Evernote's Secret To Getting Free Users To Pony Up

Hint: It's not digital.

Born as a digital-note taking service, Evernote has successfully extended its brand to physical goods created by others: Post-it Notes, Moleskine notebooks, scanners, wallets, even socks. Continuing this trend of building products for productivity, the company on Tuesday debuted a set of desktop vessels to keep workspaces organized.

The company launched Evernote Market at its developer conference last fall, selling an array of physical products. The message from the confab was clear: Evernote might have set out to eliminate unorganized stashes of paper notes, but the future is not paperless. "We declared a ceasefire between pen and digital," CEO Phil Libin said then. "You're still going to have physical products. Your sense of touch isn't going away. People still want nice-feeling, beautiful things."

Since then, Evernote Market has reported $10 million in gross revenue, averaging about $1 million a month, and the online store is expanding to China, its fastest-growing market and the second largest one overall. Its bestseller is the Evernote Moleskine, with more than 450,000 sold through Market and retail channels. The Evernote Scanner, a collaboration with Fujitsu ScanSnap, is the highest-grossing product, thanks to the hefty $500 price tag.

An Evernote event held in a Beijing mall in the spring.

What's perhaps most intriguing from this experience is Evernote discovered that selling physical goods is an effective way to monetize its free users. Evernote counts 100 million users, but declined to say what percentage of them pay for its premium or business product. Among Market customers, 49% are paid users of the service, and of the remaining 51%, 41% are existing free users. "The first time they paid Evernote anything was with a Market purchase," vice president of design Jeff Zwerner tells Fast Company.

Evernote is hoping to convert more free users with its latest batch of products. The Pfeiffer Collection is a line of desktop vessels—iPad stand, pencil holder, and tray—designed by Zwerner and Eric Pfeiffer. While many accessory makers look to Apple for inspiration, mimicking the Cupertino, California company's aesthetic with brushed-metal peripherals, Evernote went the other direction. "We don't want to be matchy-matchy with Apple," Zwerner says. "The interesting part of what we're doing is we're trying to bring the natural and synthetic worlds together, which is a lot harder than you might think."

Evernote sourced wood from Wisconsin and plastic from China to manufacture this set of desktop accessories in Petaluma, California.Image: Evernote

Such is the case with the set of products that feature walnut sourced from Wisconsin and plastic from China, with assembly done in Petaluma, California, about an hour and a half north of Evernote's Redwood City headquarters. "It takes a village," he jokes. These products range in price from $25 for a pencil cup with a slot in the middle to hold a smartphone (not a stand per se, since the screen is obscured) to $45 for a tray with a removable cup featuring a secret compartment. Evernote is also selling a plastic slotted cup for $20 and a set of plastic cups, which can be used individually or stacked on top of each other, for $25.

The company also wanted to offer colorful, more affordable desktop vessels as well.Image: Evernote

According to a customer survey, Evernote says, desktop accessories such as these were the second most popular request for products to help with organization. As for that first one, Zwerner wouldn't say what it was, but noted it's in the works—possibly for launch at the Evernote conference in San Francisco in October.

"Looking 10 months after [Evernote Market's] launch, we've proven that not only did people understand the value of it and appreciate it, and purchased it in meaningful quantities," Zwerner says, but "we also created an entirely other revenue stream for the business."

[Image: Flickr user Othree]

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