If you’re in the SaaS business you probably have already heard of product-led, and might even have already questioned or applied the approach.
As the latest trending topic in the SaaS world, it is (quite rightly so) launching the most vivid debates.
But as with anything new and promising, the product-led approach still is a work in progress - and its framework not set in stone just yet.
Is product-led the tabula rasa answer to every SaaS owner’s questions? And should all SaaS companies get into a “to be or not to be product-led” existential conundrum?
Or is product-led less of a rigid playbook than a mindset and processes most SaaS have failed to unleash to maximum potential?
We believe the latter to be true. And product-led teams to be found everywhere in SaaS companies.
1.Product-led growth is a golden ticket
Product-led growth was initially coined and described by SaaS expert VC firm OpenView as “the go-to-market strategy that relies on using your product as the main vehicle to acquire, activate, and retain customers.”
Does it work? Yes. With a median enterprise value (EV) 2x higher than the public SaaS index as a whole - as far as growth strategies go, product-led does seem to make wonders.
“The future of growth is product led. Data shows that companies leveraging a Product-Led Growth strategy perform better on average – faster growth, higher margins, lower burn and stronger valuation multiples. Product-Led Growth will soon become the norm, making it table stakes for SaaS companies that want to win in their markets.” – Blake Bartlett, Partner, OpenView
But why is that? Well..as pointed out by product-led pioneer advocate Wes Bush in his seminal book “Product-led Growth: How to build a product that sells itself”, the increasing relevance of the approach is triggered by 3 market shifts impacting all SaaS:
⇒ Startups are much more expensive to grow (with customer acquisition costs on the rise)
⇒ Buyers now prefer to self-educate
⇒ Product experiences have become an essential part of the buying process.
Looking closely, these 3 shifts do indeed impact the most important stages of a SaaS life: Acquisition, Expansion, Retention. And build a strong case for people to see that SaaS magic actually happens in the product and make user experience a priority in everything they do.
Thankfully, this reality has shed some light on many of today’s most successful organizations, providing us with a wide array of product-led success stories.
2.The case of “native” product-led companies
Dropbox, Slack, Calendly, Mailchimp… All these amazing SaaS are native product-led companies.
As a common characteristic they make their freemium offers a real epitome of their acquisition strategy - and reap the following benefits:
- Widened top of the funnel
- Increased conversion rates
- Better cash-allocation.
How come? By letting their freemium act as an accelerator of user experience.
Instead of getting into long marketing and sales cycles which eventually lead to a demo, customers try and experience the product in a click or two.
Once removed, this entry-barrier opens up a wide range of opportunities for self-education (nurtured by the companies) and product experiments, resulting in a reduced need for marketing and sales at this wider end of the funnel.
Finally, the actual needs of the new freemium signups will be confirmed within the product by the analysis of their autonomous product use and behavioural patterns, as to eventually becoming Product Qualified Leads (PQL) with a much higher conversion rate.
If done well, for these companies, upgrading their customers to a paid plan is a much easier task to tackle.
After, and over the course of their customers' life-cycles, including through upsell opportunities, native product-led companies of the likes of Dropbox, Slack, or Calendly, continue to fuel customer relationships with product data to ensure lasting satisfaction.
But is product-led growth for everyone? While it is possible to apply this magic recipe to many SaaS, there is no “one size fits all” solution to growth and according to your target market or technology product-led acquisition channels such as freemiums will not help you grow your business.
But if your product doesn’t really sell itself, requires strong marketing and sales efforts because you operate within a niche market or that you sell a complex solution that requires human interaction and strong support to show its value, a product-led approach can still, and should still, be the fuel on which you should build your clients success and therefore yours.
3.Empowering product-led teams
On top of being indeed a great go-to-market strategy, product-led is also, and mostly, a mindset and organizational matter.
It is not a question of being tech touch or high touch, of having a freemium or not. It is how you relate and assess your customer’s satisfaction with the product you provide, how you share this information across your company and how you use it to increase your revenues.
SaaS recurring revenue model means that growth revolves entirely around your customer’s lasting satisfaction with your product - hopefully long after sign-up.
As such, teams involved in revenue generation should be concerned by the way the customers interact with the product at all times.
But while many SaaS monitor a certain amount of data - never enough! - it is often siloed and aggregated in a way which only serves its supposed assigned role within the organization.
Instead, and for all SaaS sake, a product-led team should be any team using product insights as the foundation of its revenue generation efforts - be it marketing or sales focusing on increasing conversion or a customer success working on increasing product adoption.
Start empowering your product-led teams.
Salesmachine is a powerful, easy and complete solution that empowers product-led teams within your company. Salesmachine connects with your product and provides your teams with the necessary insights and tools to engage with the right user at the right time with the right context - so you can always be in the know and act accordingly.