A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
“Zooming” into the freeterprise model
As consumer brands showed the freemium model could be both a great go-to-market strategy and generate a continuous flow of qualified leads (however, only after the whole organization would be organized around identifying those opportunities), other B2B/Enterprise companies (those primarily selling to other companies or larger corporations) also mastered the freemium model but on a B2B scale.
This sort of looks like magic, as you can start from a single free professional account, and pull a whole organization into that, to transform it into an enterprise
As I explained in Zoom business model though, the whole organizaiton needs to be structured around the freeterprise model, where on the one end the company seamlessy uses teh fee product as entry point within companies.
And on the other end, sales people with the ability to built strong relationship with the account can get the whole company onboard, thus transforming a free professional account into a potential enterprise customer.
Of course, this leads the organization to skew its resources toward building an army of qualified salespeople to handle the volume of leads generated by the free offering (in 2019 Zoom spent 54% of its revenues primarily in salespeople headcounts).
Key highlights of the “Freeterprise” Model:
- Definition: The “Freeterprise” model combines “free” and “enterprise.” It involves offering a free product to attract users and then transitioning them into paying B2B or enterprise customers through targeted sales efforts.
- Strategy: The model uses a freemium product to drive viral growth and attract free users, forming the entry point into the sales funnel.
- Conversion Process: After identifying opportunities within the free user base, a company employs its sales team to convert these users into paying B2B or enterprise accounts.
- Zoom’s Example: Zoom, a video communication platform, effectively uses the freeterprise model. It provides a free offering and leverages a direct sales force to convert free users into enterprise customers.
- Success Factors: A successful freeterprise model requires the entire organization to be structured around this approach, from utilizing the free product as an entry point to building strong relationships with accounts through skilled salespeople.
- Resource Allocation: Implementing the freeterprise model involves allocating resources to sales and marketing efforts, as these teams are crucial in identifying and converting leads generated by the free offering.
- Value of Freemium: Freemium models are effective in generating a continuous flow of qualified leads, provided the organization is organized to identify and capitalize on these opportunities.
- Slack and Zoom: Companies like Slack and Zoom have demonstrated how the freeterprise model can lead to the creation of valuable businesses in the B2B and enterprise sectors.
- Transformation Potential: The model’s magic lies in starting with a single free account and gradually involving the entire organization, ultimately transforming free users into potential enterprise customers.
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