5 Ways SaaS Companies Can Increase Their Product-Based Growth

Following the collapse in valuations over the past 12 months, the phrase “efficient growth” is echoing in SaaS boardrooms around the world. All software leaders are looking to increase revenue, reduce costs, and demonstrate a clear path to profitability.

At the center of this conversation is product-led growth (PLG), a strategy that views customer acquisition, monetization, and retention through a product lens, rather than through recruiting. of expensive marketing, sales and success organizations.

With notable examples like Adobe's $28.000 billion acquisition of Figma, ChatGPT's two-month race to 100 million users, and Hubspot's pivot to PLG, which has helped generate nearly $2.000 billion. dollars in revenue, most SaaS boards are trying to understand how they can benefit from this proven sales move. PLG is quickly becoming a necessity, not a choice.

To find out what a well-tuned and well-oiled PLG strategy looks like, we analyzed data from more than 30.000 SaaS companies that generated more than $28.000 billion in ARR collectively through the Paddle and ProfitWell platforms. Based on this data, I believe there are five key ways software companies large and small can increase their efficient product-based growth.

Fix Your Funnel Leaks

If your product handles much of the customer acquisition and retention in a PLG setup, you're likely to experience what's known as "defusing" churn—customers who involuntarily abandon your service due to leaks in your funnel.

This can account for between 20% and 40% of your overall churn rate and is often related to non-payments, meaning that improving your billing processes should be a top priority. The most common funnel “leaks” to watch for are:

• Insufficient client funds, which is especially common for payments made with credit cards with limits. To fix this, try retrying payments – using smart technology to do so at a time when success is most likely – or offer payment methods that can access multiple sources of funds, such as PayPal.
• Failures in cross-border transactions, which sometimes occur due to different standards between banks. A good solution is to bank locally, where your customers are located, or use a payment provider that already has local banking relationships.
• Currency talks, which can often trigger fraud. Selling to customers in their local currency is essential to avoid this – our data shows that doing so can increase payment acceptance rates by 1-11%.

Be hybrid or go home

As you might expect, product-based growth initiatives let the product take center stage, with acquisition, conversion, retention, and expansion driven by the product itself. Instead of booking a demo with a sales team, customers are often offered trials, freemium models, and other self-service calls to action, streamlining the acquisition process.

But that doesn't mean sales aren't important, especially as the company grows. The industry is full of success stories where small SaaS companies transition from a purely product-based growth strategy to a sales-led or assisted growth (SLG) movement. When they do, their customer base shifts from individual users and small teams to larger businesses.

This means that no matter how you start, at some point you will need product-oriented and sales-oriented initiatives to work together if you want to diversify your customer base and grow sustainably. Think PLG in the short term, hybrid in the long term.

Worth paying

At its core, product-led growth is about the product selling itself, which usually means starting with a low price. To make money, the company has to sell many copies, which means going international and selling in as many markets as possible. In short, PLG and internationalization must go hand in hand.

This is where payments come into play. Payments play a crucial role in the procurement process and require dedicated resources to ensure friction-free, especially when expanding overseas.

Take free trials (a staple of PLG). If you offer a free trial and ask for credit card details to access it, you're pushing people through the purchasing process. But if you don't optimize that workflow for global payment methods, which vary from market to market, you can expect a 15% drop in conversions.

So, think of payments as an essential part of your product experience and the PLG movement, and assign a product team to work on optimizing them. Additionally, investing in a good payments infrastructure provider will also help streamline this process, as they take care of everything from subscriptions to taxes and compliance, as well as creating a frictionless payment experience for customers.

Community is key

A solid product-based growth movement must also be accompanied by an attractive content offering for the community. At the end of the day, if PLG is about the customer buying, the onus is on your startup to provide something up front to help potential customers understand the value you offer before they sign up and without talking. with your team. Content is one way to do it.

We have launched our own content hub to offer all our podcasts, web series and documentaries in a single space. In an economic climate where many companies are looking for useful content, offering help now will help you convert more customers in the short term and ensure you are top of mind later for those who are not yet ready to buy.

The price is fair

SaaS companies typically don't update their pricing regularly, even though studies show that those that do grow faster and have higher average revenue per user (ARPU).

Optimizing the price of your products – which in a PLG movement means, again, thinking internationally – is therefore another great way to maximize conversations. Consider these two strategies:

• Cosmetic location: Ensure prices are displayed in local currencies automatically within your product – making the purchasing process smoother for the customer.
• Actual location: Change prices based on customers' willingness to pay in different markets. Research the buying conventions and competitive landscape of the markets in which you sell - or want to sell - to determine the best way to price your products in each region.

According to our study, software companies that offer two different currencies grow 12,7% faster, and those that offer more than 25 currencies grow 25% faster.

Let the product lead the way, the right way
Adopting a PLG strategy is crucial for SaaS companies to increase revenue, remain competitive, and achieve sustainable growth in today's difficult market. Don't you have one? You risk being overthrown by the next competitor who has it.

However, to get the most out of PLG in selling SaaS, you'll need to do more than just include a free version of your product on your website. Any company that wants to improve its PLG must adopt a global mindset, thinking about how to adjust prices to different geographic areas to increase sales and revenue. A payments-first mindset and adopting a hybrid model can also be essential for long-term success.

Put the tips above into practice and you'll raise the bar on your product-led growth strategy and drive the growth and profitability of your SaaS business for years to come.