7 new product-led insights

I'm breaking down OpenView's 2021 SaaS Product Benchmarks report

👋 Hi, I’m Kyle and welcome to my newsletter, Growth Unhinged. Every other week I I take a closer look at what drives a SaaS company’s growth. Expect deep dive takes on SaaS pricing, product-led growth, public company benchmarks, and much more.

This week OpenView launched our second annual SaaS Product Benchmarks to help operators improve their product performance and embrace product-led growth.

The report draws on data from 250+ companies (that’s up 70% over last year). Most respondents were in the expansion stage (48% had $1-10M in ARR), although there are also a good number of later stage companies in the mix (19% had over $30M in ARR).

You can’t miss the key headline: as PLG becomes trendy, product-led imposters are on the rise. I highly recommend exploring the full report to see for yourself.

As with any of these reports, there’s so much data that it can be easy to overlook some of the most interesting insights. Here are my top 7 takeaways you might’ve missed and what to do about it.

1. Free is becoming an expectation even for Enterprise accounts

2020 proved to be the year when a free offering became an essential survival strategy. SaaS companies quickly adapted to the COVID-19 pandemic by making their products available for free or at a steep discount. But then they realized that doing so had a real and positive impact for their business.

We saw the number of SaaS companies with a free offering continue to increase in 2021. The biggest jump was among companies selling into Midmarket and Enterprise customers. That’s perhaps not surprising if you’ve been following the successes of Enterprise-focused public companies with new free offerings including PagerDuty, JFrog, New Relic, Appian, and Nutanix.

My favorite quote from PagerDuty’s CFO after their June earnings call: “Even around free, we're seeing enterprise and mid-market accounts of companies increase. And that allows us to be very targeted on driving conversion to get those to be customers who will then sustain the kind of growth that we see for the future.”

2. If you’re not focusing on activation, you’re missing $$$

70% of companies with a free offering say that they track in-product activation, or the moment with a new sign-up reaches their aha moment. While the metric itself has gone mainstream in PLG, most companies have a lot of work to do to improve their activation rates. Activation rates vary widely across companies and I’ve seen the metric span from 10% to 50%+.

Leading PLG companies regularly see activation rates of at least 20-25%. Since activation correlates strongly with free-to-paid conversion, any uplift in activation translates into significantly more revenue growth. Two proven ways to achieve best-in-class activation are:

  • Revisit your marketing channels based on activation behavior (new metric: cost per activated lead). Channel mix has a surprisingly large effect on activation.

  • Tear apart your in-product onboarding with HubSpot’s 3D growth framework (Discoverability, Desirability, Do-ability).


3. Growth teams *do* impact the conversion funnel

Product-led growth skills have quickly become among the most in-demand for SaaS companies both large and small. In fact, a recent search uncovered 950+ open positions citing “product-led growth”, up from only 200 in January.

Here’s why: companies with a growth team have demonstrably higher free-to-paid conversion rates (12% vs. 5%). They see somewhat higher website visitor to free sign-up conversion rates, too, as growth teams work cross-functionally with marketing to attract the right audience.

While growth teams are still fairly new and the responsibilities vary across companies, their primary objective is to get an audience to experience the product’s value as fast as possible. These teams also have a strategic view into the customer journey (or growth flywheel, if you prefer), and should develop data-driven theses around the top priorities to get better.

4. Hire a Growth leader as soon as you have product-market fit

Growth teams are a fantastic accelerator to a product-led business. But they’re most impactful when there’s plenty of surface area to cover (shoutout to Andrew Capland): initial product-market fit, a baseline level of website traffic & sign-ups, etc. After all, an experimentation mindset isn’t particularly helpful if your experiments never have a chance to reach statistical significance.

We see companies making their first Growth hire around $1-5M in ARR. These teams become essential for product-led companies with $10M+ in ARR.

Very large SaaS companies ($100M+) tend to be laggards when it comes to hiring Growth teams. While that’s understandable given that product-led growth has only recently gone mainstream, I expect that to change in next year’s survey.

5. Give Growth a seat on the executive team

Not long ago Growth was thought to be part of the Marketing org and analogous to demand generation. That has quickly changed.

Nowadays we see Growth teams increasingly reporting directly to the CEO and treated as a co-equal with Product and Marketing. Alternatively the team may roll under the Product org, which is natural given shared dependencies around the roadmap, access to engineers, and product tooling.

Wherever the team reports, Growth should operate like an independent function.

6. Plan for sales-assisted conversion rather than fully self-serve

A fully touchless, self-service purchase is the dream for many product-led organizations. In reality the vast majority of product-led companies still reach out to their free users, and sales normally does the outreach.

The question shouldn’t be whether to go down the path of self-service OR sales. It should be how do you align your go-to-market strategy with how both users & buyers want to buy. Increasingly that means an “all of the above” go-to-market strategy:

  • Give users the option of a fully self-service transaction (and the supporting tools & education to do that)

  • Allow buyers to opt into a sales-assisted path

  • Proactively reach out to high-value or high-potential users to offer additional assistance (ideally based on in-product event data)

For a primer on how to set up an initial product-led GTM funnel, I suggest checking out this piece by Bill Hodak at Unusual Ventures.

7. Plan to (finally) implement PQLs this year

Product Qualified Leads (PQLs) help turn your vision of product-led sales into a reality. Think of PQLs as product users who are ready for a sales-assisted touchpoint based on their usage activity (potentially paired with traditional MQL-style lead scoring information).

While PQLs have been talked about for years, still just 25% of SaaS companies are tracking PQLs and their conversion through the funnel. That figure is unchanged from last year.

I suspect that many companies view PQLs as out of reach because historically setting up a PQL funnel has required investing in resource-heavy data analysis and manual tooling from folks with specialized expertise. It’s amazing to see the rise of new startups like Endgame (raised $17M in July), HeadsUp, Correlated, Sherlock, and others who are tackling this challenge and democratizing product-led sales.


We’re still in the early innings of product-led growth (PLG). Successfully implementing a PLG strategy requires new skills, org structures, metrics, and tooling compared to traditional SaaS. I’d love to hear from you about what insights stood out from this year’s Product Benchmarks and what else you’d like to see in next year’s report. Drop a note in the comments!