The Dark Pipeline

So, let’s start by understanding the Dark Pipeline at a high level.

Based on the 2020 SaaS Product Benchmarks Report published by OpenView, The Dark Pipeline is defined as the 90% of sign up’s that never convert at PLG companies and thats pretty typical.

By the way, if you are wondering who OpenView Partners is, they have the most extensive and in-depth publications on the PLG movement. Fun fact, Blake Bartlett at OpenView Partners coined the term “Product-Led Growth”. Read more about them at the link below.

Introduction

So, if you're finding it challenging to convert freemium sign-ups into paying customers at your PLG company, you're not alone. In fact, only 5% of all freemium signups actually end up converting to paid customers.

Let us study the diagram presented which is from a blog post published by OpenView Partners to understand the numbers in more detail. Both free trial and freemium allow for user growth but a free trial lends itself more to a revenue orientation.

The free experience is provided for a short time to give users just enough space to discover a product’s value and fit for their needs. After this limited trial, they’re asked to pay or move on. This consistently results in higher conversion rates because users are required to make a payment decision.
The first track column shows you that from a 1000 leads there are 60 free sign ups. The second column shows you that from a 1000 leads there are 45 sign ups
There is typically a 7% conversion rate which makes it 4.2 paying customers of which 62% conversion is self serve. For free trial the conversion is higher as expected (at 14%) of which 45% of conversions are self-serve.

Given such a low success rate, it is simply not feasible to reach out to every single person who signs up - therefore called the dark pipeline.

Here are the three steps to address the dark pipeline.

Have a near flawless self-serve conversion funnel
Reach out to everyone who fits a well thought out PQL metric framework and provide assistance because they did not choose self-serve
Set up an integrated PLG-Nudging system (also referred to as Digital Customer Success) so you can track changes in user behavior and nudge appropriately.

So let’s look at how we Humanic helps you do this at scale and with precision

The Self-Serve Conversion Funnel

Now, let's Imagine a new lead is created in your self-serve product. The starting assumption is that product usage data is the basis of how these leads flow into one of these funnels:

Visitors in this funnel arrive with various motivations. Some are here to explore the product and its potential, while others may enter as a lone user that may have plans of monetization down the line.

Motivated users already have a path convert with the self-serve flow and therefore do not need sales-assist nor are they looking to talk to someone. Your focus should be to get the self-serve conversion flow to be flawless and get these sign-ups to convert to paid customers automatically and regularly!

They typically want speed and autonomy including the ability to cancel at any time for any reason. Transparency around pricing and value they get is key to getting users to sign up to self-service flows.

At Humanic, we highly recommend, organizing your users closely resembling your pricing tiers. In this example below we have three Stages (Tiers) Free, Pro and Enterprise.

There are many ways to drive sign ups to your website with Ad spend on different platforms, webinars, influencers. etc. But sign ups (as all Marketing folks know) is a vanity metric.

For more details click here for the Definitive Guide to Building a Sign Up Page

To drive PLG Growth :

First you need to understand how many and which users are going through the various product milestones. Typically, there is a sharp drop off in the number of users as your progress through the funnel (as shown below).
Second, you need to create user segments per milestone (as shown below)

At Humanic, we believe it is more effective to focus on a few most impactful user segment per product milestone (as shown below)

The following blog post the PLG nudges (Digital Customer Success)

The Dark Pipeline