. This comes from Seth Levine, a general partner with Foundry Group, a collection of venture capital savants in Boulder, CO. His post on the topic appears to be a timely coincidence and unrelated to our ongoing discussion here.
For those who don’t want to follow the link, his opinion is that “if you are selling largely to enterprises (companies) – you may not be the right candidate for a freemium model”. Seth adequately sums up why Net-Results Marketing Automation won’t be releasing a freemium version.
http://www.sethlevine.com/wp/2010/08/pricing-models-the-freemium-myth-and-why-you-may-not-be-charging-enough-for-your-product
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I was attracted by the Loopfuse Freemium announcement, signed up, did a quick evaluation and posed a quick review and blog article about the potential. And…
Question – what target market are Loopfuse aiming at?
The Freemium announcement was quickly followed up by a partner program announcement.
Maybe the Freemium offer is bait to potential partners who can gain exposure to an enterprise level marketing automation solution, have some marketing ammunition and develop marketing momentum around Loopfuse.
Recruiting and developing a partner channel who sell full-price solutions for the professional services and marketing services pull-through potential will have a far greater pay-back to Loopfuse than the cost of Freemium.
A very shrewd marketing move by Loopfuse I suspect.
Very interesting and lively discussion. I read through all of it and was surprised no one addressed how this freemium model might impact deliverability for both the companies offering it and the industry at large. The idea of thousands of marketers untrained on email best practices suddenly loading up their lists and sending out millions of emails is a scary enough to a guy in the MA space who doesn’t want to see email marketing degenerate into a world of SPAM. But if I were Genius or Loopfuse I’d be really scared.
I’m with MarketOne, and we are an Eloqua Partner. We are always touting Eloqua’s industry leading deliverability rates as a key to achieving maximum value on marketing spend. Eloqua and its partners do a lot of different things to assure their rate stays at the top, but chief among them are all the consulting and process things that Steve Woods and others have referred to. If you take those out of the equation with these free offerings, is marketing automation taking a step backwards into SPAM?
@ Michael, thanks for sharing that article, very interesting (nice coincidence!)
@ Mark: interesting perspective, thanks for sharing
@ Jerry: also a good point. I think they need to build safeguard into the product. E.g. if bounce rate of a
‘free’ email blast is too high, automatically pause campaign.
It also bring up another point: will regular email marketing users start ‘abusing’ these freemium products to simply send out bigger email blasts for free, maybe when their list is bigger than the free version of Mailchimp allows (500 list size, 3000 emails).
@Jerry
LoopFuse is fortunate enough to have founders that have spent over 20 years (combined. Some of us are former SilverPop) in email marketing, along with an experienced/dedicated staff of IT folks and dedicated hardware and software to handle large-volume email sending and increased deliverability through monitoring and best-practices.
Every freemium signup undergoes a manual approval process, and any abuse complaints are dealt with immediately.
There is ZERO difference with what Eloqua and similar expensive solutions offer with regards to email marketing deliverability, and I would assume that you know that Eloqua does get blacklisted regularly, as well. ;-)
http://www.mxtoolbox.com/SuperTool.aspx?action=blacklist%3aen25.com
http://www.mxtoolbox.com/SuperTool.aspx?action=blacklist%3amail.en25.com
@Jep Mailchimp’s limit on emails-per-account is not what gets an ESP blacklisted, it’s the “reputation” of the sending IP addresses that does.
Don’t want to hijack this into a deliverability discussion, but for those interested in better understanding that subject, following is a useful presentation on the Eloqua SlideShare Channel. (Of course, this thread is a veritable “Who’s Who” list of B2B marketing leaders, so the deck might be rudimentary for some.) http://www.slideshare.net/Eloqua/demystifying-email-deliverability
-Joe Chernov
Lots of good discussion here. As a B2B Consultant who focuses on recommending a number of providers, the Loopfuse program allows me to at least “walk the walk” with Marketing Automation without having to pay multiple vendors each month. Free Loopfuse is missing a Landing Page creator, and free Genius is missing lead scoring and advanced automation features. Selfishly, would love if all platforms provided basic free services modeled just for potential resellers that allows minimal database records, so so we can continue to learn the features on our own and be better salespeople.
To me, the free trials are really a waste, because it does take time to build up a pipeline of content, determine the buyer personas, the media buys, the landing pages, etc. to really see the value of these systems.
The issue I will face is for SMB; putting together a budget that includes the platform, the process, the content, the design, the analytics, and general consultation. I need to assess their current marketing efforts and determine some amount of reallocation to pay for the other services.
I think this is a big reason why certain companies may balk; it’s not the tool, it what you need with the tool, and getting management to buy, even though the case studies and the research supports the ROI growth.
But we’re up for the challenge, aren’t we?
Paul Mosenson
NuSpark Marketing
http://www,nusparkmarketing.com
Sorry all for the late reply. Just got back from a well deserved offline vacation. *ahhhhh*
To those following this thread: simply enter ALL of the IPs of your marketing automation provider and ours (the full range is available here: http://www.eloqua.com/trust) and decide for yourself. As we all know, reputation is decided by IP these days and not on domain.
To address the “blacklisting” comment from Roy: Your guys should know better about Five-Ten-Sig (which seems to be the only “blacklist” that comes up with your posted links) when it comes to ANYTHING related to their service. It is well known throughout the industry that the Five-Ten-Sig is list is a bad source of anti-spam data. They are not anything you want to rely on and many administrators have made the mistake of doing such and removed the service. If you look at the supposed blacklisting it also says the data is as old as 2007. Now what sort of “good” service would rely on such old data, but let this data explain it better.
Al Iverson’s DNSBL Resource: The Fiveten Blacklist: Not Accurate
http://www.dnsbl.com/2007/10/fiveten-blacklist-not-accurate.html
It should be also know that the blacklist, Five-Ten-Sig, is know to list ANY source of email that does NOT have a double-opt-in confirmed list management process. I am seriously doubting that anyone today in lead generation is going FULL COI and really doesn’t have to as it doesn’t make a huge difference on complaints ratios. Now I am NOT at all saying just go out there and buy a list and blast to it, but I know for fact (as our data above shows) that one of the most important aspect of reputation can be closely tied to how relevant and targeted your message is and how it impacts the prospect when they receive it.
There in lies how HUGE of a difference between service providers there can be Roy. How you present data/reports to customers to act upon, how well you educate and support customers, features such as activity filters and report trending, and so much much more can tell you more about what a prospect wants to see vs. batching and blasting.
-Dennis
Here’s more from Seth Levine on the challenges of freemium models:
http://www.sethlevine.com/wp/2010/08/the-freemium-myth-more-data
And yet more with great data from Software by Rob: http://www.softwarebyrob.com/2010/08/18/why-free-plans-dont-work/
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I’ve really enjoyed reading this thread (and keeping my opinions to myself on this one).
The real proof on the freemium model will be “in the pudding” as they say. I expect if it’s successful, we’ll see some announcements from Loopfuse and Genius in the upcoming months about the number of new customers acquired through the Freemium model and associated upgrades from there.
If we don’t see numbers…interpret as you will.
Looking forward to seeing what happens
Christopher
Manticore Technology
Chris: You are right there will be announcements coming from both Genius and Loopfuse about the number of customers “acquired” through the freemium model. However, those numbers won’t tell the story as we have all seen customers with solutions that have no success.
Forget the numbers, I want to see the success of the freemium customer, not just the adoption of a solution.
Carlos Hidalgo
The Annuitas Group
As a marketing automation consultant, I appreciate the move toward “down marketing” to the masses via freemiums. Makes my job much easier, since recent estimates indicate only 2%-5% of the B2B marketplace is even aware of marketing automation, drip marketing, nurture marketing, stay-in-touch marketing, follow-up marketing, yada yada. I get tired of explaining the same thing over and over again to clients who desperately need a lead generation/lead management system, but can’t get their arms around the technology. IMHO, the technology is/should be only 15% of the entire consideration to automate. The 85% should be spent on strategy and creating great content. The faster the buzz about MA results hits the mainstream marketplace, the fewer “top of the pipeline” conversations I have to have. From that standpoint, I appreciate all the bleeding-edge hard work pioneers like Marketo, Eloqua, Silverpop, etc., have logged. But I commend LoopFuse and Genius for stepping out on the edge of cliff to take us to the next level. (BTW, another pioneer in the freemium model is http://www.Swiftpage.com, who offers a service for all the mom-and-pop marketers, a very under-served segment because of the slim margins for vendors.)
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