Last week Vendasta announced it was shifting to a “freemium” model targeted to small digital agencies. This release raised a couple of immediate questions. First, I wondered if this was a real shift in strategy or just a more public announcement of something that Vendasta was already doing. Second, I wondered if the shift had any substantive impact on the willingness of small agencies to engage with Vendasta.
I reached out to Vendasta CMO Jeff Tomlin — someone who is always willing to have a conversation. He was direct in his answers. Number one, he said that before the change agencies would have to speak with a sales rep and sign up for $249 and then could provision products and solutions based on the needs of the end customer. With the addition of a freemium model, an agency can jump right onto the platform and grow their Vendasta business as customer demand dictates.
Second, Jeff said that since they soft-launched the new model, they’ve seen a substantive increase in the number of small agencies jumping on the platform. This is proving to be very helpful since what Jeff said is they had found the CAC (customer acquisition cost) associated with the very small agencies to be prohibitive.
Much has been written about how challenging SaaS “freemium” models can be, with plenty of strong voices advocating for and against this business strategy. Check out this rundown of some successful “freemium” models. In most cases, these models appealed to millions of prospects and had relatively small monthly pricetags e.g. $9.99.
It seems Vendasta sees its growth opportunity resting with small digital agencies. By lowering entry barriers, Vendasta hopes it can significantly expand its partner reach. A more jaundiced view would have Vendasta disrupting its own model with the freemium approach to regain lost momentum in the marketplace.
Interestingly, I also read that they havejust hired Jeff Folckemer formerly of Hearst and LocalEdge. Jeff brings to Vendasta a wealth of experience in local media from his time at Hearst and related entities for nearly 20 years.
Editor’s Note: Vendasta Chief Strategy Officer Jacqueline Cook will be speaking at the LSA’s upcoming Tech Adoption Summit, Nov. 6-7, at The Laundry San Francisco. Her topic will be: “Why Do They Leave? Tricks for Keeping Customers on Your Platform”, based on research Vendasta has done on the factors that drive customer churn.
Check out the podcast we recorded with Jackie on this topic back in June on this topic.