Welcome Here: Product led growth
If a start-up is targeting the energy and industrial verticals, they better be prepared for the 9+ month sales cycle. And when the start-up finally wins the account with a core product, the celebration needs to be brief.
While these customers do tend to have high retention, all of that upfront work earns the entrepreneurs something even more important: the access to expand.
In these asset-heavy markets, the two most natural ways to expand account size are:
- Spread across the asset base (and price per asset)
- Spread across the employee base (and price per seat)
Major growth can happen simply by executing on these two growth strategies.
But to move to top decile account expansion and retention, the best technology companies that serve the energy and industrial markets actively seek growth from new product development. And SURPRISE: these verticals are VERY receptive to product-driven growth. Why? Going back to an earlier post: trust and relationship alignment is the gold currency in critical infrastructure. If the installer, utility or asset owner trusts the start-up with a portion of their software, the customer is going to default to working with the existing relationship to solve new problems in the organization. The vendor vetting processes are hard and budget expansion within a Purchase Order is easier than a new purchase order! But most of all, trust is established.
When product-led growth occurs, software gradually takes over digitally underserved areas within a customer. This intra-company expansion quickly dissolves the boundaries on any prior, well-defined Total Addressable Market Analysis.
Every businesses in the Energize portfolio is executing on a combination of these three growth techniques: asset expansion, seats expansion and product expansion. Product-led growth tends to be the most stepwise in commercial advancements.
In a post tomorrow I will write about what techniques I have seen start-ups implement to accelerate product-led expansion in the energy and industrial verticals.