Achieving product led growth requires commitment, discipline, and faith. It’s not easy, and it doesn’t happen overnight. This is the SaaS Growth Funnel I like to use, there are a number of variations, but they all follow the same basic premise – attract users to your SaaS product, deliver your promises, and watch your business grow.
But, being product led doesn’t mean you grow the business through your engineering team delivering feature after feature to satisfy the needs of your largest customers. And it doesn’t mean you don’t need sales, marketing, and customer success, you do.
Product Led Growth is about the relationship your customers have with your product.
Relationships are complex. They take time to develop, and hard work to grow and maintain. If you expect me to interact with your SaaS product every day you’re going to need to earn my trust, prove you’re dependable, help me grow, etc.
Ok…you get the point. So how does it work?
Acquisition
Key SaaS Metrics
- Unique Website Visits
- Traffic Sources
- Signups
The acquisition stage of the SaaS Growth Funnel is about building awareness and driving website visits. There are a number of different strategies for building and sustaining website traffic. The resources you have access to will largely dictate how effectively you’re able to leverage the various channels. In the end, you’ll end up with some combination of Organic, Direct, Social, Referral, and Paid traffic entering your website.
I suggest you keep things simple at first. Start by establishing a baseline for [Uniques by Channel]. From there set some growth goals and build a plan to achieve your goals, within a certain timeframe.
Let’s say you want to grow overall traffic 15% month over month for the foreseeable future. You might consider some of the following activities:
- Optimize the website for high-value keywords
- Publish 3 new blogs per week
- Break blog content into shareable pieces, share via LinkedIn, Twitter, Instagram
- Share content on social media daily
- Identify opportunities to syndicate content with external partners
- Launch Brand Advertising Campaign
- Attend 3 trade shows this quarter
- Launch paid search campaign
- Launch Re-marketing campaigns
- Launch Paid Social Campaign
- Launch CPL program with an external partner
- Etc.
There are dozens of things you can do to influence traffic. Don’t expect to know exactly what the right recipe is to drive your 15% MoM growth. Establish an understanding regarding the opportunity/cost each channel presents, and build a plan that fits your budget and can be executed by your team.
- Establish traffic baseline, by channel
- Launch campaign
- Measure the impact you have, by channel
- Adjust
- Repeat
Activation
Key SaaS Metrics
- App. Accounts Created
- Activated Accounts
- % Activated Accounts
- Time to Activation
Ok … you’re driving traffic to your website. It’s time to turn your focus to the acquisition stage of the SaaS Growth Funnel.
If your website is doing its job, visitors are excited about your product and you have a steady stream of new accounts being created in your app. Sweet!
In the activation stage of the funnel, we want to ensure new users can get through the bare minimum requirements for using your product.
Take care, not to overcomplicate this stage. It’s not about realizing a benefit, using all the features, or getting to value.
When your user gets through the basic setup and configuration of your app. fire off an event that tracks both the number of activated users and the percent of total accounts activated for a given time period. Use this data to continuously optimize this critical first step in your SaaS product experience.
Many businesses overlook the importance of this step and jump directly to some measure of value. Big mistake. Accounts that don’t activate are dead.
There is a whole segment of tools to help you instrument and understand this stage of the funnel: Pendo, AppCues, WalkMe, Intercom, Drift, HotJar, FullStory, CrazyEgg, etc.
Retention
Key SaaS Metrics
- Key Feature Adoption
- Daily Active Users
- Value
The retention stage of the SaaS Growth Funnel is not about retaining revenue (we’ll get there later) this is about your product retaining a user for an extended period of time. We’re still in a free trial or free version of your product at this stage of the funnel – and you’re still in the courting phase of the customer <> product relationship.
Focus on helping your customer use your product. Easy, right!?
You can leverage many of the same tools suggested in the activation section to help people move through your product and use it successfully.
You’ll want to be sure to instrument key in-app events (think feature adoption, inviting new team members, etc) and define some logic for counting daily active users (beyond just logging in). Again, don’t over complicate things. Give yourself enough data to feel good about making decisions, but not so much that you’re chasing your tail.
One other word of caution. A key part of delivering an exceptional product experience is your ability to properly set and deliver upon expectations. If you find your SaaS product churning users consider adjusting your website messaging to better meet product expectations, and attempt to talk to some of those users to understand their experience and what you could have done better.
Referral
Key SaaS Metrics
- Accounts with > X Users
- Advocates
- External referrals
I like this stage to live in front of the revenue stage because it is such a critical factor in building and sustaining momentum. If you deliver on your promises throughout the first 3 stages of the funnel your users will show you the love. It doesn’t matter whether we’re talking about paid or free accounts – it’s ALL ABOUT PRODUCT EXPERIENCE.
If your customers love your product, growth will happen. If they don’t, you’ll be fighting an uphill battle and will struggle to keep things moving in a positive direction.
Depending on your model you may choose to incentivize people to share by giving away swag, credits, or some other thing of value to drive external referrals.
I suggest you focus on the first two metrics listed above: Accounts with > X Users and Advocates. You want your product to be fully adopted by teams or whole companies. You should have some understanding of the size of the team that your product typically serves or is best suited for. Set a threshold and measure your progress.
Advocates are users that have agreed to participate in a case study, be a guest on your podcast or webinar, wrote a blog, agreed to a testimonial, are willing to speak on your behalf at a trade show, or simply showed you some love on social.
If you’re successful in the first 3 stages of the SaaS Growth Funnel then this one will almost certainly take care of itself. So, don’t worry too much about it until the engine is purring.
Revenue
Key SaaS Metrics
- Paid Accounts
- % Free to Paid
- MRR
Finally, we’re making some money! Again, if your product is doing its job there should be natural growth to paid accounts at this stage in the SaaS Growth Funnel. This is not to say you shouldn’t proactively work to move free accounts to paid, you absolutely should. Your goal throughout this entire funnel is to deliver value and to exceed expectations – grow accounts from free to paid.
Identify the levers you can use to drive revenue and work out a strategy to move free accounts to paid. This is getting back to the core of your business strategy, so by the time users get to this stage, you should have a good handle on the activity that leads to paid accounts and have programs in place to help users there as efficiently as possible.
As you convert accounts to paid try to understand the activity that got them there, and where the value is for them, and then use that data to improve your free to paid conversion rate.
Wrapping it all up
Product led growth is all about your product experience, having a clear path to value, and keeping your promises to your customers. If you take care to understand your customers and deliver them a product that helps them be more successful, this SaaS Growth Funnel will make you more successful.
