SaaS growth and the Pandemic

With the recent user growth of Slack, Zoom and other SaaS companies during the Covid 19 pandemic, will one of the success trends or lessons learned post-pandemic be Product Led Growth (PLG) that leads to sales growth and dollar based net expansion? Could the lack thereof be part of the reason for the sales struggles recently experienced by ZS and NTNX who need access to C-Suite Execs to sell their digital transformation solution across the enterprise?

“More business buyers want to experience the product on their own before considering purchasing. This is already happening — in fact, nearly 50% of B2B buyers already made up their mind before talking to sales reps (source). The social distancing during the coronavirus crisis accelerated and accentuated the need. When a user can sign up for the product for free, get to the AHA moment fast, really understand the value of the product on their own, and establish a habit of usage, they’re that much more likely to want to continue using the product and even advocate it to their IT department. When that user is a business buyer, you have struck gold.

Product Led Growth (PLG) is an end user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion, and expansion.
How does it work? PLG companies typically use a bottom-up approach to go after the end-user first and focus on delivering consumer-grade user experience so that users actually engage with and love the product to an extent to become product advocates. Existing users invite new users in a viral loop, reducing user acquisition costs. Users are more likely to upgrade and expand, increasing LTV and net-dollar-retention. When IT or Procurement departments get involved, the end-users already have been using the product actively, making the sale of enterprise plans a lot smoother and faster.”

In summary, the coronavirus crisis will challenge the traditional sales-driven growth model now and will have a long-lasting impact. It’s prime time to consider establishing a bottom-up self-serve growth model to empower your end-users to experience and understand your product’s value, in order to lower your acquisition cost and increase the probability to convert to active and paid customers. Onboarding, activation, retention, engagement, monetization, customer success, and lifecycle marketing are all key components that require persistent experimentation, careful orchestration, and innovative thinking to break out of the box.
We’ll likely see more SaaS businesses transition from a “Sign a multi-year contract and forget the customer until renewal time” model to a “Try the product for free and you’ll love it so much to continue the subscription forever” product-led growth model to keenly focus on the end-user experience and delivering consistent and ever-increasing value.“

https://medium.com/@Holly_Chen/why-product-led-growth-is-the…

sjo

8 Likes