following feedback collapse of the last 12 months, the phrase “lean growth” is reverberating in SaaS boardrooms around the world. All software leaders seek to increase revenue, reduce costs, and demonstrate a clear path to profitability.
At the center of this conversation is product-led growth (PLG), a strategy that views customer acquisition, monetization, and retention through a product lens, rather than hiring expensive marketing, sales, and marketing organizations. success.
With prominent examples such as Adobe’s $28 billion acquisition of Figma, ChatGPT’s two-month run to 100 million users, and Hubspot’s pivot to PLG that has helped drive nearly $2 billion in revenue, most of SaaS boards are looking to understand how they can benefit from this proven sales move. PLG is fast becoming a necessity, not a choice.
To find out what makes a fine-tuned and well-oiled PLG strategy, we analyzed data from more than 30,000 SaaS companies that collectively generated more than $28B ARR through the Paddle and ProfitWell platforms. Based on this data, I believe there are five key ways that software companies, large and small, can leverage their efficient product-based growth.
To find out what makes a well-oiled PLG strategy, we analyzed data from more than 30,000 SaaS companies that collectively generated more than $28 billion ARR.
1. Fix the leaks in your funnel
With your product handling much of your customer acquisition and retention in a PLG setup, you’re likely to experience what’s known as ‘rogue’ churn – customers leaving your service inadvertently due to leaks in your funnel.
This can account for 20-40% of your overall churn rate and is typically related to failed payments, which means improving your billing processes should be a top priority. Common funnel “leaks” to watch for include:
- Insufficient customer funds, which is particularly common for payments made with credit cards with limits. To fix this, try retrying payments, using smart technology to do so at a time when you’re most likely to be successful, or offer payment methods that can access multiple funding sources like PayPal.
- Failures in cross-border transactions, which sometimes happens due to different standards between banks. A solid solution is to bank locally where your customers are, or use a payment provider that already has local banking relationships.
- currency talks, which can often create fraud triggers. Selling to customers in their local currency is essential to avoid this – our data shows that doing so can increase payment acceptance rates by 1-11%.
2. Go hybrid or go home
Unsurprisingly, product-driven growth moves allow the product to take center stage, with acquisition, conversion, retention, and expansion driven by the product itself. Instead of booking a demo with a sales team, customers are often offered trials, free models, and other self-service calls-to-action, streamlining the acquisition process.
But that doesn’t mean sales aren’t important, especially as your business grows. The industry is full of success stories of small SaaS companies graduating from a purely product-led growth strategy to a sales-assisted or sales-led (SLG) growth strategy. When they do this, their customer base shifts from individual users and small teams to larger companies. Just look at the track record of some of the most successful names in the cloud:
—————————————————-
Source link