As a tougher funding climate starts to bite, it’s time to ditch the past decade’s “growth-at-all-costs” mantra. Telling investors about your viral user growth is no longer enough — they want to know how it translates to revenue, resilience and runway.
The ongoing market uncertainty is a particularly loud wake-up call for founders pursuing product-led growth. The go-to-market motion pioneered by the likes of Slack and Dropbox revolutionized how teams adopt and purchase software. However, even the best PLG products don’t propel their own viral popularity forever, and all companies eventually face a similar challenge: To keep growing, sales teams must be hired and a pipeline must be built.
As VC funding dries up, a particularly perilous path lies ahead for PLG startups. Those on the path to revenue growth have no margin for error, and founders face a series of tough calls: which teams to layer in, when to do so and how to set them up for success. These decisions will dictate whether a PLG-driven startup will sink or swim.
I’ve spent more than two decades building, scaling and advising teams tasked with bringing software products to market. While it’s true that every business is different, there are a few commonalities in every go-to-market journey I’ve been a part of.
Don’t fear the demand plateau — plan for it.
Here’s a roadmap founders can use to build on their PLG strategy and plot a route from product-led popularity to sustainable profitability.
Size up the piece of the pie you can win now
The serviceable addressable market (SAM) is where the go-to-market journey really begins. The little sibling of the total addressable market (TAM), a figure often thrown about during fundraising, the SAM is the piece of that pie you can win right now. It’s vital to understand which market segments your product can address and your go-to-market team can tackle.
To gain that understanding, here are a few questions you should be asking:
- Which qualities do our existing customers share?
- What problems do they currently face?
- How do they approach adopting and buying software?
Invest the time to establish the criteria that define your ideal customer profile. Searching for your SAM is a continuous process, especially as the capabilities of your team and product expand, but arriving at a clear understanding of your initial SAM is milestone No. 1 in your go-to-market journey.
Qualify your best leads
Your search for the SAM should have given you a sense of the sign-ups you’re trying to drive, and with any luck, you’ve won some active users. With your acquisition channels up and running, the next milestone in your go-to-market journey is defining a product-qualified lead (PQL).