Delaying PLG journey increases your R&D spend.
Why it’s important to start your PLG journey early and how it can save you money
In this blog post, we shed light on a critical aspect of PLG adoption: the impact of delaying the decision to embark on the PLG journey on research and development (R&D) spending.
In the rapidly evolving landscape of modern business, organizations are constantly seeking innovative strategies to accelerate growth and boost customer acquisition. One approach that has gained significant traction in recent years is Product-Led Growth (PLG). PLG involves leveraging the product itself as the primary driver of customer acquisition, conversion, and retention, rather than relying solely on traditional marketing and sales tactics.
PLG has demonstrated impressive results for companies across various industries, with the likes of Slack, Dropbox, and Zoom achieving substantial success through this approach. However, while many businesses recognize the potential benefits of embracing PLG, some are hesitant to embark on this transformative journey.
Cost of Entry:
Thrive Stack conducted a smallish survey (n=35) with B2B SaaS companies who are planning to or have started implementing PLG for their respective products. Here are some survey findings w.r.t. PLG R&D spend
Starting PLG when you are at the Idea-market-Fit stage: Most SaaS companies build a basic User Registration system. Seasoned (and repeat) founders preferred to accelerate the platform engineering and decided to invest in simplified Product Onboarding and Product Analytics knowing very well that it’ll their products better and drive efficient customer onboarding sooner than later.
Four(4) Capabilities to Invest at this stage Self-Service Registration, Product Onboarding, Trial Management, Product Analytics Typical spend: $10K in Tooling, $40K in People/Wages Effort: 3-4 monthsStarting PLG when you are at the Product-market-Fit stage: Delaying to invest in core self-service capabilities, more than 3x the spend had they implemented it earlier - This included rework in onboarding, user registrations, customer journeys, and adding telemetry for product analytics across a spectrum of new features.
Four(4) Capabilities to Invest at this stage Interactive Demos/Guides, Self-serve Pricing Plans, Usage Based Pricing (optional), Sales Assist (either CSM or via support) Typical spend: $50K in SaaS Tooling Costs, $250K in People/Wages Effort: ~6 months If Self-serve capabilities are not implemented, Typical spend: $100K in SaaS Tooling Costs, $500K in People/Wages Effort: ~9 monthsStarting PLG when you are at the GTM-Fit stage: Delaying to invest in core self-service capabilities, more than 8x the spend had they implemented it earlier - This included rework in onboarding, user registrations, customer journeys, and adding telemetry for product analytics, planning to price their product for usage, etc.
Three(3) Capabilities to Invest at this stage Product Led Sales, Experimentation, Enterprise Sales Typical spend: $150K in SaaS Tooling Costs, $600K in People/Wages Effort: ~6 months If IMF and PMF stage capabilities were not implemented, Typical spend: $275K in SaaS Tooling Costs, $1M in People/Wages Effort: ~12 months
Conclusion:
While the decision to embark on a Product-Led Growth journey requires careful consideration, delaying the adoption of PLG can have significant financial consequences. As the statistics show, companies that implement PLG early on benefit from reduced R&D spending, increased revenue growth, and improved customer retention rates. By embracing PLG and leveraging the power of the product as a growth driver, organizations can achieve sustainable success and gain a competitive edge in today's dynamic business landscape.
So, don't delay the PLG journey - start today and reap the rewards of a more efficient, customer-centric, and cost-effective growth strategy.
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