OpenView's Third Annual Product Benchmarks Report Reveals PLG Companies 2x More Likely to Grow Quickly

In the face of economic uncertainty, over 450 product-led founders and CEOs share benchmarks and learnings

BOSTON, June 7, 2022 /PRNewswire/ -- OpenView, the global venture capital firm that coined the term product-led growth (PLG), today released its third annual Product Benchmarks Report. It empowers product teams with a playbook on how to build a business driven by product growth. The report found that product-led companies, especially those with a freemium model, are 2x more likely to grow revenue 100% year over year as compared to sales-led models. In an uncertain economy where SaaS technology companies continue to see pullback in public stocks, it's critical that CEOs and founders understand key product metrics and how they relate to levers of sustainable growth.

Since the initial Product Benchmark Report in 2019, PLG adoption has grown from 45% to 55%. Now, 61% of companies in the Cloud 100 – including Calendly, Amplitude, and GitLab – leverage a PLG model. For the first time, the Product Benchmarks report also segmented respondents into four product experience categories: freemium, free trial, standout PLG and sales-led. This allows companies reviewing the data to understand the differences in growth of each go-to-market motion and model off of where they see the most success.

"We are going to see a tough year for many tech companies that were seeing hypergrowth," said Sam Richard, VP of Growth at OpenView. "If public tech markets are feeling the impact, it goes without saying that most startups are feeling the pressure, too. For emerging SaaS businesses to survive and thrive, they need to grow efficiently and responsibly. This year's benchmarks report shows them how to do just that." 

Since PLG products enable users to discover, try, and buy on a self-service basis, the standard "sales funnel" focused playbook is no longer relevant. Based on interviews with B2B SaaS experts who have built and scaled successful product-led businesses, a New User Journey has been created and includes:

• Discover: Top freemium businesses generate most of their users through organic search (53%) and product-driven referrals (13%).
• Start: Freemium businesses have a median visit-to-signup rate of 6%, making website conversion optimization a huge opportunity.
• Activate: 87% of standout PLG companies identify and track activation, the moment when products deliver value to users.
• Convert: Only 5% of all freemium signups convert from free to paid customers.
• Scale: Retention matters more than ever; companies that performed outreach to users retained  them 2-3x better than those who didn't.

"Delivering a world-class product experience is more than just building the best product," said John Cutler, Amplitude Product Evangelist, and Coach. "It's about designing the entire customer journey around a seamless experience – which starts with offering a product that's discoverable by target users, and ends with scaling by focusing on user retention. To maximize success, this job can't solely rely on the product team. The journey has to involve every digital-facing team including marketing, customer success, analysts, and more."

According to this year's survey, more than half of respondents identify as a product-led organization and the number of respondents with more than $10m in annual recurring revenue (ARR) has nearly doubled year over year, illustrating that PLG is more than just a trend: it's the new normal.

To compare your metrics to those of businesses with similar sizes, scales, customer targets, and more, check out OpenView's free interactive calculator: https://openviewpartners.com/2022-product-benchmarks-calculator  

For more information on how you can empower your company with a product-led model, visit OpenView's blog and download the Product Benchmarks Report today: https://openviewpartners.com/2022-product-benchmarks 

Founded in 2006, OpenView is a venture capital firm investing globally in business software companies. With a mission to improve people's working lives, OpenView's focused investment approach across sector and stage enables the firm to identify and partner with business software companies that it deems to be category leading. The firm's focus extends to operational excellence through its dedicated expansion team working with portfolio companies on go-to-market, sales and marketing, product-led growth, talent, and corporate development. The firm is based in Boston and has approximately $2.8 billion in total capital under management. For more information about OpenView and its portfolio companies, please visit https://openviewpartners.com/

SOURCE OpenView