Freemium Businesses Switch the Hunter and Farmer Sales Roles
Kenny Van Zant is a marketing wizard. Before his current role at Asana, Kenny managed products and marketing for Solarwinds, a publicly traded company that sells networking equipment to the mid-market. Solarwinds pioneered the low-friction, high-velocity sales model in their segment to great success.
SolarWinds offered free products to their customers to gain usage data that informs their sales and marketing efforts. As one might expect, inside sales reps would call upon the most likely customers to up-sell them to paid. And of course, SolarWinds employed the enterprise sales team to win the business of the largest customers. Plain vanilla freemium, right?
But over a conversation earlier this week, Kenny pointed out that freemium businesses switch the hunter and farmer sales team roles, an important twist that had escaped me.
In traditional businesses, the enterprise team hunts. They acquire leads, cold call, and try to push the customers to close. Their counterparts, the inside sales team, nurture and cultivate these relationships to prevent churn and grow revenue through up-sell and by growing with their customers.
Freemium businesses reverse the roles. The inside sales team fields the freemium leads, make the cold calls and push the customers to close. The enterprise sales team looks for multiple teams paying separately within one customer, build a relationship, and grow revenue through up-sell, helping their customers grow.
It's plain to see the marketing departments of freemium companies must be constructed differently, with a strong quantitative bent. But freemium businesses also require a fundamentally different sales team structure.
In one hour, Kenny completely transformed my understanding of freemium software companies. I hope he decides to teach a course at Stanford one day his framework for success. It would be a huge a success and might very well change the trajectory of many SaaS companies.