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Freemium Business Models Served With Premium Ice Cream

Freemium The Freemium business model has become a buzzword in the industry that has generated a lot of interest, especially since Chris Anderson of Wired Magazine wrote his book Free.

On 9/24 at the Capitol Theater in Arlington, MA at 6:30pm I’ve invited Kevin Micalizzi to the IceSocial for ice cream and to chat about his company’s implementation of a freemium business model.

Kevin is the Community Manager for Dimdim a web conferencing company that has both a free and premium product. Kevin’s background includes stints with larger established companies, notably Avid Technology in Tewksbury, MA. Dimdim is his first experience with a Freemium start up. Kevin will describe his company, the business model and talk about the challenges and benefits of running a Freemium business.

Kevin and I recently spent some time on the phone chatting about Dimdim and the Freemium approach to business, here’s the result of the interview below.

Join us for the #IceSocial tweet up at the Capitol on 9/24, listen to Kevin, and have the opportunity to ask questions while you enjoy an ice cream at the Capitol Creamery.

John: What is freemium?

Kevin: In our case, making a free product available, and making our premium product to help pay the bills. Having a free product, not just a free trial, we have intentionally designed it to be good. If we update the premium you also make sure the free product is competitive in the market as a free product. To me Freemium is not just about making a free product for marketing publicity, but do as little as possible to make the product viable. Here at Dimdim where we have thousands of people meeting all the time we have to make our free product fully functioning.

John: you make very good point here. Freemium is more about business strategy than marketing promotion. Was the Freemium model at Dimdim part of the strategy from the beginning?

Kevin: We cannot compete with Cisco and WebEx on their own terms. Their marketing budget is bigger, and as we cannot compete on their terms, we built a strategy to make a market shift, in this business you cannot compete by taking timid steps, having a free product has always been part of the strategy.

John: Does just having the Freemium strategy make the product successful?

Kevin: I don't think so, you have to treat it like a paid product, and you have to give customers and the products the love and the attention they deserve. Even though you have a free product, you have to understand that people are running their business on the product, we have to make sure operations are supported.

Support is always a challenge. There's always an expectation there will be a high level of support for support. Look at Yahoo! And Google with their support, if ever there are higher needs for support, we pull in engineers to help with support.

Part of our strategy is to make sure customers are successful without increasing our costs. We built Dimdim so that our costs are low. We have ongoing conversations internally around a support issues that have a big impact on customers, what can we do to help customers? That’s why we are building out our getting started section, providing more video tutorials. With the Freemium business model you have to be able to scale. Customers have to be able to get up and going by themselves, you have to stage your product in such a way that customer don't need support. Build the additional resources around it that are needed, users guides are nice, but people don't read them, while a one minute video that quickly explains how to use the product will off set support usage. As support questions come in you develop content and solutions to address those questions.

Some parts of the product made perfect sense to us, but our customers have problems, and when customers highlight those issues we'll look at the problem and try to fix it. That's a fun part of my job; people will let me know about the UI and what they think we should be doing.

John: Are you using any semantic technologies for automated support?

Kevin: Every email is read and reviewed, no semantic technologies so far. Ultimately would be nice, but we have to be careful, the last thing a customer wants is a list of resources that gives answers the customer does not want from an automated email. I have not seen a semantic technology that gives an answer 99% correctly with usable responses. The last thing you want is to feel you just got answered by a bot. You have to make support real and personal.

John: Are you empowering any of your customers to help other customers?

Kevin: We use forums, but due to a lack of hours, have not pursued an army of volunteers to help support other customers. However, I have seen a shift in the last six months; people are commenting about dimdim, more and more people jumping in to answer questions by themselves.

John: What are challenges of being a Freemium company?

Kevin: You have to keep your operations lean and mean. We undermine our own model by hiring too many people. One reason we are doing well with our model, management are frugal, we are very careful about how we use our money; if you start to get bloated in any one area it becomes too expensive to operate the business.

John: Thanks Kevin, I look forward to learning more about Dimdim and Freemium models at the IceSocial on 9/24, I hope my readers will join us by signing up.