When I was still teaching, the three main points of advice I found myself repeating were:
- Take your time.
- Keep it simple.
- Don’t bite off more than you can chew.
As it turns out, those three statements apply to most things in life – including business. Especially business.
I know. We’ve been in an era of calculated risk, mainlining entrepreneurial spirit, and the pervasive (-ly annoying) go-big-or-go-home philosophy for so long that “going above and beyond” isn’t even status quo; it’s bare minimum requirements.
Hear me out.
No matter what else you’re doing with your company, you have to take care of your customers. You have to understand them: what they want, what they need, and what they will need down the road.
That understanding of your customer and their relationship with your product is a crucial aspect of becoming a successful product-oriented business.
So you’ve read our previous post on product-led growth (PLG) and now know all the nuts and bolts of a PLG go-to-market strategy. It’s a super-exciting concept and exactly the direction you’ve wanted to take your company in.
But. (There’s always a “but.”)
Your business – the entire customer lifecycle every user of your product goes through – revolves around the traditional sales-led approach of painstakingly coaxing every customer through each step of the sales cycle from demo to trial to paying user.
You can’t go in tomorrow morning, clear out all your established processes, and tell your sales team: Right, we’re totally changing everything right this second. Even if your sales team doesn’t laugh you out of the office, it’s not going to work.
So how do you navigate that transition and maintain your success?
I didn’t know the answer to that, so for this Process Street post, I went straight to the horse’s mouth (🐴) and asked PLG champ, author, and founder Wes Bush about how to make PLG work and become a successful, product-oriented company.
- Wes Bush, PLG Champion
- Product-led growth: Where it all began
- The end-user era: Software for the people
- PLG: Simplicity is the ultimate sophistication
- What goes up, must come down
- Essential metrics to measure product-oriented success
- A final word on the product-oriented evolution
Wes Bush, PLG Champion
“Wes is a really nice guy,” Molly says during our strategy session. “I think he’ll be really helpful in the interview.”
I sort of nod but don’t really take it in as I continue to review the research she’s sharing with me. See, Molly is one of those truly, genuinely kind people. In the entire time we’ve worked together I don’t think I’ve ever heard her say a cross word about anyone. And someone who’d actually be cruel to her – well, even a person who bites the heads off puppies would cross the street to get away from that guy.
When it came time for my interview with Wes interview, I was completely thrown off in minute one because he really is a nice guy.
Working in marketing – or any kind of sales-adjacent field – you become very attuned to noticing the soft sell. I went into this interview expecting just that: another business guru trying to convince the world he’d cracked the secret to mastering successful business practices.
Now Wes is amiable, upbeat, and passionate. He laughs easily and a lot. What really stands out the most, though, is his earnestness. He believes in product-led growth as a go-to-market (GTM) strategy.
So, I set aside my skepticism and asked: What qualifies you as an expert in company growth?
“I’m not an expert in everything around company growth, that’s for sure,” he says chuckling. “But I think people should listen to what I have to say about product-led growth, specifically, because for the past six or seven years, I’ve just been focused on how to grow companies as fast as humanly possible.”
“What’s unique about my background is that I’ve done the old way as well as the new way of growing companies. By ‘old way’, I mean the more sales-led approach of growing a company.
On the other hand, I kind of bridged over to the product world and was more focused on, OK, how can we get more people to try out this product?
One of the core skills that I’ve always brought to the table is around conversion rate optimization: how do you understand these users better? How do you build empathy?
My experience is around understanding your users, and helping them better so that, ultimately, they can purchase your products. In a product-led company, oftentimes this happens without the user ever talking to you.
I just think that’s still so cool.”
It is so cool.
A while back, I was really into phygital marketing, which is very much related to what Wes is talking about. Phygital marketing is about blending the physical and digital elements of the customer journey to create an overall experience.
You virtually test-drive a Porsche from the comfort of your home or grab a snack at the till-less grocery store and have the total debited from your account automatically. Augmented and virtual reality headsets let you try out products and services without commitment – and without a salesperson hovering over you.
With SaaS and tech products, try-before-you-buy is almost always the way to go. I remember the roulette wheel of software purchases way back when, and never being quite sure it was what I needed, or if it would even work the way I expected it to.
That seems insane today. I won’t even consider software or a SaaS product that doesn’t offer some sort of test drive. That’s a typical user expectation.
But, as Wes explained, that is not all it takes to be a product-oriented business:
“On the surface level of a lot of product-led companies, you’ll see the free trial or freemium model.
But when you really look deeper at that company, you’ll find that they’re doing a lot of things differently. The marketing approach is a bit different. The sales approach is a bit different.
It’s much more than just slapping on a new call-to-action on your website and bingo, you’re product-led.”
Product-led growth: Where it all began
If you do a quick search on product-led growth, or even Wes Bush (not the General Motors director), you’ll notice that PLG has become pretty ubiquitous as a GTM methodology. Wes has even built – and named – his company, ProductLed, around it.
Everyone loves a good origin story, so naturally, I wanted to know where it all got started. Who came up with this product-oriented focus when it comes to understanding customer needs? Is it really such a new concept, or have people been doing this since a handle was added to the first clay pot?
Wes tells the story much better than I could, so listen to how he breaks down the whos and whens of PLG’s origin story:
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“The software market is continually evolving, and we’re witnessing the rise of the end-user,” says Blake Bartlett, Open View VP and source of the term ‘product-led growth’. “Here’s the harsh truth: software companies must adapt and embrace the end-user if they want to remain relevant.”
Bartlett’s go-to for describing product-led growth is Slack. It’s a great company to look at in terms of PLG, so far be it from me to break ranks with the expert.
For those who don’t yet live and breathe all things Slack, it is a phenomenal channel-based messaging platform that’s freemium business model targets the end-user rather than the executive.
Plenty of options, right? And yet only a year later, Slack had 73,000 paying users for their premium service, solely from word-of-mouth. Literally. They had zero official marketing. They didn’t even have a single marketing employee on staff.
At Process Street, everything we do revolves around Slack somehow: we launch checklists, keep up-to-date with releases, troubleshoot problems, connect with customers, communicate across teams, and even rely on it for our company social functions. As a completely remote company, Slack provides us a virtual office space that keeps us all connected.
So what catapulted Slack above competitors that’d been on the scene for years? They understood their end-users and focused on meeting those needs. No other app made optimizing team collaboration so simple.
Happy users told their teams, who told their friends. Those friends then told their teams. Then leadership got in on it so the whole company signed up. Before you know it, 12 million people are using the app on a daily basis.
PLG: Simplicity is the ultimate sophistication
A few months ago, my editor and I disagreed about a prospective title for one of my posts. “To scale or not to scale” – that was the question.
His (very valid) point was that you always want to scale. My (somewhat pedantic) response was that it’s not always the right time to scale.
So, while researching this post, I naturally ended up scouring Open View’s materials and, specifically, their “Everything to Know About Product-Led Growth” article. Within the introduction, this paragraph stuck out:
“Any company — even those selling to large enterprises or operating in niche vertical markets — can adopt PLG principles to improve user experiences and increase go-to-market efficiency. And they should: Product led [sic] growth isn’t going away any time soon.”
Again, that somewhat pedantic part of my brain replied: Any company? That’s a pretty broad claim.
Every GTM strategy has risks. Every decision has risks. Are there, I wondered, instances where – like the question of whether or not to scale – switching to PLG or even adopting a more product-oriented approach aren’t the best option for that company?
“Of course, I’m going to say that you should be product-led. But I’m not actually advocating that every company right now at this very minute should be product-led.
There are a couple of caveats.
For instance, if you have a super complicated product. Your odds of success right out of the gate are going to be lower than someone who has an easy-to-use product with a quick time to value (TTV).
That’s not saying you can’t be product-led; I’m advocating a slower approach.
Maybe you introduce new products. Maybe you have a piece of that big, clunky product that you use as a gateway drug to PLG, where it’s easy for people to experience the value on their own terms.
So, yes, I agree wholeheartedly that any company can adopt PLG principles. You just have to be careful about how you disrupt your company.
Sales-led to product-led is an evolution, not a revolution.”
“What are the risks of inciting a product-led revolution?” I asked. “What if a company tries to adopt PLG and fails? What should they have done differently?”
“Oh, dear,” he says with a charming note of concern.
“So, there are a ton of risks.
Let’s say you have your big cash cow product and you just wake up the next morning and say, We’re going to become product-led. We’re going to change everything we’re doing that’s already working in the business and just go at it because we want to be product-led. There are a ton of benefits.
That’s not what I’m advocating one bit.
If you find right now that something in motion is working well for you, great. Keep at it. You want to keep the money rolling in for that business.
What you want to think about long-term is: how does PLG fit into this? How could you, let’s say, use a freemium model to get more people at an earlier stage in their business to learn about your product?
You get them to start using your products so that – by the time they’ve grown – they’re going to be a perfect fit for your business. They’re already sold on the benefits of it.
Most people jump in a bit too much with their products without starting small.
Product-led growth is a methodology. It’s a philosophy. It’s a new way of building a business. You have to treat it like, Hey, this is something we’re going to work towards. It could start really easy. It could be getting our team to look at recordings of people using our product.
It can be just that easy.
What you’re really doing is building the muscle of we care about user empathy at this business.
The key to product-led growth is that you need to understand that your end-users’ success will eventually become your success.”
What goes up, must come down
“Apple is usually pretty good about product design,” I say, “and they’re well-known for being a product-led company. The new iMac mouse, though, can only be charged from the bottom. Is this just an instance of hubris at work?”
“This specific decision is just hubris,” Wes decides without hesitation. “They clearly didn’t do enough user testing to see the conversations around, Hey, I can’t actually use this. Most people in tech use their computers a lot. That’s all they’re doing. That’s how they make money. So it’s super useful to have something that can just be used day in, day out. In this case, they just don’t understand their user well enough.”
How does a company – with the level of success Apple has – not realize their wireless mouse isn’t as functional for its users as it could be, or even should be?
Sure, as an armchair critic who has never designed or built a wireless mouse in my life, it’s easy for me to criticize. Occasion’d by the fall of an Apple, I had another realization: PLG isn’t an endgame. You never get to a point where you can dust yourself off and declare the job finished.
At Process Street, for example, our UX team, our designers, and our engineers are constantly gathering data and feedback from our users on features they’d like to see, pain points they might be having, and basically just how they actually use the product.
“Our design practices are centered around one question:
What value are we bringing to the customer?”
– Jonathan Bond, Staff Product Designer at Process Street
More often than not, their colleagues (i.e. everyone else at Process Street) get to be unwitting beta testers for these improvements – which only makes sense. If a feature is too complicated or unintuitive for users who know the product inside and out, it’s like to be even more so for the average user.
The purpose of user research, according to one of our product designers, is to make sure you’re building for the needs of the customer, not chasing after a pet project.
So, if you just need to repeat this process, why do some businesses miss the mark when it comes to being product-oriented?
“When companies aren’t hitting the mark, it’s often because they set way too big goals early on.
I’m not going to name names because it’s a big company. A lot of people know about them and I’ll save them.
They set this super crazy goal of like, we’re going to get to X, like 200-300k users signing up for this product. They tried their best, but only got a few thousand when they expected a few hundred thousand.
They were really distraught about it when I talked to them. That’s where I see a lot of companies get into trouble; they make these big cases but then they can’t deliver. That’s going to happen if you’re setting these unrealistic goals when you don’t quite understand the reality.
The best thing you can do early on is just getting buy-in from your leadership team. Tell them, ‘Hey, this might not work.’ Set your expectations super low.
When the bar is low, the pressure is taken off a bit. You’re going to think more creatively about how you can solve problems.
I’d always recommend starting small. Get some of those small wins under your belt before taking the big swings. The recurring trend we see in companies that are successful and make the transition from sales-led to product-led is that they really focus on delivering success. Success attracts success, and companies are really all about that at the end of the day.”
Essential metrics to measure product-oriented growth
To really sell any new strategy, you need data. You need measurable results so you can show leadership that the scheme is working. With a sales-led strategy, you might look at customer acquisition cost (CAC) or lead-to-opportunity ratio.
Let’s say you’re super into numbers and you want to measure every possible angle you can measure. These metrics will help you chart exactly how your product-oriented strategy has helped (or hindered) your business:
- Product-qualified leads (PQL): The free or trial account that gets your user to the point of initial value with your product.
- Time to value (TTV): The amount of time it takes for a customer to realize value from your product.
- Expansion revenue: The rate your company’s expansion monthly recurring revenue (MRR) grows monthly.
- Average revenue per user (ARPU): The generated revenue averaged across all users; reported as a monthly or yearly value.
- Lifetime value (LTV): The total amount of money your customer is expected to spend on your products/services during their lifetime.
- Net churn: The measure of revenue lost due to cancellations/downgrades month over month, after factoring revenue from upgrades/expansions.
- Virality: The number of new users generated by an existing user.
A final word on the product-oriented evolution
There are a lot of benefits to adopting a product-led methodology – and a lot of risks. Taking on a new approach like this can be incredibly exciting – particularly if you’re emboldened by a few hits of that entrepreneurial spirit mentioned.
But – you knew that was coming – switching from a sales-led model to a product-led methodology isn’t something you can take on overnight, and excitement alone won’t get you there.
Switching to a product-oriented approach is a huge shift for a company to take on. You need to collect data and feedback from your users so you know where you stand and what you actually have to offer. Consider who you’re offering it to.
As Wes pointed out when we were finishing up the interview, most SaaS companies target executives and leadership. PLG, on the other hand, is a bottom-up GTM strategy; this means your target is the end-user, not the executive. Often, reaching that end user is a lot more affordable and cost-effective than the executive.
Will a product-oriented approach help you adopt a more bottom-up GTM strategy? I’m convinced the answer is yes. Just take your time. Keep it simple. And don’t bite off more than you can chew.
Share your thoughts on PLG and product-oriented marketing in the comments below!