Yammer is designed in such a way that anyone can sign up for the basic service with their work e-mail, no fees or strings attached. The free plan includes just the basics, so should the new user then want to introduce a more robust experience to their business peers, he will need to upgrade to either the three or five dollar per user per month paid plans.
This approach has proved profitable for the two year-old startup -- it converts 15% of customers from the basic version to a premium option. "The biggest driver to growth so far has been our freemium distribution model and the 'democratization of software' aspect that it brings," explains Sacks.
In fact, it's this bait-them-with-basic strategy that Sacks attributes to Yammer's success. "Any employee in a company can come to our website and sign up for Yammer, thus creating a Yammer network for his/her company. That is how we have gotten into 90,000+ companies and organizations in just over 2 years," he says.
A Product That Markets Itself
"Because of the viral nature of our product, we do not have to do a lot of traditional marketing," Sacks says.
When Sacks speaks of Yammer's "viral nature," he's pointing to two distinct side effects of the network: Yammer users are anxious to share how the network has helped their businesses and the network invitation process makes for perpetual sharing.
The startup harnesses the vocal nature of its clients to then attract and secure new business. "We engage with customers to capture their Yammer stories so we can share with potential customers the value that leading companies are deriving from our solution," explains Sacks.
Fad or Future?
Social networking is the buzz word du jour and Yammer has done an excellent job associating its product with big industry trends. But one has to wonder, is Yammer merely capitalizing on a fad that will soon fade? By this we mean, social media is fast becoming baked into all enterprise software, so is Yammer at risk of providing a feature as opposed to a business platform?
We'll need to give the social enterprise space a few years to shake out before we can know the answer to those questions, but Yammer's designs around its recently released application platform point to an awareness of the situation at hand.
"We recently introduced an application platform so that partner companies can build new applications on the Yammer platform and tightly integrate existing products," Sacks describes. "Companies already use a slew of enterprise applications, such as HR, SFA, and ERP, to help operate their businesses. All of those application areas can be enhanced with a social component, and we think the combination with Yammer is very powerful and valuable to customers."
Proving his point, Yammer just announced integration with SharePoint; users can access their Yammer feed from directly inside the Microsoft product. Crocodoc, Zendesk, Box.net, Expensify and Lithium are also integrating their applications with the startup's enterprise social network.
Images courtesy of magerleagues, Mr. T in DC, Flickr
Sponsored by Microsoft BizSpark