Using product-influenced revenue to drive your SaaS PLG motion
Episode 79
Hey Friends, Welcome to Episode 79 of the MarketCurve newsletter - today I’ll show you how to use product-influenced revenue as a metric to drive your SaaS PLG motion
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Friends,
Early-stage PLG teams need to have a clear KPI to measure performance. They are tied across the 4 core levers of acquisition, engagement, retention & monetization. All 4 of these are in turn tied to revenue metrics like ARR, Net Dollar Retention, CAGR, Expansion Revenue.
So the KPI for your PLG team needs to be an outcome-based one and not a function-based one. Outcomes that directly affect your core metrics.
One such outcome-based KPI is product-influenced revenue. And this is a subset of what is known as Natural Rate of Growth. The Natural Rate of Growth is a metric describing the company rate of growth in the absence of any paid marketing or outbound sales motions.
The product-influenced revenue is a subset of Natural Rate of Growth. It tracks the revenue generated directly from the product and excludes revenue from sales / marketing based efforts.
The customers bringing in this revenue never even talk to sales or have any prior touchpoints with the marketing team. Rather they have been acquired, engaged and been monetized via the PLG motion.
There are some areas of overlap bound to happen between PLG and growth marketing. (In fact, every PLG team should have a growth marketer).
Product driven revenue helps to highlight the segment of users where meaningful activity as recorded and whether or not it translated into revenue without any sales intervention. It shows the impact of your PLG efforts and how well the products performs as an acquisition, retention & expansion vehicle.
You could then look at your broader metrics like Net Revenue Retention, or CAGR and observe what % of this revenue was product-driven as opposed to non-product driven.
If you have a self-serve or freemium offering, then product-influenced revenue will work best & can account for 90% of your total revenue.
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