It’s definitely dilutive in that there’s a constant tension between management time and resources.
On the one hand, the sales-driven side of the business, B2B, “costs” a lot more — you need sales people, customer conferences, booths, customer success, etc.
But. The deal sizes are much, much larger in the enterprise / B2B customers. And the customer lifetime value is much higher. And the churn is much, much lower.
So … to me, the question is, can the smaller segment of your business at least do 10% or more of your revenue (i.e., be material), and/or drive 10% or more of your leads. If so, it’s worth investing in — relative to its overall contribution to the top and bottom lines.
In terms of successful companies that do both “B2B” (sales-driven) and freemium/B2C-ish (self-service / non-sales driven) successfully, there are many. But these tensions exist at all of them:
- Adobe. $1b+ from Digital Marketing, which is very sales driven and very B2B. $3b+ from Creative Cloud, etc. which are primarily not sales driven / B2B.
- Dropbox. As noted. Enterprise is material.
- New Relic, Github, Twilio, etc. New Relic and many “B2D” companies combine self-service at the low-end and more B2B enterprise sales for larger accounts quite nicely. Generally, they start as self-service and as the accounts grow, they add a sales team to support larger deal sizes.
But … more often, one of the business lines falls to the wayside as the business scales and one segment clearly becomes immaterial, and therefore, not just a cost center but dilutive to management team and focus:
- Surveymonkey & Zenefits. Both just dropped their enterprise sales forces to stay focused on core businesses (self-service+ and VSB, respectively).
- Box. All B2B now. Freemium is < 1% of its revenue now. Still an important marketing channel, but not for revenue anymore.
- Salesforce. Still working it, but at least at $7b ARR, the SMB offerings are still immaterial.
