How Does G2 Crowd Make Money? Business Model of G2


How Does G2 Make Money

Founded in 2012, G2 Crowd is a business software review website site that gives users a chance to read and write reviews for various software products and services. G2 Crowd is a leading online platform where real people share their experiences about different SAAS products and applications – giving business owners the power to choose the best solutions for their businesses.

Are you wondering how G2 makes money? If so, you’ve arrived on the right page. In this article, we’ll analyze G2’s business model in detail and list down all of its revenue sources.

G2 operates on a freemium business model through its software peer-to-peer review site. It makes its money through premium subscriptions (G2 profiles), user data (G2 Buyer Intent), and add-ons (G2 Reports).

About G2

G2 is a peer-to-peer review site in the B2B software space. CEO and co-founder Godard Able describes G2 as the Yelp of B2B Software. Obviously, G2 makes its money from some source other than its viewers and reviewers.

G2 was created from a simple idea: reviews from real people who have actually used the products they write reviews for. The vision was founded in 2012, and it continues to be a grassroots movement today as G2 reviews rely on user-to-user feedback that reflects true experiences with software products.

 

Business Model of G2

The business model of G2 is freemium. It operates a review site for B2B software. Software vendors can create profiles on the site, for free, but for companies that want to maximize their profiles, there are premium options.

G2’s main competitor is Gartner. Other competitors of G2 include:

  • Capterra
  • SourceForge
  • Experts Exchange
  • TrustRadius

Company Product/Service

G2’s product/service depends on which party you are referring to:

  • Site viewers
  • Review writers
  • Software buyers
  • Software sellers

For site users, review writers, and software consumers, the product/service is the site itself. This site by itself is not a revenue stream, but the review site is the brand and reputation of G2.

Without the site, there would be no subscriptions, or sellable data, or add-ons. Even though the site viewers are not necessarily paying customers, they constitute the actual notoriety of G2 and therefore remain an important part of G2’s business model.

For vendors, the site is a golden opportunity to attract customers through G2 profiles. If they wish to capitalize on the freemium business model, the profiles are absolutely free. If they wish to improve their profiles in order to get a competitive edge, they can contact the sales team and pay for subscriptions.

G2 also offers customer data to vendors through its G2 Buyer Intent. It should be noted that this data is not the personal data that can be used to subject customers to unwelcome sales calls or fraud scams. Rather, this is customer data in aggregate that is simply used to identify buyer behavior in aggregate.

G2 also offers content licensing as a service to vendors with profiles. This licensing allows vendors to use the content on their profiles as they see fit for their own marketing plans. G2 also offers to improve this licensed content by transforming said content into social assets.

 

Marketing

G2’s best marketing is its own review site. The various software companies that have profiles on G2’s site have a vested interest in G2’s success. The traffic the site has, the more exposure the vendors have. Therefore, the vendors, buyers, and review writers can do G2’s marketing for them.

 

Expenses

G2 has the standard expenses that we would expect any platform to have. They do not, however, have to store product inventory because their product is digitalized.

While they do have offices, they do not have to deal with customers face-to-face as one would have to do with a brick-and-mortar business.

Obviously, G2 needs technologically skilled employees to maintain its site and services.

 

Plan for Profit

G2 intends to make a profit through its revenue streams:

  • G2 Profiles
  • G2 Buyer Intent
  • G2 Reports

Even though G2’s valuation and funding are growing exponentially, making a profit is not G2’s priority right now. G2 is not making a profit because it is still in its growth stage according to CEO Godard Abel.

As mentioned before, Abel has compared G2 to Yelp, a review site that is also free for viewers and reviewers. It might not be unreasonable to compare G2 to social media platforms like Facebook.

In the beginning, Facebook was not making money. There was a conversation between Mark Zuckerberg about charging fees for Facebook but Zuckerberg was adamant about keeping Facebook free. He knew that if he charged a fee, Facebook would stop being “cool”.

He knew that maintaining coolness over the long term was more important than chasing short-term profits. He had enough faith in his company and in himself to make short-term sacrifices for long-term gains. Obviously, Facebook is now making a profit and the investors that have put their faith in Zuckerberg have been handsomely rewarded.

One could argue that Abel has a similar vision. In Abel’s case, however, there is no sacrifice at this time.

The truth is that G2 has some powerful backers like HubSpot and Salesforce Ventures. Salesforce Ventures is the investment arm of Salesforce and CEOs like Marc Benioff are not going to let Able and G2 fail over a matter as simple as not making short-term profits.

 

How Does G2 Make Money?

G2 Profiles

As part of the freemium model, some profiles are free. G2 CEO Godard Abel even admits that the $27.7 billion company, Slack, for example, manages to get great exposure, despite not paying for any premium services, due to its great reviews.

Regardless, many software companies that are not in the position that Slack is in would like to have more exposure by having a profile with more features than G2’s free profile.

For such companies, a paid subscription is an option. These paid subscriptions are also a revenue stream for G2.

A G2 profile allows you to:

  • Promote software
  • Promote service
  • Identify buyers
  • Start appearing in G2 reports that are used by millions within the B2B software market
  • Collect user reviews that 95% of customers read before buying a new technology software or service
  • Display compelling customer reviews
  • Display compelling customer quotes
  • Display compelling customer videos
  • Engage buyers with video reviews
  • Get needed feedback to enhance products
  • Get needed feedback to streamline services
  • Get needed feedback to create the best customer experience possible

It should also be noted that G2 is continuously developing SaaS-type subscriptions, so G2 Profiles is not the only subscription that is a revenue stream for G2. G2 Track, for example, is a platform that assists companies in the tracking of their software and platforms for optimum business outputs regarding a host of items:

  • Vendor data
  • Invoices
  • Renewals
  • Compliance

Like G2 Profiles, G2 Track operates on a freemium model and offers a free package. It does, however, have premium packages as well and is also, therefore, a revenue source as a paid subscription.

 

G2 Buyer Intent

The G2 Buyer Intent service allows vendors to access viewer data in order to identify potential buyers. In that way, vendors can target their messages with perfect timing.

With G2 Buyer Intent, you can also find out:

  • Which companies are researching your product
  • Which companies are researching your category
  • Which companies are researching your competitors
  • Who is the right person at these companies to contact

Based on this data, you can create ABM campaigns that speak to the specific needs of your target audience. This type of business intelligence is crucial because the most compelling and persuasive marketing is targeted and personalized.

Furthermore, G2 Buyer Intent will tell you when your current users are actively looking at competing solutions. Otherwise, you will not know that a customer is making a decision until it is too late.

 

G2 Reports

As stated before, G2 does not charge for writing or viewing reviews. It does, however, offer marketing add-ons to vendors. G2 claims that about 2% of its 56.000 products reviewed on G2 have a paid “premium profile”.

A premium profile allows the vendor to add its own videos and content to the profile page. Furthermore, the vendor has access to “metrics on the types of people viewing the profile”. These metrics can be invaluable for any CBR systems the vendors want to employ.

Because G2 allows vendors to license content with this service, vendors can implement that content that influences their prospects as they see fit. Vendors using this service can also allow G2 to transform licensed content into social assets for social media channels like LinkedIn and Facebook.

This licensing includes:

  • Quarterly reports
  • Social assets
  • Video reviews
  • Other content proven to influence prospects

 

G2 Funding and Valuation

Funding is not a problem for G2. Although rounds B and C are not available in this table, it is plain to see that the funding for Round D was nearly an 80x increase from the Angel Investor, Auren Hoffman, in 2013.

Other notable investors include Hubspot, Permira, and Salesforce Ventures.

DateFunding at each stage (Angel Investor + Rounds A and D)
Feb 2013$2 M
May 2014$2.25 M
Jun 2021$157 M

Apparently, investor appraisal of G2 is not a problem either. Over the course of 4 years, G2’s valuation has increased over 7x.

DateValuation
May 2017$130 M
Oct 2018$500 M
June 2021$1.1 B

 

Is G2 Profitable?

G2 is not profitable at this time. G2’s leadership is spending a lot of their money on growth, according to G2 co-founder and CEO Godard Abel.

While G2 Crowd is not profitable, they are still growing very quickly and trying to figure out the best way to use the funds they have raised. Their current focus is on growth rather than earning profits.

As stated before, Abel has the backing of powerful CEOs like Marc Benioff that lead real unicorns like Salesforce. Because G2 is based on a freemium model with a growth-based long-term strategy, following in the footsteps of unicorns and godzillas like Yelp and Facebook, G2 and Abel are under no immediate pressure to produce a profit.

 

Conclusion: How Does G2 Make Money?

So there you have it, an inside look into the exact formula of how G2 Crowd makes money.

Overall, the idea behind G2 Crowd is simple: it gives users the chance to provide honest reviews and insights for software they have recently used. By doing so, people can get a really good understanding of what they’re buying and find out whether it’s worth their investment.

The website has a very strong reputation, and it helps business owners discover the best technologies for their businesses.

That’s it for now…thanks for reading. We took the time to write this mainly to help people curious to know about the revenue sources of G2.

If there is an area that we haven’t covered in this guide, please let us know through email, and we’ll be happy to help you with your inquiry. If you enjoyed reading this post, please share it with your friends, and check out our other posts.

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