Verkada Paying $100 For Referrals Just To Demo

By John Honovich, Published Jan 22, 2020, 01:46pm EST (Info+)

Some companies pay for referrals when the referral becomes a customer. Verkada is taking it to the next level - paying $100 referrals fees simply for a prospect to do a 30-minute web demo.

Madness or Genius?

In this note, we examine the approach, why it leverages some of Verkada's key competitive advantages against traditional video surveillance providers and why it has a strong chance of making a difference.

Program ********

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Cost **********

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Benefits **********

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Competitive *********

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Marketing ********* *******

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Vote / ****

Comments (12)

Avatar

Brian Rhodes

IPVMU Certified | 01/22/20 07:00pm

The closest parallel to this is the marketing tactics that the residential security market has used for years, also a subscription business with lock-in.

Someone maybe should point out to Verkada that specific business model is hemorrhaging money/customers and incumbents are routinely going bankrupt.

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John Honovich

IPVM | In reply to Brian Rhodes | 01/22/20 07:03pm

Well, in fairness, it is happening now, after what, decades? Verkada is in at the start of commercial video SaaS sales. My gut feel is that when you are late to something like this is when you take the most risk.

Verkada is not worried about what happens in 2040. If they can get to where they want to be in 2022 or 2024, they can get acquired at a big premium and declare victory.

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Remiel Feng

ENS Security
01/22/20 07:02pm

First post here! If the client subscribes for 1 year, a $100 gift card is pretty worthy.

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John Honovich

IPVM | In reply to Remiel Feng | 01/22/20 07:05pm

Remiel, thanks for your first comment! I think the big thing for Verkada is that if they get you for 1 year, statistically they likely have gotten you for 5 or 10 years because you sank the money already into the hardware and are then biased / driven to capitalize on that sizeable investment.

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Robert MacMillan

VXG | 01/22/20 10:01pm

I think it's pretty cut and dry. VC's gave Verkada money to spend on sales & marketing, and that's what Verkada is doing.

Let's say they spend $100,000 on this promotion (1000 qualified referrals), they can potentially get that ROI on 3-5 customers.

For example, a SMB with 10 stores or school board could easily pay the following;

30 cameras @ $1000 per camera = $30,000.

30, 1 year cloud license @ $200 per license = $6,000.

Uber and Lyft both give substantial referral bonus. As do companies like Opencare and Airbnb.

The biggest question I have is how has Verkada pitched their customer LTV to investors when they've only been around a few years? I guess in the Valley all pitches are done on potential rather than real numbers.

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John Honovich

IPVM | In reply to Robert MacMillan | 01/22/20 11:25pm

The biggest question I have is how has Verkada pitched their customer LTV to investors when they've only been around a few years?

I think they can be a reasonable estimation even with just 2 years data:

(1) A lot of customers are buying pre-paid multi-year licenses up front, which is a strong signal.

(2) For those you did not, they can see what the 1-year churn is.

(3) I am guessing they commonly see customer accounts growing, i.e., an account starts with 4 or 10 cameras but regularly adds new cameras, signaling that net churn will likely to be negative.

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Undisclosed Integrator #1

01/22/20 10:54pm

I guess they ran out of Yeti tumblers?

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John Honovich

IPVM | In reply to Undisclosed Integrator #1 | 01/22/20 11:20pm

Don't you fear! They are still offering the Yeti tumblers here:

However, interestingly, they have switched their Facebook ad campaign away from the Yeti giveaway to a free trial camera ("we pay shipping both ways"):

I'd suspect that's converting better and it makes sense since it focuses more on their product than a cup.

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Anthony Jones

01/23/20 04:42am

School districts are their biggest market right? Most school districts have rules about gifts as do many corporations, government entities. I'm not thinking this is such a grand idea.

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John Honovich

IPVM | In reply to Anthony Jones | 01/23/20 05:56am

They actually have a clause in the rules about that:

Promotion is not open to employees working for local, state or federal government institutions unless prize is used by their organization for video security purposes.

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Undisclosed Manufacturer #2

01/27/20 02:39pm

They are hiring at a break-neck pace but probably 95%-98% of the company has ZERO Surveillance experience...literally. Most of their employees seem to have come from service-based industries, copier sales or some uber-aggressive sales position that you would normally see pharmaceutical companies pull from.

From what I would assume, Verkada has positioned themselves for a buy-out as fast as possible. They're coming into the market, having inside sales reps aggressively target end-users, paying the EU for their time/demo, passing those leads to integrators (the Cisco model) and calling it a win.

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John Honovich

IPVM | In reply to Undisclosed Manufacturer #2 | 01/27/20 05:10pm

95%-98% of the company has ZERO Surveillance experience...literally. Most of their employees seem to have come from service-based industries

An example I recently saw:

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