Why self-service freemium capped LTV at Crystal, and how its PLG funnel now feeds B2B sales at about 4x LTV
Drew D’Agostino · Crystal
Published September 1, 2022Drew D’Agostino, Founder and CEO of Crystalknows shares the inside details on:
- Why our self-service model couldn't scale
- How we validated the B2B sales opportunity
- How we use our PLG funnel to drive B2B sales
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Drew D’Agostino describes Crystal’s move from a self-service freemium model toward a higher-value business motion. He contrasts funnel growth with LTV and retention, then covers the operational trade-offs of serving larger customers.
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“the new model and how that has played out so far over the last two years at the high level we've about 4X star LTV which is the main kind of metric that I've been using as success to make these decisions and build the team and everything so three stages so I'll start with just basic overview of the product um does anybody here familiar with Crystal Eric okay a few people so it's a um we call an Adaptive selling tool we serve mostly B2B sales teams and they”
“under her this is the key stat that I am laser focused on with our team it's improving improving our LTV so all throughout this self-service journey of our company I could not for the life of me figure out how to increase ACV significantly I could not figure out how to get the churn down so that resulted in a long long slog of struggling with Lowell TV we had a very exciting product on the surface but just the nature of you know this credit card”
“um how we did that this was a part of the organic funnel and how it was generating those thousand signups a day so first one was just multiplayer features I could skip over these details here but the second was SEO so that was a major part of growing that funnel most of our SEO is just these personality tests and all these types of opportunities that we found online so bottom line here is that growing that”
“unexpected things where it's if you're one of those companies that's going from self-service towards Enterprise or B2B this is one of the things that just surprised me I was expecting roughly similar usage and retention patterns but what we saw was a jump from like 55 retention rate to about 120. and that was pretty much the same product except when it was an individual use case just you lose half of them over a year versus”
“the main ones are around sales cycle and complexity so if you've ever tried that up Market motion if you're going the opposite direction it's it's kind of a nice it's a nice reprieve from those things but going out Market we definitely had to build out our just the overall apparatus in the uh to the infrastructure around compliance and legal in all of this so that's been a big big trade-off and also much greater seasonality this was one that I didn't expect whereas our Revenue used to be very very steady now we see those huge drop-offs in the summer come back”
“Under the Hood: LTV up 400% Early PLG: $350 LTV Mature PLG: $480 LTV B2B + PLG: $2,000 LTV”
“PLG Was GREAT for the Early Stages… Forced to build organic growth channels. Our self-service model gave us 3 great advantages: INBOUND FUNNEL PRODUCT/UX EFFICIENCY Rapid product feedback and iteration loop. Insanely low CaC. Consistent 1K+ signups per day. Tons of great logos. UX-driven mindset throughout the organization. Steady recurring cash flow. Tiny team (<10) supporting thousands of customers. Brand awareness. Low-friction buyer experience.”
“Organic Funnel #2: SEO The Self-Service Funnel: 500K+ uniques/mo. 30-40K signups/mo. 3-4K trials/mo. 150-200 customers/mo.”
“…But We STRUGGLED to Scale Revenue. Mostly monthly subscriptions. With 100% self-service, we struggled in 3 main areas: HIGH CHURN LOW ACV $$$ ON THE TABLE $420/year ARPU, spread across thousands of customers. Many HUGE companies using self-service. Mostly single seats and tiny teams. 5-8% total gross revenue churn. 2-3% involuntary churn monthly. Limited room for customer success. Limited opps to build customer relationships. No route for enterprise users to expand. Very sensitive to price increases.”
“Why We Shifted from PLG to PLG+B2B: Team subscriptions had much better retention than individuals. PLG unit economics only worked with organic user signups. Large companies were organically converting with individual accounts but were not organically expanding into team accounts. The slow, steady grind of B2C-like churn was burning us out.”
Video
Life After Freemium: How we killed our business model - Slide Deck
Drew D’Agostino is the founder of Crystal, a company that helps people communicate more effectively with each other by developing personality detection software and email assistance tools. He previously co-founded and served as CTO of Attend.com, a venture-backed event management software company based in Boston, leading the product,engineering, and support teams.
Drew D’Agostino · Crystal
Andre Cvijovic · Referrizer
Ben Gabler · Rocket.Net
Chris Cunningham · Clickup
Chris Marentis · Surefirelocal
Craig Fuller · FreightWaves
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26 passages
We built a new business model Founder500, Sept 2022 Drew D’Agostino Founder, CEO of Crystalknows … and increased LTV by 400%
Most SaaS Cannot Scale by PLG Alone. My biggest lesson from the past 7 years:
Over the next 20 minutes: How we acquire 1K organic signups/day I’m going to show you PLG MODEL PIVOT PLG+B2B MODEL How we achieved profitability after VC Why our self-service model couldn't scale How we validated the B2B sales opportunity How we de-risked the transition to the new model Unexpected challenges of moving up-market How we increased LTV by 400% in 2 years How we use our PLG funnel to drive B2B sales How we expand accounts from 3- to 6-figures
What Crystal Does We make sales teams more effective by adapting to the needs and preferences of every buyer.
Crystal’s History Founded in 2015. Backed early by Salesforce, HubSpot, and others (last funding in 2018). Profitable since 2019. 28 employees.
Crystal’s Products DISC-based communication insights. Chrome Extension integrates with LinkedIn, Gmail, Salesforce, etc. Free behavioral assessments (DISC, Strengths, Values, etc). High-touch training and coaching.
Crystal’s Revenue Journey: PLG => B2B Started Mid-market sales team Started CS team Started enterprise sales team Launched with invite-only self-service plan Launched freemium self-service model Removed self-service
Under the Hood: LTV up 400% Early PLG: $350 LTV Mature PLG: $480 LTV B2B + PLG: $2,000 LTV
Pure PLG 2015-2020:
2015-2020: Pure PLG Freemium pricing model $420/yr ARPU 80% monthly, 20% annual No sales or CS team No marketing spend
PLG Was GREAT for the Early Stages… Forced to build organic growth channels. Our self-service model gave us 3 great advantages: INBOUND FUNNEL PRODUCT/UX EFFICIENCY Rapid product feedback and iteration loop. Insanely low CaC. Consistent 1K+ signups per day. Tons of great logos. UX-driven mindset throughout the organization. Steady recurring cash flow. Tiny team (<10) supporting thousands of customers. Brand awareness. Low-friction buyer experience.
Organic Funnel #1: Multiplayer Features Robust free features. Team-focused UX. Lots of value from inviting coworkers to the platform. Shareables: downloadable content for social media, email, physical display, etc.
Organic Funnel #2: SEO In early 2019, we saw opportunities to capture organic traffic from personality-related search terms (i.e. “disc test”, “enneagram test”).
Organic Funnel #2: SEO The Self-Service Funnel: 500K+ uniques/mo. 30-40K signups/mo. 3-4K trials/mo. 150-200 customers/mo.
…But We STRUGGLED to Scale Revenue. Mostly monthly subscriptions. With 100% self-service, we struggled in 3 main areas: HIGH CHURN LOW ACV $$$ ON THE TABLE $420/year ARPU, spread across thousands of customers. Many HUGE companies using self-service. Mostly single seats and tiny teams. 5-8% total gross revenue churn. 2-3% involuntary churn monthly. Limited room for customer success. Limited opps to build customer relationships. No route for enterprise users to expand. Very sensitive to price increases.
PLG+B2B 2020-Now:
Why We Shifted from PLG to PLG+B2B: Team subscriptions had much better retention than individuals. PLG unit economics only worked with organic user signups. Large companies were organically converting with individual accounts but were not organically expanding into team accounts. The slow, steady grind of B2C-like churn was burning us out.
3 Key Moves in 2020: Hired a VP of Sales who did it before ($1MM => $10MM ARR). Hired a VP of Customer Success and started a true CS process, bundling high-touch training/coaching with our B2B subscriptions. Placed new limits on self-service accounts, and identified B2B sales opportunities within our existing customer base.
PLG+B2B Sales Funnel Mid-Market SQL $3-24K ACV 20-5,000 employees All use cases Enterprise SQL $24K+ ACV 5,000+ employees Primary sales use case MQL <$3K ACV SMB & Individual All use cases WoM ~20K/mo SEO ~10K/mo Marketing ~2K/mo Free Account Assessments and insights for individuals Free trial of premium tools
Risks & Trade-Offs PLG PLG+B2B Longer sales cycle (6+ weeks). Complex sales process involving legal, compliance, security, and privacy. Much greater seasonality. More people-intensive (hiring and management are more important) Emotional roller coaster: Higher highs and lower lows. Immediate sales cycle. Simple sales process. Muted seasonality. Less people-intensive. Emotionally stable: Predictable, smooth curves.
ARPU: Up 300%
Gross Churn: Down 71%
Current Revenue Breakdown
3 Key Takeaways: The business model that got you to $1MM may not get you to $10MM. Going up-market requires long-term investment and conviction. Overcoming the fear of “number go down” can unblock your revenue and raise the ceiling of your company.
Over the last 20 minutes: How we acquire 1K organic signups/day I showed you: PLG MODEL PIVOT PLG+B2B MODEL How we achieved profitability after VC Why our self-service model couldn't scale How we validated the B2B sales opportunity How we de-risked the transition to the new model Unexpected challenges of moving up-market How we increased LTV by 400% in 2 years How we use our PLG funnel to drive B2B sales How we expand accounts from 3- to 6-figures
September 2022 Drew D’Agostino CEO of Crystal
