MailChimp: Freemium Success Story?

MailChimp: Freemium Success Story?

MailChimp probably has its fans among the MSP community already: they’re an email marketing service that bills itself as the best way to reach customers regularly with HTML newsletters. And now company co-founder Ben Chestnut is highlighting in a blog entry their freemium success a year after MailChimp decided to go free for low-usage customers. Here are some key takeaways.

Chestnut leads his freemium discussion with an impressive statistic: when MailChimp announced it was going free for customers with 500 subscribers in September 2009, they had 85,000 customers. As of Monday, Chestnut says, they have 450,000 -- and it's free up to 1,000 subscribers now, too. That’s five times the number of users in a short span of time.

I strongly suggest reading the blog entry for the full and well-thought-out rundown of why freemium worked for MailChimp. But the numbers that jumped out at me include Chestnut’s claim that MailChimp’s profitability is up 650% and the cost of adoption has gone down below $100. What’s more, they’re delivering 700 million emails a month from businesses ranging from one-person startups to Fortune 500 companies.

But is freemium right for you? Chestnut says that MailChimp would never, ever have gone freemium if they weren’t certain they had enough paying customers and enough money in the bank to take care of their employees - freemium may not be the best idea for companies just finding their financial sea legs, since the ration of free-to-paying customers is a “dismal” 10:1.

It’s a good meditation on the concept of freemium, and MSPs could learn from Chestnut’s modeling and statistics whether or not giving it away would pay in the long run. All the same, he felt the need to include the following:

“That’s my personal opinion. Disclaimer: I’m wrong about 99% of the time.”
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