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Following the evaluation Over the past 12 months, the phrase “effective growth” has been echoing in SaaS boardrooms around the world. Every software leader wants to show a clear path to increase revenues, reduce costs and achieve profitability.
At the core of this discussion is product-led growth (PLG), a strategy that employs expensive marketing, sales, and success organizations to acquire, generate, and retain customers through a product lens.
Like Figma’s $28B acquisition by Adobe, ChatGPT’s two-month competition to 100 million users, and Hubspot’s PLG pillar to nearly $2B in revenue, most SaaS boards want to know how they can benefit from this proven fact. Sales activity. PLG is urgent, not optional.
We analyzed data from over 30,000 SaaS companies with over $28B ARR collectively generated by the Paddle and ProfitWell platforms to find out what a well-tuned and well-oiled PLG strategy can do. Based on this information, I believe there are five key ways software companies large and small can increase their product-driven, agile growth.
We analyzed data from 30,000+ SaaS companies that generated over $28B ARR to learn what a well-oiled PLG strategy can do.
1. Fix the leaks in your funnel
With your product handling most of your customer acquisition and retention in a PLG setup, you may experience what’s known as ‘culprit’ – customers involuntarily abandoning your service due to leaks in your funnel.
This can account for 20-40% of your total churn rate and is often associated with failed payments, which means streamlining your billing processes should be a priority. Common ‘leakage’ in fungi to look out for include:
- Insufficient customer fundsIt is especially common for limit payments on credit cards. To fix this, try retrying payments – using smart technology is more likely to be successful – or offer payment methods that can access multiple sources of funds, such as PayPal.
- Cross-border marketing failures, which sometimes happens due to different levels between banks. A stronger solution is to bank locally where your customers are located or use a payment provider that already has a local banking relationship.
- Currency talksIt can often create fraud triggers. To prevent this, it’s important to sell to customers in local currency: our data shows that doing so can increase payment acceptance rates by 1 to 11 percent.
2. Go hybrid or go home
Remarkably, product-driven development activities allow the product to take center stage, with acquisition, conversion, retention and expansion being driven by the product itself. Instead of scheduling a demo with the sales team, customers are often offered trial, premium models, and other calls to action, which streamline the acquisition process.
But that doesn’t mean sales aren’t important, especially as your company grows. The industry is full of success stories where small SaaS companies have graduated from a purely product-led growth strategy to a sales-led or sales-led growth movement (SLG). As they do so, their customer base will shift from individual users and small groups to large businesses. Check out the trajectory of some of the cloud’s most successful names:
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