Often when you see a customer journey graph it looks like something like this:
A wide funnel shrinks down to a deal and then there are some afterthought stages after close to give lip-service to expansion, renewal, and/or advocacy. In all reality, this is the same AIDA funnel (attention, interest, desire, action) that St Elmo Lewis laid out in … wait for it ... 1898.
That’s not to say no one has done anything to adapt the funnel to modern times. I’m particularly fond of this product-led growth (PLG) version from Mickey Alon. It’s specific to software and also recognizes the huge opportunity that exists post-sign up and also the interconnected ways that the go-to-market team works together.
With that said, I still believe this chart has a fundamental flaw that anchors it to the past. While the S-curve is an improvement over the funnel and was a good way to describe earlier generations of business software, in our new product-led world, customers that go flat might as well be churned. As a subscription business, your explicit promise to a customer is your ability to deliver products that will help them both today and tomorrow. Although there’s a joke about great SaaS companies being able to turn off all their sales, marketing, and development and continue to grow, the best software companies in the world are also many of the most innovative, constantly pushing new product to customers. While much of that new functionality comes for free, some of it doesn’t, and between that, seats, and usage-based pricing, the trend is toward continued growth. Rather than S-curves, the best case scenario for today’s leading SaaS companies (Twilio, Stripe, Snowflake, etc.) is growth that’s more linear and never ends. When your software is great and your pricing model is truly aligned with the customer, then the deal should grow as the customer does.
First Deal is Your Smallest
One way to think of traditional enterprise software sales is “the wooden roller coaster model”: you slowly make your way up the initial hill (a multi-year contract) and then hold on for dear life as you traverse the twist and turns of implementation, rollout, and usage until you eventually get back to the chain lift and the process starts over again (usually with a small percentage or seat increase).
Even as software moved from on-premise to the cloud, it didn’t really change this first-deal pattern that much. That’s until PLG picked up trends that had existed in consumer software and moved to freemium/trial and credit card payments. In this new world of business software, your first deal is the smallest one you’ll ever sign with the customer, not the largest. The better a product is able to serve the needs of its users, the more the deal size will grow along with them.
From a Funnel to Linear Growth
This new model shifts the S-Curve of software sales (big upfront deal, small expansion) to something that looks linear as you grow your customer indefinitely over time. Above is a pass on how to visualize it, with another nod to Mickey Alon’s original.
As you start to layer teams onto this new curve, you also see an additional difference between the old model and the new one. Whereas in “the wooden roller coaster” world a seller spent a lot of time upfront and then dropped off a deal, in this new growth world that makes no sense. Teams need to be more fluid, as there’s now much more overlap between prospects and customers (every customer is also a prospect!). The only difference is sales, marketing, and success teams are now armed with real usage data to help close down more of the org. This is felt most strongly in sales. In a world where account growth moves from a nice-to-have to a must-have, sales must continue the relationship that they worked hard to build through the pre-sales and product-qualified sales process.
From the illustration, this new model offers tighter alignment between all teams. Get off the roller coaster and on the growth train. All aboard!