Being part of a sales, marketing or CS organisation in a SaaS company, the odds are high that you’ve heard of a Product-led Growth (PLG) strategy. A product-led growth approach, where your platform becomes the center of all lead generation, working bottom-up rather than traditionally top-down.
Many organizations think that such ‘PLG’ strategy isn’t really possible for your product right now, typically because it’s too hard to self-serve new signups. Because a demo is always needed, and thus, PLG becomes a ‘maybe later’. Lets explore when and how to adopt a product-led growth strategy.
Let’s first start to debunk the concept of Product-led Growth. While indeed a self-serving signup workflow is ideal to start with, PLG can add value to SaaS solutions with a demo onboarding just as well. In that case, where the go-to-market strategy is often referred to as hybrid sales-led/product-led growth, the ‘PLG’ part is still significant for improving customer acquisition, expansion and retention, at scale.
When feeling that your product isn’t fit to having an automated in-app guided onboarding do its magic, then at least you’ll benefit from post-onboarding —yet still trial— signals to indicate whether the signup is successfully trying key features. And once a customer, PLG will continuously monitor each user and account for any change in usage, and signal you when churn risk is detected.
When a company starts considering PLG, it typically has already received some signs from its first users during product-market fit.
The first sign would be the most obvious: Does your customer want to try before they buy? If you feel friction to have your customer pay for subscription after a demo, and always insist on getting a 14-days trial first, it’s clear that a PLG —or at least a hybrid SLG/PLG— strategy will be useful to improve trial-to-customer conversion.
And this is actually very comparable with shopping for clothes. When entering a store, even if you would receive a personal welcome and being showed where certain types of clothing resides, you would still prefer trying them on before buying. Just to know if ‘the solution’ fits ‘your requirements’. When trying, the good salesperson in the store will check your behaviour and provide recommendations based on whether you fit the clothes in a right way —which is admittedly mostly the case 😉— and whether you seem content. Now imagine the store has 100 people in parallel trying on clothes, how will the store make sure to provide you a personal service which would make you want to buy? In SaaS, luckily, you have PLG signals to help.
Two ways to validate if SaaS customers are pulling your company toward product-led:
The second sign a company could receive early on reflects virility. Or how will existing customers encourage others to use your product? Not so much Net-Promotor-Score-like, but truly due to using the product itself. E.g. Posting holiday pictures on Instagram and inviting family to check them out, encourages the use of Instagram. If you feel you have a product where usage will encourage more usage, PLG is the way to handle exponential growth. And here again, your users being human too, they’ll most likely want to try before they buy. It’s simply what your users want.
Once you’re clear why a product-led shift is right for your company (or at the very least, why it’s worth experimenting with) you’ll want to take an iterative approach.
Here are a few strategies that will help you maintain momentum as you work through your evolution from start or sales-led to a product-led or hybrid motion.
The first thing to do when transitioning from traditional to a PLG strategy is to get comfortable with the fact that change will need to occur, and that not everyone likes change.
Marketing teams will need to expand the top of the funnel to account for product-led’s long-tail approach. Messaging and tactics will need to change to focus on customers that do not know your offering at all while guiding them towards their ‘aha’ moment.
Product teams will need to shift some amount of focus from innovation to self-service blocking and tackling. As customers enter with an expectation of doing things on their own, tech resource allocations will need to change.
Sales reps will likely need to engage at other points in the buyer journey. Their sales workflows and skillsets will likely change.
Sales leaders in traditional sales-led motions often teach reps to control the process and use friction to advance that process. In many ways, product-led flips the script and sales reps need to balance removing friction with advancing the sales process.
Customer success will likely need to automate certain tasks to provide answers (by email or in-app) when frictions occur. A quick response team will need to dedicate themselves in answering churn risk signals ASAP.
Founders, executives, and finance leaders will need to get comfortable with how the economics of the business might change. In product-led, people will likely make smaller initial commitments to minimize risk, and then expand over time. Forecasting, compensation plans, and associated strategies will change.
In general, traditional companies work in siloes. Data and workflows are kept separate, seemingly —yet more often wrongly— to improve process. In a PLG environment, these siloes have to be torn down, to allow for a seamless customer flow. Without agreement and alignment across the highest levels of the company, the implementation will suffer.
When working through this transition with your team, it’s important to:
To start with a common workflow, you need to map your customer journey(s) as it stands today:
Next, you’ll need to make first assumptions on how most plausible onboarding scenarios will look like. You’ll be able to rely on PLG product analytics with marketing attribution to make these assumptions, while later refining them through feedback loops.
Before going into details, let me repeat that transitioning from a Sales-led over a Hybrid into a Product-led environment doesn’t have to —and won’t— go quickly. So take your time to define different new roles to accommodate the best possible outcomes.
The idea is to get a cross-functional tiger team together with one purpose: addressing the friction points across your ideal customer journey. The various members will likely be:
TOFU Marketers: Who at your company can help increase reach to find more people with the problem you solve? Given that product-led is more of a “long tail” approach than sales-led, it requires more top-of-funnel demand. Who can craft and deploy helpful 1:many communications that help users overcome some of those friction points you identified in your customer journey?
Internal Sales: Which humans can step in to help users with best practices around setup and adoption? And then guide them down the right path to conversion? This is a critical role, since your product was likely not originally designed for self-serve onboarding. This team could be staffed initially by folks from customer experience or support functions.
Sales: Who can weigh in on what the handoff from sales-assist to sales looks like, from designing process to feedback loops?
Customer Success: Who is going to hold down the fort helping your existing customers and more advanced users with bugs, technical issues, and other miscellaneous issues that don’t fall under the guidance of sales-assist?
Product Leaders: Who can take the learnings from everyone above, and start to build more systemic changes needed within the product itself?
Although it’s implied in the name ‘product-led’, it can be super uncomfortable to accept that in this new environment, the customer is going to be doing a lot without assistance. For every customer you speak with, there may be five, five hundred, or five thousand more that are evaluating the product on their own.
The key, then, is to use every human-to-human conversation as a learning experience that can be used to build resources to help all of those customers that are choosing not to engage with a human just yet. Here are a few easy items to help you create your early feedback loops.
First, determine the type of insights you’d like to glean from your human-to-human interactions that might tell what similar folks might be thinking or struggling with. These are things like:
Lastly, determine how you’ll gather the insights and disseminate them to the squad. This could be as simple as a human codifying responses into a form, or as advanced as a data analyst reviewing user clicks and usage.
Regardless of how you start — it’s crucial to simply get started, measure effectiveness, and share even small learnings.
As you settle into PLG, you may find that there are a few new processes you’ll need to develop to smooth over the experience for both customers and sales team.
First, create a system for helping customers get through friction and move on to the next step in the journey. Sometimes friction is easy to identify — like when a customer brings it up in chat — and sometimes it’s uncovered when reviewing product data for negative health indicators. There are different ways to work through such friction: demonstrate a solution, educate the customer about the best path forward, guide them out of the friction step-by-step, and even aggregate product usage data to help the user see how an upgrade can solve their problem.
Secondly, route leads in a new way, based on activation score and map new offerings to various points on the customer journey:
In finalizing transitioning into PLG, you get to measure how far you’ve come, look forward to where you’re going. Tactically, this looks like re-iterating the initiatives that you launch within this PLG shift and reporting on very specific KPIs on a periodic basis. At a macro level, you want to look at company-wide metrics, and across the entire funnel. Here’s what I’d recommend measuring:
While this is a great phase in which you can enjoy the progress your team has made, remember that it is just a part of a cycle. Shifting to Product-Led Growth is making a continuous commitment for life as both market and product keep evolving.
Journy.io is built for PLG. We help saas companies adopt a product-led growth approach by combining customer behavior and product data. Typical things we help them achieve is a better conversion from demo or trials to paid accounts, increase in ARR/expansion revenue and significant decrease in churn.
To conduct a correct B2B PLG motion, you need to act on both accounts and users. First, proper product-qualified accounts (PQAs) must be identified, to then engage with the best possible users (PQLs) from within these specific PQAs. We're today introducing relatioship properties to improve that process.
While product-led growth (PLG) and sales-led growth (SLG) may seem like they are at odds with each other, they can actually work together to capture full business' potential.
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