Product-led growth is one of the trends we’re most excited about at a16z and many of the fastest-growing and visionary companies today are product-led because it’s such an efficient distribution channel that aligns incentives between a company and its customers.
To become a successful product-led organization, companies need best-in-class go-to-market tools. We’ve made several investments in what we believe will be the next-generation GTM stack for product-led growth businesses – from Orbit for community management, Tackle for cloud marketplaces, UserLeap for user research and product development, and Census for customer data integrations and operational analytics.
One of the key GTM developments we’ve been tracking is the shift in where revenue and value is generated in the customer lifecycle. In a traditional top-down sales motion, salespeople aim to capture the highest dollar value and secure large contracts from the start. In product-led growth however, the dollar value of initial “sale” is often far less than the overall long-term opportunity, and given the prevalence of freemium and free trials, often negligible. With many companies now self-serving using a freemium, trial, or a low-cost version of the product, most top-line growth is driven through expansion revenue – either as product usage grows with the customer or as it expands to more parts of an organization.
And this isn’t just important for product-led growth companies, but all SaaS and subscription revenue businesses. Net retention and net expansion are key and often critical drivers of company growth.
Customer success teams own the retention and expansion numbers, and with the massive rise of SaaS as a software delivery model it should be no surprise that customer success is currently the 6th fastest growing job in the country as a result.
Yet despite the rapid growth of the role, the pace of customer success software is lagging. First-generation players educated the market on the importance of customer success and how to build a community of customer success managers. However, these products are built for the top-down sales motion, have an older interface, and often require a heavy services lift to deploy. So when we met the Vitally team, we were thrilled to find that they were building the new customer success platform for the modern SaaS company.
Vitally nails several key principles that we have long believed a new CSM platform should have. First, it is architected to handle thousands of accounts vs hundreds, which is key given the long tail of smaller users that make up many SaaS customer bases today. Vitally is also able to automate personalized customer success at scale – with built-in triggers and workflows that allow CSMs to scale their efforts across this longer tail of accounts and maintain a high touch, while prioritizing their time for the most valuable customers and opportunities. Moreover, Vitally is able to ingest disparate signals from users (from product usage to freemium/free trial user data) to proactively understand user health, analyze where to prioritize expansion opportunities, and minimize churn while also scouting opportunities for larger enterprise contracts based on the sentiment of users within specific accounts. It’s by far the best way to keep a pulse on how existing customers are doing and to optimize your company’s response.
Before we ever met with the team at Vitally, we had heard rave reviews from their customers – many of which are fast-growing software companies like Segment, Zapier, and Productboard. The feedback was overwhelmingly positive and affirmed the fact that Vitally simply had the best product on the market since it actually mapped to how businesses operated and interacted with customers. Even though Vitally was built to handle the needs of product-led companies, the product is robust enough to be a perfect fit for all modern SaaS companies – including top-down sales companies – since every company cares about customer health and long-term customer value.
Jamie, the CEO of Vitally, has an uncommonly strong level of empathy and understanding of customer pain points as the former co-founder and Chief Customer Officer at Pathgather. It was clear from our multiple conversations with him that he has a stunning amount of knowledge about the problem and had taken a craftsman-like approach to solving it. Jamie, and his co-founder and CTO Patrick, methodically built the product for years, and that effort has paid off with a platform that is best-in-class in its space.
We’re very excited to lead Vitally’s Series A and believe all SaaS companies should use Vitally to empower their go-to-market and customer success teams. Check out the product here. And if you’re as excited about them as we are, they’re hiring!
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