How Mailchimp skyrocketed their profit 650% by going ‘freemium’.
By: Cole Schafer
Tags: Entrepreneurship, Writing, Marketing, Business, Startup

Today, there are two wildly competitive spaces you don’t want to touch with a ten-foot pole.

Bed-in-a-box mattresses is one.

Email marketing software is the other.

However, one valuable marketing strategy is looking at the leaders in these spaces, highlighting what they did to secure their spots as the top dogs and applying it to one’s own business.

It’s not (technically) stealing.

While I imagine I will one day do a write-up on one of the one hundred and one bed-in-a-box mattress startups putting mattress stores out of business, for now, I want to focus on the latter of the two competitive spaces I mentioned…

Email marketing software might be as cutthroat as it gets.

The list of players battling in this space goes on forever, like one of those cartoon scrolls… ConvertKit, Email Octopus, Drip, AWeber and Constant Contact… just to name a few.

However, one of the most impressive names in the space (and by far the coolest) is a brand you’ve surely heard of… Mailchimp.

Mailchimp launched during the worst time in history to start an email marketing software company, 2007-ish.

At the time, folks despised email and viewed most of the shit they were getting in their inboxes as just that… shit (or something worse than shit, spam).

In order to be successful, the email slinging monkey-loving startup had to figure out a way to build trust with the masses and ultimately make email… cool.

Some might even go as far as to say… sexy.

Fast-forward a decade and while Mailchimp might not be the godfather of email marketing software, they’ve single-handedly been responsible for making email marketing sexy.

Between knitted monkey hats for cats, uber badass high-five gifs and a loveable mascot named “Freddie” who actually comes in an action figure… Mailchimp has created an email software brand that people wouldn’t mind wearing across their chest.

(So, perhaps, here’s the first lesson from today… if you do enough cool shit as a brand, eventually you’ll become cool yourself and your customers will love you).

And, if this doesn’t make them love you, you go a step further and…

Give them something for free.

Most brands “make it” by offering freemium. Mailchimp, on the other hand, made it and then offered freemium.

In September of 2009, two years into its launch with 100,000 paying subscribers, Mailchimp did something that many would call idiotic…

They made an announcement that they’d be offering a “Forever Free” plan to not only new prospective customers but to their current paying customers.

(They did this in hopes to better serve small businesses like flower shops and coffee shops who had a small email list and perhaps not the budget to spend hundreds of dollars a year firing off emails).

For a user’s first 500 subscribers, all of Mailchimp’s features would be 100% free to use… and as long as their subscriber count stayed below that number, it’d be free to use forever.

Here was the announcement made by their co-founders…

As you can imagine, small businesses everywhere began signing up in droves.

Free email marketing? Christmas had come early.

And, not just for the small businesses snatching up the freemium plan…

The jaw-dropping results after Mailchimp went “Forever Free”.

Just one year after Mailchimp started its freemium model for all users with 500 or less email subscribers, their company experienced the following growth…

They had grown their user base by 500%, from 85,000 to 450,000.

They were consistently adding more than 30,000 new free users and 4,000 new paying customers every single month.

Their profit (not their revenue) had grown by a mind-boggling 650%.

This monkey can do some serious business.

Today’s lesson is simple…

Folks like free.

And, contrary to common belief, marketers don’t always have to launch with free… they can move to free when it’s time to fire the rear thrusters for a bit of a boost.

MailChimp’s Forever Free leaves us all with a lingering question…

What portion of our services can we offer for free?

Sometimes folks don’t want to pay for a taste.

But, once they’ve had a taste, they’re certainly willing to buy the whole thing.

But, I digress.

By Cole Schafer.