If you’re in the Software-as-a-Service (SaaS) business, by now you’d know that SaaS is no longer a business luxury – it is everywhere. There are many well-funded companies as well as start-ups that are thriving and if 2018 was an amazing year for SaaS, with software companies in the US spending $63.1billion on R&D and accounting for one-fifth of domestic R&D in the US, 2020, despite the pandemic hiccup, has only made businesses rely more on SaaS to reach out to people.
This ups the game – the next generation of SaaS companies will have to follow a different growth playbook to stand out and out-do competition. The reasons for this are:
- People’s attitude towards buying and using software is changing
- The era of the end user is here
- Companies are furiously rethinking their sales North star
There’s one other reason that’s proved to be a game changer, the one that’s helped tech giants and new ventures sing their way to success:
- The advent of Product Led Growth (PLG)
Why do SaaS ventures need Product Led Growth?
- Because of the customer’s insatiable and ever-increasing demand for experience and not cold calls
- Because the customer wants to be in full control of the buying process
- Because according to the 2018 Demand Gen survey, 65% buyers believe peer recommendations and review sites — this figure was just 20% in 2012
Therefore, those who want to chart success, definitely need to move from marketing their products to letting the product do their marketing ASAP. The future, clearly, is PLG
But what is PLG, and why should SaaS companies adopt it ASAP?
Follow the successes of Altassian, Survey Monkey, Shopify, Dropbox, etc, and you’ll know. In his blog, SaaS marketing superstar Sujan Patel explains Product Led Growth as “a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself. It creates company-wide alignment across teams—from engineering to sales and marketing—around the product as the largest source of sustainable, scalable business growth.”
PLG, says Hiten Shah, founder of several SaaS companies, in his blog, is about the “product being the core DNA of your company, so much so that the default mode for solving problems—including growth challenges—is to figure out how to use the product to address whatever issue is at hand.”
In other words, the product led growth playbook is all about the implementation of an effective PLG strategy to enable faster, cost-effective growth in this era of subscription model of doing business, where the customer is unwilling to pay for the product till, he’s sure of the experience he’ll have with it.
So, what is a good product led growth strategy?
Blake Bartlett, one of the partners at OpenView Venture Partners, specified the five traits that drive PLG companies to success in his session at SaaStr Annual 2017:
- Easy sign-up
- Deliver value quickly
- Value first, money later (making freemium models an effective tool) and,
- Seeing all users as prospective customers
To tick off all the right boxes once again, a good PLG strategy must allow you to scale up quickly, be easy on the users, be slow to hit them with those paywalls, and focus on making all customers “successful across the sales-to-support continuum”.
Why a great PLG strategy is the Brahmastra for your SaaS success
PLG’s gargantuan success stories has led to its wider adoption – and the next couple of years will see more of this trend. The attribution of the rapid growth of a slew of companies – such as MailChimp, Slack and Calendly to such strategies – makes it the go-to plan of the moment for successful as well as fledgling SaaS ventures. Here are five points that make PLG the secret weapon in your success armoury:
- It places the product in the hands of the customer at the earliest, leading to its virality.
- A product that is easy-to-use and share becomes immediately valuable and can drive user acquisition. As Jon Falker of GLIDR says in his piece in Forbes, “Users can get unique value from the product or service right away and can benefit from helping to attract other new users.” This, in turn can,
- Slash Customer Acquisition Costs (CAC) – no pre- and post-sales pitches, no cold calls – and also,
- Exponentially increase Customer Lifetime Value (CLV) and
- Help your business build a very strong unit economics hand-in-hand with user growth
What this basically means is that by giving the customer a valuable experience straight up, you egg on the product’s frequent use and shareability. By treating free trial accounts and freemium accounts as potential customers, you can focus on those aspects of your product that will drive purchasing decisions and customer retention. It’s like giving the foodie a piece of the burger and then enticing him to buy the whole instead of crying hoarse about how tasty it is by showing him a picture of the burger.
A quick look at the adoption rate of PLG tactics in the SaaS world
A quick look at why SaaS businesses need a PLG playbook – NOW
- A product led growth model can help you gain market visibility via user testimonials, which can help you slash a series of marketing costs, including workforce salaries. This leaves you with more capital to reinvest – which will reflect on the product and make your brand go viral in the marketplace.
- It’s time to embrace the end user era, and give the customer the experience he demands to make informed buying decisions. This will also make him you advocate, and help you build a strong testimonial-and-review base which will up the value of your product.
- Smart PLG practices and techniques are just the ways to out-do your peers and go beyond the limitations of the traditional tech stereotypes
To conclude, from small software companies to tech giants – all can benefit from following a smart Product Led Growth strategy. PLG hacks are no longer considered frugal, instead, they’re seen an elite differentiator that helps scaling of SaaS companies. Plus, an efficient PLG strategy that balances the best SaaS metrics and growth is your best bet in these times of financial uncertainties.