as hard As the funding climate begins to bite, it’s time to ditch the “growth at all costs” mantra of the past decade. It’s not enough to tell investors about your viral user growth—they want to know how it translates into revenue, sustainability, and runway.
The ongoing market volatility is especially a wake-up call for founders pursuing product-driven growth. The move to go-to-market with the likes of Slack and Dropbox has revolutionized how teams receive and buy software. However, even the best PLG products don’t drive their own viral popularity forever, and all companies eventually face the same challenge: they need to hire sales teams and build a pipeline to keep growing.
As VC funding dries up, a particularly perilous road ahead for PLG startups. Those on the revenue growth path have no margin for error, and founders face a series of tough calls: which teams to align, when to do it, and how to structure them for success. These decisions determine whether a PLG-driven startup is sink or swim.
I’ve spent more than two decades building, growing and mentoring teams tasked with bringing software products to market. While it’s true that every business is different, there are a few commonalities in every market-to-market trip I’ve been on.
Don’t fear the demand plateau – plan for it.
Here’s a roadmap founders can use to build their PLG strategy and plan the path from product-led popularity to sustainable profitability.
Now increase the size of the piece of bread that you can win
A serviceable market (SAM) is where the go-to-market journey really begins. The smaller sibling of the total addressable market (TAM), which is often tossed around during fundraising, SAM is a piece of that pie you can win now. It’s important to understand which market segments your product and your go-to-market team can handle.
To get that insight, here are a few questions to ask.
- What characteristics do our existing customers share?
- What problems are they currently facing?
- How do you approach receiving and purchasing software?
Invest the time to establish the criteria that define your ideal customer profile. Finding your SAM is an ongoing process, especially as your team and product capabilities expand, but getting a clear understanding of your initial SAM is critical Phase 1 of your go-to-market journey.
Qualify your best leaders
Your search for SAM should help you understand the registration marks you’re trying to drive, and with any luck you’ve won some active users. With your acquisition channels in place, you define the next phase of your go-to-market journey. Product Qualified Lead (PQL).