Product-Led Growth Is Great. But Product-Led Retention Is Probably Even More Important.

Product-Led Growth Is Great. But Product-Led Retention Is Probably Even More Important.

To get all our best SaaStr content delivered directly to your inbox weekly, subscribe for free here.

So somehow, “Product-led growth” became a seemingly magic savior for many struggling SaaS companies.? Or at least, they hoped so.? A magic cure for sales costs that are just too high.?

What if we just add a Free edition?

Sometimes it does work.? I mean, Canva’s metrics for example are just awesome.? $500k in revenue per employee at $2 Billion in ARR, and profitable.? Now that’s a solid PLG motion.

But just as often, if you were any good at “PLG” — you’d already be doing PLG.? Still, if you go all-in, truly 100%, add a free edition and a true hands-off free trial if you can.? It will make your product better and easier to use, if nothing else.? If it doesn’t magically change the trajectory of your startup.

But with everyone discussing PLG, there just isn’t enough discussion in B2B of Product-Led Retention.? In fact, I can’t think of a single board meeting where I’ve even seen a slide on it.

Our products in SaaS just don’t tend to automatically retain themselves.? To be so valuable, so cost-effective and so deeply embedded in the fabric of our customers’ businesses that they’d never churn.? They tend to come close enough to get most renewals though.? Most.? But far from all.

But our B2C friends obsess about Product-Led Retention.? Sometimes in dark ways — making it hard to cancel.? Sometimes in great ways — forcing B2C subscription businesses to relentlessly provide a great end-user experience.? Churn is so high in most B2C and B2B2C they have no choice but to obsess on improving their value proposition constantly.? Every month, the meal kit, the clothing, the game subscription, the video subscription almost has to be better than the month before.


This edition of the SaaStr Insider is brought to you by Auditwerx

See Why SaaS Companies Choose Auditwerx for Security Compliance Reporting

While GRC tools can offer convenient features, did you know a CPA is necessary to sign off on a completed SOC report? Your CPA auditor is responsible for the validity and completeness of the evidence gathered, meaning working with a CPA firm like Auditwerx can help save your organization time and money.


But in SaaS?? Well, we do all track NRR, churn and hopefully GRR too.? And then sort of throw Customer Success at it.? And usually — that’s almost about it.

I’m not saying the best product leaders don’t think about retention all the time at the product-level. They do.? I just don’t see the obsession here across B2B companies, founders and their entire management teams.? I just don’t see it discussed all that often.

Some of this may be that in the enterprise, many products really are so hard to rip out, you don’t have to worry as much about Product-Led retention.? Look at $100B market cap Service Now, which is very, very enterprise.? Customers often sign 3+ year contracts, and architect their entire business processes around ServiceNow.? As a result, no one leaves.? Renewal rates are steady at 98%-99%.

But that’s not most us.? In fact, most of us saw churn rocket the past 12-18 months, and NRR fall.? In fact, NRR fell all across the board in SaaS.

Raising prices and making threats at renewals helped a bit in 2023.? But that’s not really Product-Led Retention.? That’s not making your product so, so, so great and so, so, so important no one will leave. Like ServiceNow.

And obsessing here can really pay off:

  • Get 30 day activation rates up to 95%-99%, not the 80% or so we often see if you do nothing.
  • Make your product self-deployable.? Maybe 90% of your bigger customers won’t really do it, but it will make everything better.
  • Make every integration work in one-click.? Too many still make this too hard.? Copy Shopify here.
  • Make data migration work in one-click.? Very few do this right.? Moving from Marketo to a new marketing solution, or Zendesk to a new support solution?? Why does it have to take months?? Why can’t it take one-click? It’s possible, folks.

And obsess about GRR and logo retention.? Set a goal to drive it up to 95%+, or at least, to drive it up every quarter and this year.?

If you obsess about GRR and logo retention, watch the conversations change.? We all tend to be so sales-driven, and that’s great — up to a point.? I love a sales-driven culture myself.? But even focusing mainly on NRR keeps it all sales-driven these days.

But if logo retention is a Top 5 goal, maybe even Top 3, well then so many folks jobs change.

Your product will get better, and — more important.

Be the ServiceNow of your industry.? Where 98%-99% of folks stay.?

Product-Led Retention.? It’s time to take it more seriously in B2B.

Steven Cronin

Create support organisations that provide customer delight through self-help, support engineers with a customer-first mindset and systems and KPIs that can scale.

6 个月

The conversation about PLG in B2B is hot right now. Companies think it's the magic bullet to lower CAC, a little like the conversation 15 years ago when everything had to be in cloud. Then, many on-prem products where ported into the cloud and they were hard to use and manage. PLG requires a company mindset shift to focus around making the product more accessible, user-friendly and offer a quick time to value, in addition to it being so great you don't ever want to replace it. Many B2B SaaS companies have complex products, a sales-led culture, silos and competition, which is why it's a sales-led culture. I think many of these companies will find it difficult to switch to PLG.

回复
Jessica Turner

Fractional & Project-Based Product Strategist | Product-Market Fit | Product Strategy | Informed Roadmaps | White Space Innovation | Workshop Facilitation

11 个月

Louder in the back!!! If retention is poor it's a sign the product is poor. This can be either: * Not solving a meaningful enough problem * Poor user experience * Misaligned value proposition and target audience It's often forgotten that it takes more resources to acquire a customer than it does to retain them. This is also why I believe a sound strategy is critical to the foundation of a business. If you aren't clear on the problem you're solving, why, who you're solving it for, the value you bring, and what you're building, this shows up as pains in every other business unit.

回复
Connie Lund

Helping fractionals and founders turn their expertise into revenue using simplified approaches to marketing (without content overload). The Growth Rebel attitude is a leads-first approach.

12 个月

Isn't that MRR? the monthly recurring revenue is the retention. Or am I missing something?

回复
Vivek Prakash Mishra

Snowflake |Top Customer Success Professional | Data Architect & Evangelist | Apple & Snowflake Veteran | Performance Tuning Expert | Engineering Leadership | Business Strategist & Entrepreneur| Community Leader -Speaker

12 个月

Product-Led Retention is definitely the flip side of the coin worth exploring in B2B! ??

Anant Gupta ?

Founder | CEO @ GrowMeOrganic ??

12 个月

Product-Led Retention is the missing piece in many B2B strategies. Let's start the conversation on its crucial role.

回复

要查看或添加评论,请登录

Jason M. Lemkin的更多文章

社区洞察

其他会员也浏览了