👋 Hi, I’m Kyle from OpenView and welcome to my newsletter, Growth Unhinged. Every other week I take a closer look at what drives a SaaS company’s growth. Expect deep dive takes on product-led growth, pricing, benchmarks, and much more.
We’re all familiar with the classic B2B marketing and sales funnel and the supporting jargon: leads, MQLs, SQLs, SALs, opportunities, closed won, etc.
The B2B funnel isn’t quite dead, but it’s not exactly thriving either. To be honest it never won me over because it doesn’t capture the way that people buy products— especially how people buy in the PLG era. Some of my gripes:
It mainly reflects the last mile of the buying process, which feels short-sighted considering that just 5-6% of buying activity is spent meeting with sales reps at a specific vendor (data from Gartner).
It assumes that “buyers” hold the power rather than users. Increasingly, end users discover and champion products, then tell their boss what to buy.
It ignores product and community engagement, aka the experience with the thing that someone is actually purchasing.
It’s time to replace the classic B2B funnel with a new one, this time taking into account users rather than buyers and product activity rather than simply sales and marketing activity. The New User Journey looks something like this:
🕵️ Discover: Users learn about the product typically by word-of-mouth, a product invitation or Googling a solution to an everyday problem. Your goal: drive relevant, high-intent traffic to your website while keeping CAC as low as possible.
🏁 Start: Users see potential value in the product and decide to sign up and try it for themselves. Your goal: educate website visitors on the value of the product and convert as much of that traffic as possible to free-account signups.
😍 Activate: Users actually realize the value that they were promised. Product usage grows into a habit and they become engaged users. Your goal: reduce time-to-value and guide users to their ‘aha’ moment in the product.
🤑 Convert: Users decide to take the relationship to the next level and become paying customers. They’ll usually start small on an entry-level package or pay-as-you-go plan. Your goal: generate revenue by efficiently converting free accounts into paying customers.
📈 Scale: Users deploy the paid product and decide to deepen their relationship by expanding use cases, inviting their team, or increasing their activity. Your goal: facilitate ongoing usage and expand the overall revenue generated by paying customers.
That begs the question: what does a “good” PLG user journey look like?
Along with our friends at Amplitude, my colleague Sam Richard and I surveyed 450+ software companies to find out in OpenView’s 2022 Product Benchmarks report. A few words on who was included in the data:
Respondents spanned all sizes from <$1M to $100M+ in ARR. 24% of folks had <$1M ARR, 22% had $1-5M, 26% had $5-30M, and the remaining 28% had $30M+.
More than half (55%) identify as product-led. This is up from 48% in 2020 and 45% in 2019.
Product-led companies were almost split evenly between offering a free trial or a freemium product as their initial product experience.
We summarized the New User Journey benchmarks in a helpful visual below. You should use this to get a sense for where you’re already doing well and where you aren’t so that you can focus your limited resources most effectively.
(If you’re doing well at everything, you should let me know 😉 — I’m always trying to feature insights from the best PLG startups!)
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