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Is there any risk with hybrid growth models?
How do you reduce the risk with hybrid growth models?
What SaaS Metrics are essential when executing a hybrid motion?
Can you break the product into "for enterprise" and "for SMB" categories?
Evolve and Automate
Everyone is talking about the hybrid growth model in the world of B2B SaaS.
As growth strategies in SaaS have evolved, so has the conversation around balancing product-led and sales-led approaches to drive scalable, sustainable growth. Increasingly, B2B SaaS companies are recognizing that relying on one approach alone may limit growth potential or leave untapped markets on the table.
The hybrid growth model, which blends Product-Led Growth (PLG) and Sales-Led Growth (SLG), has proven to be an effective approach to this challenge. For companies aiming to stay agile and resilient in uncertain times, a hybrid model offers a flexible framework to reach more diverse markets and respond to changing customer needs.
In a recent webinar, we spoke with Niclas Lilja, CEO and Founder of Younium, about the emerging hybrid growth model in B2B SaaS. Here’s what he had to share:
"The reason is simple: The more varied the growth options, the greater the likelihood of your business thriving despite the funding winter that persists in 2024! Combining product-led (PLG) and sales-led (SLG) growth is what will offer your business a real chance to stay lean and agile."
“But this SaaS growth trend is also the most unexplored”, he added.
Since there aren't yet any silver bullets or best practices for running two growth strategies parallelly, he believes that rather than adhering to rigid workflows, businesses must adopt non-linear, feedback-driven processes.
“Today, companies are still finding their footing when it comes to the ideal mix of the two growth motions that is most effective for them. The “balance” may be different for different companies or perhaps not very easy to define. This is what makes the ability to run data-backed experiments, that allows for continuous improvement and evolution, a powerful paradigm for driving growth.” he added.
A subscription management solution can guide you in ensuring that your subscription management decisions and hybrid growth model pivots are always backed by data.
But, is your business ready to make the big plays with the hybrid growth model? What are the associated risks? And how can data help overcome them?
Is there any risk with hybrid growth models?
While Niclas believes in an iterative and experimentative hybrid approach, he also warns that simultaneously running two growth motions comes with its own set of risks.
He went on to explain, “When trying to bring about a balance between PLG and SLG, there can be a fear of conflict of your existing models. This is why it's important to identify your main source of growth. Then, instead of changing what is working, identify the areas where it's possible to do better.”
So, when done right, the risk posed by adopting a new growth model is worth it. 100%.
He further pointed out that, especially if your sales efforts are not enough to keep pace, in this dynamic marketplace, combining the strengths of both the product and sales teams is the best way forward.
And it's definitely more cost-effective and opens up a bigger sales target-pool (SMBs and high-value targets), he added.
How do you reduce the risk with hybrid growth models?
- Form a clear idea of why you're opting for the hybrid growth model, before deciding to pivot. This involves securing a better understanding of what types of benefits you expect to receive and if the risks are truly worth it.
- Split the target audience of your SaaS solution into different segments. Start by targeting only a smaller segment of the customer base with separate/improved processes (linked to the new motion) to manage risk better. On that note, it's best to, “Identify the customer/product subset where you can start experimenting, instead of betting everything in one go. And, use data to back your decisions.”
- Try to meet the customers where they are instead of focusing on just the frameworks. This step includes focusing on improving internal processes and internal efficiency.
- Choose a subscription management platform that enables improved evaluation of risks in changing the growth strategy. Leveraging historical data, such SaaS management platforms offer a single source of truth and support informed decision-making. Especially when there is a lot of experimentation, smart data analysis helps you understand the performance of each plan/product and iterate accordingly.
What SaaS metrics are essential when executing a hybrid motion?
SaaS metrics are great yardsticks to measure how successful your hybrid growth strategy is and how to circumvent risk.
Niclas identified the following three KPIs, for the hybrid model:
- Recurring revenue by segment: This SaaS metric measures the predictable and regular segment of your business' revenue. For example, monthly recurring revenue (MRR) and annual recurring revenue (ARR).
- Retention by cohorts: Such KPIs are used to track how well your SaaS business retains customers, within each cohort (grouped based on common characteristics). For example, customer churn and customer retention rates.
- Average revenue per price plan: It helps you understand how much revenue you generate, over time, with each price plan. For example, average revenue per unit (ARPU).
Interestingly, from a commercial standpoint, these KPIs are similar to the ones tracked in the case of a stand-alone product-led growth (PLG) or sales-led growth (SLG) model.
It's still all about churn and gross and net retention figures, with the hybrid motion, but the distinction lies in how you interpret and work with the usage data.
For example, in general, product-led growth (PLG) models tend to start with a smaller ticket size and the expectation is to grow from there. Whereas, with a sales-led growth motion, you start with a higher ticket size and may not scale much afterward.
To harness SaaS metrics and ensure the success of hybrid motions, the following steps are suggested:
- Improve your understanding of the product’s base (original) growth motions.
- Conduct cohort analysis, since new growth motions will lead to changes in the cohort over time.
- Based on the cohort evolution, decide whether or not to add new growth motions to one segment of your customer base.
This is where a subscription management solution can significantly aid your efforts. By collating subscription data (from different sources) in one place, allows you to justify what is working, identify what is not working, where to invest more, go faster, and go slower. "As a result, it becomes possible to really analyze the data and draw conclusions from it,” he added.
Is it possible to break the product into ‘for enterprise’ and ‘for SMB’ categories?
Niclas shared that while the bifurcation is possible, just hiding some fields that exist in an enterprise-grade product doesn't automatically make for a product-led solution. Instead, he encourages SaaS businesses to:
- Put a lot more thought and willingness into experimenting.
- Be aware of the target segment for each growth motion.
- Differentiate pricing and packaging for both growth motions.
Evolve and Automate
If you are actively thinking about creating that perfect mix of PLG and SLG, you need smart technologies to support data tracking, analysis, and management.
A robust subscription management solution, like Younium, can help tackle the challenges of a hybrid growth model, data management, and metric tracking.
Younium is a one-of-a-kind subscription management ‘hub’ built to support B2B SaaS companies. Here’s how Younium can support your strategy:
- Single source of truth: Younium collects subscription data from multiple sources so that you can have all data in one place – offering a full picture of different business scenarios at any point in time. This will enable you to make data-backed decisions on when and how to add/tweak a growth motion.
- Next Generation Insights: Younium’s improved functionality offers pre-calculated, accurate, and comprehensive business overview. You can also dive into the details of each motion to secure the relevant actionable insights that enable experimentation with different growth models.
- Built for SaaS: Younium accommodates subscription data without requiring extensive customization and supports the complexities of the SaaS industry.
- Automated and standardized data: Younium integrates with different enterprise resource planning (ERPs) and pulls your data in a very automated and standardized way. Thus, sans human intervention, the quality of data and insights is improved significantly.
- Future-first platform: Younium is built to support businesses through various growth phases, ensuring adaptability over the next 5 to 10 years. As you experiment with various growth motions, your company too will evolve, and the platform needs to be able to flexibly facilitate this. And Younium can do that for you.
Ready to hop on the latest SaaS growth trend? Accelerate your hybrid growth strategy with data-driven decisions. Discover how Younium’s Next-Generation Insights provides the visibility and real-time KPIs needed to confidently balance PLG and SLG, simplify your SaaS metrics, and make smarter, faster decisions.
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