A shift from sales-led to product-led
From a marketing and sales perspective, Product-Led Growth is a game-changer. Rather than stuffing leads into a leaky funnel, you are retaining happy customers who spread the word to others.
Truly great software companies are built to be product-led
We are at the tipping point. The software market is continually evolving, and we are witnessing the rise of the end-user. SaaS companies must adapt if they want to remain relevant.
But most businesses remain stuck playing along with the old playbooks:
- Sales-led companies are still using cold-emailing, outreach, and cold-calling.
- Marketing Led companies reamin focused on blogs, landing pages and nurturing leads with automated emails.
THE OLD WAY IS OBSOLETE
Hunting for high-budget executives or lead nurturing is a losing proposition. It’s slow, complicated and inefficient. 98% of Account and Marketing-qualified leads never result in closed business.
Market dynamics and consumer behavior have changed and consumers expect to use software and receive value from it before buying.
The new wave of product-led companies flip the traditional sales model. Instead of pushing buyers to go through a long, drawn-out sales cycle, they give them the the trial or freemium versions of the actual product.
The new PLG growth model
Pirate metrics model AARRR reflects how PLG companies scale. They acquire the customer, generate some revenue, ensure retention and finally receive referrals from successful customers. The cycle goes again.
Acquisition - the number of users who sign up for your free trial or freemium plan
Activation - activation rate is expressed as the percent of users who have achieved value, out of total acquired users
Revenue - average contract value (ACV), monthly recurring revenue (MRR), average revenue per user (ARPU)
Retention - the number of users who continue using or paying for your product
Referral - the percentage of current users who successfully refer your product
Despite the PLG promise, it still has its own challenges. Having a great product is not enough.
The main issue – how to transition prospects from trial users to long-term customers.
Done wrong, it can sink your customer relationship before it’s even gotten off the ground.
From One-size-fits-all to Personalized onboarding
Most SaaS companies fail because they provide the same generic onboarding experience for every user. Distinct segments of customers have varied needs, motivations, knowledge and skills. Clients also belong to industries that require a different implementation of the same product.
SaaS companies have to adjust customer onboarding processes based on user data. They need to create distinct onboarding journeys that focus on user roles (industry or position), expertise (new or existing user) and behavior (progress or fallback).
TRIGGER THE PLG GROWTH ENGINE
The more complex the product, the more onboarding matters. Educating and guiding your customer is difficult, but it is the only way to trigger the PLG growth engine AARRR.
Personalizing the user onboarding experience is the key here.
Segment the audience and deliver targeted engagement messages: in-app chat, email sequence, product tours and in-product calls to action.
GUIDE YOUR CUSTOMERS
Journey-based engagement guides different segments of customers and educates with the key features and capabilities of the product.
If done correctly, this is the perfect user onboarding experience that helps new customers to cross this chasm and succeed with the product.
THOSE THAT SCALE
Slack. Organizations adopt Slack initially as part of our self-service goto-market approach. Organic growth is generated as users realize the benefits of Slack.
Zoom. User happiness is the central element of Zoom’s growth flywheel: happy users invite people to Zoom meetings, more people discover Zoom, invitees create their own Zoom accounts, they invite people to Zoom meetings. They’ve made the process of adopting Zoom as frictionless as possible, allowing people to join or host meetings for free.
Shopify. Did not just to sell their product to customers, but also helped them become more successful on the platform. The more money customers made, the more new users joined Shopify.
Those that FAIL
Color. Photo-sharing service that allowed to see pictures made by nearby users. The app was complicated to navigate – it had a bizarre user interface, which used strange invented characters for basic functions. Onboarding was broken: users would use the app once, and never return again. Just a year and a half after launch, the service was closed.
Shyp. On-demand shipping service. Users took a picture of the object they wanted to ship and a courier would arrive to pack it. Although Shyp had a novel concept, it also had an extremely high churn rate. The service was complicated to understand; users did not understand the process flow – how to start, where to go next when to expect the courier to arrive. User frustration became a drop-out problem and Shyp had to stop its operations in 2018.
What is the common thread?
PErsonlized ONBOARDING JOURNEYS
SaaS onboarding SOLUTIONS
Create a Source
Create an event
Create a segment