The freemium coconut water strategy

We were waiting outside a building to get an immigration item done. There was a friendly lady selling coconut water.

Unlike other coconut water sellers, however, she didn’t ask us to buy coconut water. Instead, she gestured toward a few plastic stools she had around her stand.

Many took her up on the offer. She was friendly and approachable and conversed with anyone who was willing. A few minutes in, she’d ask if they wanted coconut water. After enjoying her hospitality, it was much harder to say no. And given the strength of the sun in Chennai, it isn’t a very hard sell in the first place.

We asked her about her business and she shared that she sold 100-150 coconuts on most days nowadays (with higher expected revenues in the summer). Some quick math brought us to a conservative estimate of 50,000 INR per month in profits – a solid business.

That got us reflecting on her business fundamentals/strategy. She had a good product that was conducive to the environment. She then had a fantastic location with strong top-of-the-funnel awareness.

Building on these strong fundamentals, she then had a differentiated freemium strategy. Her free offering was the seating in front of her cart. She then maintained a strong upsell rate – optimized further by her approachability.

Well played.