We already know that SaaS success doesn’t come easily, it takes work - and whilst adding a product-led motion to your go-to-market strategy is your next step to big business wins, it comes with its obstacles.
Here are 5 common challenges of moving downmarket:
1) Attracting the wrong customers
Fishermen will tell you, it’s not only the prime fish that get caught up in their fishing nets. Casting your net to a wider audience with quick, simple, self-serve, and sometimes free access to your product means you’re almost guaranteed to get catches that aren’t suited to your business.
This can have a knock-on effect on multiple things, including:
- Your conversion rate from freemium to paying customers.
- Your churn rate with customers canceling their subscription.
- Your success team’s workload with them providing extra support to non-paying customers.
When you don’t adopt any of these PLG models properly, you’ll quickly soak up more money, time, and resources than you should, having a real impact on your ROI.
2) Converting freemium to paying customers
A big question within businesses that use a PLG approach is how do I convert freemium users to paying customers?
People love free things, especially when it comes to products that make their lives easier. With plenty of tools out there offering a free trial or version of their product, what is it that would make them take the leap to a paid version?
Ideally, freemium conversion rates are between 2-5%, but the typical conversion rate is around 1% - because it’s not necessarily an easy pitch, no matter how skilled that sales team is when they decide to intercept.
Here are our seven main freemium and free trial conversation techniques:
- Nurture your freemium users from start to finish
- Create a sense of urgency with time-sensitive promotions or one-off gift vouchers
- Unlock new features at lower prices, going step-by-step up to the full-upgrade
- Charge to remove adverts or other annoyances
- Show them what they’re missing in-app or on your site
- Include credit card details in the sign-up process for free trials*
- Make it super easy to upgrade
*Hot tip: this actually ups your conversion rates to 30-50%.
For more on how to own each of these conversion techniques, check this blog out.
3) Determining your product and price plan takes work
You don’t want to sell yourself short by offering too much for free, or by not offering enough for free. But where’s the balance?
Unfortunately, there’s no SaaS template for this. It relies on you understanding your product and your customers, but ultimately what they value about your offering. Now, this will vary from customer to customer, but you can (and should) simplify this with customer segments.
Then comes the customer research. Speak to, reach out to, interview, survey, and analyze your users. Consider companies of all sizes, from SME up to enterprise-level, to determine where the value of your product lies for each segment.
This will play a key role in how you efficiently split up your product’s features between pricing tiers or freemium/premium offering, and the ideal length for a free trial (for both your audience and your ROI).
4) Hiring right for your business growth
If you’ve been running a successful sales-led approach to customer acquisition, then we’re sure you have a slick sales team and process in tow. But when it comes to adding a product-led sales motion, this requires a whole new set of skills.
With your product sales being driven by the product itself, there’s a need for lots of attention paid to the following:
- UX (user experience)
By working with the hybrid motion, you need to create the perfect balance of hiring and customer focus. Focus too much on the product-led growth side of things and you could miss out on the higher ACVs and revenue. Ignore the requirements for successfully adding a PLG motion, and you’ll risk stunting your business growth and seeing high volumes of churn for not providing the best experience for the specific customer segment.
5) Working with split data
Adding in another sales motion to create a hybrid GTM strategy means adding in a whole new set of tools and processes, leaving you with more sources of data and revenue and an apparent split between the two acquisition approaches.
Split customer data causes complications with reporting and important processes like invoicing. Ideally, you want your data collection to be unified and real-time to make sure it’s as efficient and accurate as possible, (making your finance team’s lives a lot easier).
A solution to this is using a centralized metric or BI tool so that you can unify your data into a single source of truth.