1. Optimize for acquisition with a hybrid model
While it’s called product-led, SaaS go-to-market strategies almost always include a hybrid sales motion.
That is, either a business starts product-led (with a self-serve checkout) and then hires sales teams and implements enterprise payment methods like invoicing as they sell upmarket. Or it starts with an outbound sales team and a self-serve checkout comes later to help attract more customers downmarket.
Either way, we aren’t saying goodbye to sales teams just yet.
Data from Adam Schoenfeld at Peersignal shows that at sales-led companies with 100 employees sales teams are much larger but by the time you get to 1000 employees, sales teams in businesses that started out as purely product-led have almost caught up.
(Source: PeerSignal data)
This means that, however you start, you're going to need those two sales motions to work alongside each other at some point.
The problem is that when you have self-serve and sales-assisted processes, things quickly become complicated. Why? Because now you've likely got two sets of systems and processes for managing these sales and customers and two sets of user and revenue data.
With a hybrid motion an almost certainty, it’s critical to choose tools that can help you create a single source of truth for this data early on – so it doesn’t become a blocker later down the line.
2. Count payments as part of your product offering
For a product-led company, your product offering is everything. What’s often overlooked is the part that payments play in that and how - as a major part of your acquisition journey - you need dedicated people and resources to make payment processes friction-free.
Let’s take free trials as an example. If you offer a free trial and ask for credit card details to access that trial, you’re pushing people through the buyer journey. But if you don’t optimize that workflow for global payment methods, you can expect a 15% drop-off on conversions.
This might not seem like an issue at first but as we’ve said, whether intentional or not, product-led = international. As such, these complexities happen much earlier in the business lifecycle than you’d expect. So think of payments as part of your product experience, and assign a product team to it.
3. Fix the leaks in your funnel
Once you have the resource, you can get to work fixing your leaky funnel. Delinquent (or involuntary) churn makes up anywhere between 20% and 40% of your overall churn rate. That’s people who don’t actually want or mean to stop being your customer.
The biggest cause of delinquent churn? Payment failure.
Optimizing your payment and billing processes to reduce payment failure is crucial for keeping your churn rate down (and your revenue up).
There are many reasons a payment can fail, be it insufficient funds, card-not-present (CNP) transactions, or difficulties with cross-border payments. Whatever the reason, the result is the same, lost revenue. Looking at your business’ payment failures and seeing which reasons are causing the leaks in your funnel will help you find the right (or most impactful) fix.
Here are some examples and how to fix them:
Reason #1: Insufficient funds
When the customer’s account or credit card doesn’t have enough funds to cover the payment. Particularly common for payments made by credit card where there are spending limits in place.
What you can do about it:
- Retry the payments, ideally using smart technology to do so at a time when it’s more likely to be successful.
- Offer payment methods that can draw on multiple sources of funds (like PayPal) or that take payment from a bank account so that credit limits aren’t an issue (like ACH Debit).