A company’s value proposition forms the core of its identity, reason to be, and future potential. But having a clear and compelling value proposition is just the beginning. To be successful, a company must catalyze a flow of interest in its value proposition; I like to refer to the head of this flow as “the value onramp.” Value onramps should make it easy for prospects to experience your value proposition and become customers. Compelling and “self-service” value onramps are the primary reason that new Internet-based companies are able to sustainably grow customer adoption and revenues so much faster than the big ticket enterprise solution providers that preceded them. While many big solution providers have leveraged anything-as-a-service (XaaS) models to ease and accelerate the implementation of their complex offerings, most have yet to master a value onramp strategy that emphasizes grass roots marketing, customer pull and product adoption rather than top-down sales, vendor push and contract signature. When product adoption precedes sales engagement, you wind up with users that step forward to purchase (or request that their purchasing department do so). When sales engagement and contract signature precede product adoption, you indeed capture the first sale, but the ultimate end users of your product may resist or delay product adoption, which can jeopardize recurring revenue or worse, relegate you to shelfware.

Free But Fitting

When offering a free version to catalyze the value onramp, it is very important that this free version adequately represent the gist of your value. After all, you are trying to establish your brand with a new user and thus want them to experience what your brand stands for. If you reserve most of the value for your premium offering, your free offering won’t be compelling and therefore your fremium onramp will be ignored. When we decided to open source Aerospike’s server software, we made sure that the open source Community Edition was screaming fast and super scalable. Meanwhile, we held back valuable but less brand-centric features (e.g., cross-data center replication, fast restart) to reserve for the Enterprise Edition. Another notable example is Splunk, whose free version was packaged as a tool that enabled operations personnel to troubleshoot logs. Each user soon ran out of the storage allocation provided in the free version, but not before getting hooked on the simple user interface and the cumulative value of analyzing larger and larger stores of log data.

Prospecting vs. Community Development

Your website must function as the optimized communicator of your value proposition and thus must reflect the structure of your value onramp. One track through your online value onramp is for prospecting. This track presents information, demos and free product editions designed to convert browsers to evaluators and evaluators to buyers. The prospecting track also features a registration gate that requires visitors to provide contact details that sales can use to follow up. The registration gate should be placed to optimize sales, not registrations. Meanwhile, a second track through the onramp is required for any company that is developing a community as part of their go-to-market strategy. This track must strive to present a “no strings” experience for community participants. A community participant will only provide contact details in exchange for valuable community deliverables, such as open source software updates, product and training materials, development tools and utilities, and in some cases, t-shirts. Using these contact details to apply sales tactics to community participants is a sure way to kill the community. When we open sourced Aerospike, we created one section of the website to serve our new open source community, and a different section that allowed prospects to download a mix of free and registration-gated assets such as white papers and other pre-sales tools.

Simple Pricing Vortex

Simple pricing eases the sales cycle for both initial and expansion sales. For any given product, it’s best to structure your price around a single unit of value. While you may “leave some money on the table” by not charging for all value variables, the simplicity of a single unit tends to make up the difference. At Aerospike, we charged by terabyte of unique data stored in the database, even though this meant that customers with small data sets and high transaction rates could be leveraging our performance without paying much. This latter customer segment turned out to be small and therefore the choice proved successful. The database storage pricing model is also beneficial in that customers could easily predict their future budgets based on projections of their data set size. At Sensage, we simplified the pricing model but had to stick with CPU cores as the unit of value because it was the best way to optimize sales. The downside was that initial and expansion sales required a relatively complex sizing exercise performed by our pre-sales team. Granularity is another useful attribute in the pricing model, as it allows customers to buy more product as they need it rather than in large chunks that require external and internal selling. While pricing granularity can increase your SKU count (for those that are bothering with SKUs), it doesn’t add to complexity and is well worth the inches added to your price list.

Directing Traffic

Once you structure your onramp in a way that reflects these principles, you will want to feed it with various programs that generate visitors, interest and engagement. Make sure you are prepared to measure engagement within each part of your onramp and conversion ratios between each part of your onramp. As you gather and analyze these metrics and resulting trend lines, take note of internal and external changes so you can correlate what’s going on. You might launch a great new program and see poor results, only to find out that your competitor has increased its marketing budget and is drowning your ability to drive increased interest. I have found it useful to monitor engagement volumes and conversion ratios on a weekly basis – the importance of these metrics is too great to wait for monthly reviews. With a weekly measurement cadence, you can stay on top of the pulse and observe tactical patterns while using monthly reviews for deeper analysis of trends, correlations and necessary adjustments.