Product-Led Growth 2019: Report Benchmarks Challenges and Opportunities For SaaS Companies
Insights · 6 min read

Product-Led Growth 2019: Report Benchmarks Challenges and Opportunities For SaaS Companies

Natasha Wahid
Posted November 21, 2019

“Product-led growth” or PLG is a hot topic in the SaaS world—and rightly so. Because if you can harness it, it works.

What is product-led growth? As opposed to sales- or marketing-led growth, product-led growth is a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself.

There are four tenets to product-led growth:

  • Start with real user pain

  • Deliver value immediately

  • Make the product stick

  • Set customer success as your north star

Slack famously went from $0 to $1B in two years with a product-led go-to-market strategy. Calendly quickly became a $30M ARR company with over four million users by obsessing over customer value. HubSpot built viral loops into its product to drive faster adoption and became the second fastest SMB SaaS company to ever IPO.

These companies win because they solve real problems for their customers—and are iterating continuously. They obsess over making customers happy, increasing the likelihood that people will adopt their solution over the alternatives.

SaaS companies around the world dream of replicating this success. Harnessing product-led growth, however, is not a simple task.

Recently we surveyed product teams at over 100 SaaS companies to understand the challenges they’re facing and the opportunities they’re focused on. What we found provides insight into how your company can adopt a product-led strategy to drive sustainable growth.

3 Insights From the Product-Led Growth Report: Fall 2019

In analyzing our survey data, a few key insights came to light. Read on for three highlights or get the full report using the link above.

1. Many companies race to create value but struggle to deliver on their product roadmap effectively and in a timely manner.

One of the key tenets of product-led growth is the ability to deliver value to customers pretty much immediately. To that end, many companies are racing to elevate their product with fixes, improvements, and features even while they struggle to deliver on their product roadmaps effectively and in a timely manner.

This pressure was reflected in our survey, with product teams citing “executing the product roadmap” as the biggest challenge they’ve faced this year.

Effective prioritization can help mitigate some of this pressure. One way we prioritize product work at FullStory is through our "9-blocker".

Of course, there are lots of ways to turn product ideas into a prioritized roadmap—and PLG companies are sure to find a methodology that fits their objectives and culture.

2. Customer success requires cross-functional collaboration but aligning across organizational efforts is a challenge.

Great digital customer experience requires consistency across every touchpoint, making cross-functional collaboration a hallmark of PLG companies. Unfortunately, these touchpoints are often owned by siloed teams. Even in smaller, digital-first companies, a seamless digital experience is difficult to achieve.

When asked, “Which do you see as the most common digital experience (DX) management challenges for your organization?” respondents highlighted coordination, consistency, and clarity as pain points:

"Coordinating all customer-facing teams (marketing, customer success, sales, support, product, executives)"

"Continuity and consistency of the UX"

"Understanding all the customer touchpoints and coordination with other teams"

"How to integrate into the current product workflows quickly and easily, without threatening other product dev activities"

Our survey also revealed a lack of clear ownership of the digital experience. This is a stumbling block for many organizations–big and small. Cross-functional collaboration is only possible when the individual understands her responsibilities and the team has a shared understanding of what success looks like; too often this clarity is missing.

The importance of a common language: Clarifying “digital experience” confusion

For most SaaS companies, the digital experience is the customer experience. Yet, in our survey, we observed a recurring confusion around the term “digital experience”—particularly in the context of who is responsible for the digital experience.

This isn’t surprising. From the vantage point of the individual—a product manager, a designer, an engineer, etc.—it is easy to view your product in pieces or to focus on and take responsibility for only the particular piece of the product you own.

But your customers are having a holistic experience: every interaction matters and informs their perception of your brand. Your digital experience encompasses all of the components of your product—from its interface to its functionality to its usability. It must be understood comprehensively, even if it is owned in part.

That’s where “digital experience” comes in. When everyone in your organization can understand the greater context within which their work rests—that is, the customers’ digital experience—they can know just how to make their piece of the puzzle fit. And with the digital experience in hand, teams across your organization can finally work locally but optimize globally.

A foundation for cross-functional collaboration works from the ground up but must come from the top. If your organization is struggling here, take the time to ensure you are aligned at the executive level. Get in a room and map out your key organizational objectives so that you can waterfall these objectives to every team and every individual. Extraordinary growth is only possible when everyone is speaking the same language and pulling in the same direction.

At FullStory, we leverage OKR—Objectives & Key Results–cycles to ensure company-wide alignment. If you’re curious about how OKR cycles work, check out this video.

3. Product usage metrics form the North Star for product-led companies

Growth—product-led or otherwise—requires a unifying goal(s), which can be translated into key metrics and KPIs. For SaaS companies, product usage metrics are often the most reliable predictor of retention and sustainable growth.

“Retention has become one of the hottest topics among growth professionals. It has emerged as the antidote to the boom and bust storyline and the common denominator that separates the most valuable companies from the rest of the pack. It’s become the most valuable player in growth—and this is a great thing [...] if you improve retention, you’ll also improve the rest of your funnel.” — Brian Balfour, CEO of Reforge and former VP of Growth at HubSpot

Strong product usage and user retention are the result of several critical components, including how valuable your product is—i.e. does it solve real pain? And how easy and delightful it is to use—i.e. is it intuitive, accessible, and actionable?

To win here, you need a thorough understanding of your users’ motivations and interactions with your product. It tracks, then, that most product teams are evaluating their users’ digital experience by gathering qualitative insights:

While qualitative methods like user interviews and NPS or CSAT scores are essential, they don’t capture the full picture. Leading PLG companies are able to identify why users are interacting with their product in a particular way, as well as quantify the impact and scale of those interactions. This is often made possible by sourcing the right technology stack.

Pursuing Product-Led Growth in 2020 and Beyond

Product-led growth mirrors a shift that is happening across industries—a push to prioritize customer value and experience above all else. Again and again, we are seeing that the SaaS companies that hold up the tenets of PLG are succeeding in this era of elevated consumer expectations.

So, how will your organization spur product-led growth moving forward? Because only the best products and the best experiences will win.

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