Product Led Retention
Building SaaS for keeps
I’m going to do one of those slightly annoying things that we VCs do. Write down something relatively obvious, but couch it as if it were something profoundly insightful. Then share aggressively.
Over the last couple of years I’ve learnt a lot from Dave Kellogg. Amongst other things, he introduced me to some of the leading thinkers and builders in Product Led Growth. Many VCs now wax lyrical about the benefits of PLG, and in the main, they are spot on the money. PLG has helped and will help build some mighty businesses, and has reshaped how many businesses build software.
It is developing rapidly as a discipline and consistent practice in modern SaaS. Even product managers and sales leaders deep in enterprise sales software land should spend time understanding PLG. There are some great resources (for instance from correlated and Gainsight) and books to learn about PLG, so there is really no excuse to not know about it.
The future of sales in the enterprise will involve a dynamic mix of Sales Led Growth and PLG. I did a podcast with Tim a little while ago about this.
Read the room
It is blindingly obvious that we are in some sort of slow down. I’ll leave labeling it to economists and more famous polyglot VCs. I don‘t know when we will be out of it. Maybe we are through the worst, maybe not.
Lengthening the runway is now the first topic at board meetings in start up and scale up companies, and corporates are tightening spend too. Procurement leaders and CFOs are sharpening their pencils, and LOB independent spend is going to be under pressure. Many vendors are in for a bit of shock come renewal time, as they become victims of someone else‘s runway lengthening or the corporate CFO’s drive to reduce perceived non-essential spend.
Apply the discipline of product led growth to retention
Ask yourself today, what features in the product directly or indirectly drive customer retention? Are you able to clearly identify those customers most at risk of churn from user behaviour? What analytics does your product produce to help your champions defend their investment from the sharpened pencils?
Have you recalibrated how you assess churn risk in the last 6 months? If not you are likely underestimating it.
Often in enterprise software, vendors engage heavily with the economic buyer in the sales cycle, but then focus on the end user once the system is in business as usual. In good times, renewal decisions are delegated down, when things tighten they move up. Your original economic buyer may no longer be the true economic buyer anymore. Your new economic buyer may well be the CFO or their underlings! You may no longer actually have access to buyer, so you will need to arm your champion with the data and arguments to defend their investment.
At the click of a button can you provide a data-driven argument why your product adds value to the customer, and why switching it off would destroy value? If you can‘t I suspect that one of your competitors for that tighter budget will.
What‘s on the roadmap to specifically drive retention? Turn up the dial on the features that will have a measurable impact on retention.
Sometimes you need to ask the obvious questions.