How Lucidchart grew to 13 million users on land-and-expand strategy
Lucidchart is a cloud-based diagramming platform best known for its freemium model—a model that jump-started the company’s journey to its current 13-million user base. You probably also know this company from its viral doggos, puppers, and cattos diagram videos.
Here’s a quick look at Lucidchart’s success so far:
- Utilized in over 180 countries by various job functions
- Trusted by 96% of the Fortune 500 companies
- Used by customers such as Google, Amazon, Cisco, and Intel
- Receives around 500,000 sign-ups every month
Dan Cook is the senior vice president of sales and customer success at Lucidchart. He started out in technology investment and then worked with Polaris Venture Partners and earned his MBA from Harvard. Cook joined Lucidchart over four years ago.
As part of our Secret Sauce to Sales by Freshsales interview series, we sat down to discuss his journey in building Lucidchart’s sales organization from the ground up and scaling to an enterprise model with his team.
Considering Lucidchart runs on a freemium model, how do you pitch the product and scale it to an enterprise model?
Our freemium model definitely gives us an advantage because we already have employees within companies that are using our product. For instance, there may be about 15-20 paid or free users of our product within a company.
We leverage the fact that the company already has so many employees using Lucidchart to diagram processes, systems, or networks that are proprietary to the company.
Our team then calls key stakeholders, sells the enterprise version, and rolls it out to the users.
Our points of contact are mainly the directors of IT or software asset management teams. We tell them why as a company, they should move to enterprise and scale the platform across verticals.
The value proposition to the end user varies from sales to business operations to network engineering. But, when we first talk to the management, we try to solve the problem of shadow IT. We teach them how to make sure that our platform is being used in the most appropriate and secure way within their organization.
Let us talk more about your value proposition. How does it work when you’re convincing them to buy the enterprise version? What do the teams get out of it?
We split the value proposition into two groups. The value to the end user is a consolidated diagramming subscription. You’d be surprised by the number of applications being used in an organization for the same purpose, whether it be Visio, deployments that work on Mac, or other long-tail diagramming applications.
We tell them that they no longer have to convert diagrams into other formats to be compatible across operating systems— they can just work with their colleagues on the same online platform without emailing versions of diagrams back and forth.
We also show them how we provide a variety of other features that can benefit the company itself. For instance, we offer free view-only users for the entire organization on an enterprise account, which allows anyone at the company to view the diagrams and collaborate more effectively. Putting everyone on the same system helps streamline communication and increase collaboration.
The second group we work with is the IT buyer. We have found that there are a couple of key pain points that our enterprise solution solves for them. First, the consolidated diagramming experience is completely controlled by the company and offers integrations for secure logins.
Second, an enterprise account provides peace of mind for IT with what we call document retention. When people use Lucidchart on their individual accounts, they take all that data with them when they leave the company—that makes it difficult for the company to ensure no proprietary data is leaked.
With a centrally managed enterprise account, employee accounts are deactivated as soon as they leave, ensuring information stays within the company.
How does your outbound sales process work? Is there one?
Again, we have two parts to our outbound motion. The first motion is what we just discussed. We target companies that already have some form of adoption. We reach out to them and sometimes even ask them whom we should be talking to. Though it’s a semblance of outbound, that’s our core play.
While it’s a fairly new initiative, we are determined as a company to become a visual productivity platform with vertical-specific solutions. We recently launched the Lucidchart Sales Solution, which is designed specifically to help streamline sales organizations and empower them to close bigger deals faster. This new solution brings us to our second outbound motion.
As we’re evolving from a freemium company, we’ve developed a more traditional outbound process. We conduct discovery calls with sales and customer success teams to understand how they visualize their sales strategies for different accounts. It’s certainly changing the way we are now approaching our GTM.
At what point do you decide if it’s going to be an inbound or outbound motion? What’s the catalyst?
We have a pretty nice inbound flow. If someone goes to lucidchart.com, we have some self-serve options. But if they’re interested in the enterprise subscription, we ask them to fill out a form. That information then goes to a team whose job is to respond to and qualify those buyers. That’s a separate process, and we have a whole team dedicated to what we call inbound.
From an outbound perspective, we have territorialized our team of account executives. We’ve divided the world into relatively equitable chunks, and the accounts they focus on have at least 20 users of our product.
How big is your sales team today? What’s the structure like?
Our sales team now comprises close to 80 individual contributors, with eight of those being part of sales enablement and sales ops. We have divided the 70+ sales reps into a couple of different teams.
The sales development team is inbound-focused only and includes around 10 reps. Their job is to quickly respond to form submissions that come through our website, as well as to phone calls. Sometimes they even work on support tickets with sales intent.
The other team is made up of our account executives. We have allocated them to different sizes of businesses: SMB (1-100 employees), corporate (101-2500), and enterprise (2500+). We also have a small, strategic group of around 30 people that help close deals across segments.
Finally, we have an account development team that works exclusively with our enterprise reps who are outbound-centric. The account development team calls into large businesses such as IBM, where there are thousands of Lucidchart users scattered across the organization.
With a company that size, they are trying to build pockets of adoption across departments that will eventually lead to departmental usage and then hopefully lead to a massive, company-wide deployment.
Another new initiative is on the education front, in which a group of six employees work exclusively with educational institutions interested in buying Lucidchart.
We are presently based out of Salt Lake City. Since we don’t have global offices yet, our teams just work in different time zones. We do have plans to expand to Europe in the next 12 months and eventually into APAC with some sales presence.
What’s the most common sales objection your team hears from other leaders?
We deal with a different kind of sales objection. When we engage with companies to try and upsell our enterprise solution, the biggest question we get asked is how our enterprise offering differs from our self-serve solution and why they should pay more for the former. We deal with this objection by doing some really good discovery before getting into pricing discussions.
We believe there’s value in our enterprise solution, so we ask the right questions that help us understand how the company wants to handle the purchase and what their current pain points are. We find out if our product can provide value to that particular company, especially relative to our competitors like Visio, and train our team to push that value.
Just the other day, a Fortune 500 company asked us why they should upgrade when they could stay on a team account. We explained that with an enterprise account, they could manage all their teams using Lucidchart under a single umbrella and start using our single sign-on integration. After understanding the benefits, the company decided that moving to enterprise was the right decision for them after all.
Speaking of competitors, we understand that Lucidchart is the popular alternative to Microsoft Visio. How do you differentiate yourself from the rest?
We are grateful for Microsoft Visio. They have been around for a long time now, and they’ve taught people about the value of using a dedicated diagramming application. However, Visio is outdated and a classic Microsoft style product. There hasn’t been a lot of innovation since it was acquired in 2000.
We think when you combine a much easier-to-use diagramming interface with the capabilities of the cloud and integrations across platforms, you have a robust offering. Lucidchart offers all of that, and we’re still less expensive than Visio. We can beat Visio with the cloud promise, and we can beat our cloud competitors with the enterprise promise. That’s what sets us apart from the competition.
While companies like Visio have massive scale distribution, we combat that with our freemium model. Our marketing team has also done a fantastic job ensuring Lucidchart always tops the listings.
What do you think are the top 3 reasons for LucidChart’s success?
The first reason is that people recognize a need for visuals while trying to communicate and collaborate with teams. When I interact with our engineering team, we might be speaking different languages when we only use words to communicate. However, when we take what we’re trying to say and put it into a visual, it enables greater clarity between teams and individuals. They’re right when they say a picture is worth a thousand words.
The second reason is that we are an enterprise-grade product that’s easy to use. Combine that with collaboration, integrations, and cloud capabilities, and you have yourselves a winner. We are also continuing to grow internationally. We just launched Lucidchart in six different languages—French, Spanish, Portuguese, Dutch, German, and Japanese.
Another factor contributing to our success is our product cost. We offer a freemium model that lets people try before buying, and our pricing is attractive too.
What are the top three metrics you like to monitor?
Then, we look at the pipeline creation for the deal pipeline value, which is our efficiency metric, so we can see if those calls and emails result in the pipeline.
Lastly, we look at our closed deals to understand and make sure we’re heading towards our target numbers.
What sales principles does your team swear by?
Our company values are fairly straightforward, but I think the one that resonates with me the most is the concept of teamwork over ego. In sales, you have to have some ego in order to bet on yourself to go out there and sell. But, we think there’s a team aspect to selling.
I like to compare a sale to that of an individual matchup in cricket or baseball—the hitter versus the pitcher. There’s this need for people around you in order for you to really succeed. You need someone to be on base, someone out in the field to catch the ball, and so on and so forth. So we’ve tried to drive that teamwork concept into our culture, and one way it manifests itself is by asking a lot of questions.
We want people to feel like they can ask questions, and they should never feel like there’s such a thing as a dumb question. It becomes an ego issue if you don’t feel like you can ask the question. We want people to feel like we’re winning as a team or losing as a team. We want to help each other and build a collaborative environment.
In your opinion, what’s the most misguided sales practice?
I think there’s a lack of patience in sales when it comes to career path and progression. But, sometimes you do a disservice to yourself when you don’t spend enough time in each of the different sales roles to really understand how the machine works or learn the required skills.
I find a lot of our reps want to be promoted quickly to an account executive role, and I don’t blame them. The pay is better. But, what about the skills that you can gain while specializing on prospecting or qualifying or just asking good questions? I believe there’s something to be gained from just spending a lot of time in a role and being patient in terms of career progression. In the long term, you’ll be better off when you get really good at different stages of selling.
Another misguided practice is getting paid to hit numbers. I think it’s really important to understand that hitting numbers doesn’t have anything to do with getting paid.
While I’m not advocating that it shouldn’t exist, sometimes sales is an apprenticeship business. It’s a mentorship deal, and it will take more than a couple months for someone to really learn what he or she is doing.
They say the leading predictor of success in a sales role is the amount of time you’ve spent in the seat. As a sales leader, I firmly believe this has been the case for me, and I’m sure others feel the same way too. We lose patience and think people need to be performing right out of the gate. It can take time, and everyone responds differently.
So, build a little bit of buffer into sales plans and make sure people have enough time to ramp up effectively so they don’t feel too much pressure to hit the numbers right away. There is value in this approach because it means you’re going to spend more time learning, asking good questions, and so on.
What do you look for when you’re hiring for someone at Lucidchart?
We’re believers in the hiring concepts presented in The Sales Acceleration Formula written by Mark Roberge. The book talks about finding individuals who are coachable and teachable, and we think that’s a leading indicator for success.
I also look for characteristics like competitiveness and the ability to be autonomous without constantly requiring motivation.
What books would you recommend for sales reads?
The one by Mark Roberge that I mentioned previously is very foundational. It covers how you build a sales team and the things you need to know before you start to build.
The second one I’d recommend is Extreme Ownership: How U.S. Navy SEALs Lead and Win by Jocko Willink and Leif Babin. It’s about the concept of no excuses, and it discusses how to take ownership as a leader when things don’t go well, and how to solve those challenges.
The third one is Never Split the Difference by Chris Voss and Tahl Raz. It’s an interesting book about negotiation.
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