Google in the Software Sales Business Now

Posted by Pete Caputa on Jul 7, 2009 1:59:00 PM

This is a really big move. Google just officially launched their Google Apps software product.  At launch, they already have 1.75M companies using the software. Who knows how many of those are using the free "standard edition" vs a paid one. Regardless, that's a ridiculous install base which will upsell themselves when they add new employees.

This is aimed squarely at Microsoft's sweet profit spot. No doubt Google will continue to add capabilities to the suite. Unlike Microsoft, Google has no monopoly on desktop software to protect. So, while Microsoft continues to tell themselves that people want some strange integrated version of desktop software + online services, Google will eat their shorts.

The lesson for any business (not just software businesses) is that Google started with a free version of all of these products for consumers. This drove massive adoption. They, then launched a freemium version of Google Apps which again drove massive adoption. Now, they're launching the paid version in full. This process lowers the barrier to trial and the time between trial and satisfaction. This reduces so much friction in the marketing and sales process.  

This is a model for business building.

Their cost of customer acquisition (COCA) must be next to nothing. Their lifetime value (LTV) must be through the roof. And their cost of support is probably minimal.

Although this is classic Innovator's Dilemma product management (entering the established market), I think this is the smartest move Google has made since they cloned and improved their Overture with Adwords.

What I find really interesting is that they actually let people contact sales reps. (In the screenshot above, you can see it says "contact corporate sales". (It's notoriously difficult to ever get a person on the line at google, even if you're spending thousands of dollars per month on adwords.)

Not that Google has a reputation for rewarding sales professionals as much as their developers, selling Google apps is probably one of the few jobs I'd consider other than the one I have now.

Topics: google, freemium

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