There are 4 aspects that companies with a Product-led growth approach have in common and that could be the key to their success. Find out what they are and maybe apply some of them to your own company.
Not so long ago, B2B software sales used to involve an executive who made the decision about whether to purchase or not. And that decision impacted the end-users (employees) who suffered the consequences of the selection of incorrect software for their workflow.
However, as the software industry shifted towards an end-user orientation, more B2B businesses are approaching a Product-led growth methodology.
In a previous article, we explored the definition and benefits of Product-led growth. Now we want to dive into what those B2B companies that successfully apply this business model have in common with each other.
At Palabra we did our homework and, given our recent research, we can mention that there are 4 aspects that repeat throughout several PLG companies:
- Solve employee/end-user pain
- UX matters more than design
- Integration to employee stack
- Deliver value before the paywall
Let’s check each of those points separately to see what they mean.
Solve employee/ end-user pain
Some people recognize this point as “virality”. But the reality is that there is no virality if there is not a good product, and a good product solves the problems of users.
B2B companies are very used to focusing solely or primarily on solving executive problems. They have a very different look at what the product or the company means to them. Therefore they look for tools that allow them to increase ROI.
Spoiler alert: this does not work the same with end-users (which in this case will be the employees of that company).
It can be easy to ignore end-user pain points if executives buy your product anyway. But that won’t bring you profit at the end of the day, because no one will talk about your product and no one will want to use it, because it was not designed to solve their needs.
Creating a successful product for end-users means identifying their issues and worries and solving them. It would be useless for your application to be full of glitter if it does not add value to those who use it.
UX Matters more than design
We have all gotten used to seeing pretty and bright designs on the internet. Therefore, a very important differentiator for your brand will be that this application may be able to solve a problem that the user has.
According to Forbes, a well-designed User Interface (UI) could raise your website’s conversion rate by up to 200%. Ok, that’s good, right?
Well, a better UX design could raise your conversion rates up to 400%. That’s even better.
Applying methodologies and research focused on end-users in the development of your products is key to getting to know their real needs and not simply assuming that you know what they are.
Do not jump directly to create a solution, first think about your user-person, then about their problem and the way to approach it and that path will lead you to the solution.
This point is intrinsically linked to the previous one. Both of them are necessary to create products for end-users.
Let’s stop here to give an example of what we have been talking about so far.
One great platform that solved an end-user pain point has been Trello.
Trello understood that work teams could suffer from great disorganization and that sticking post-its that could have unintelligible handwriting from a co-worker (sorry, Kevin) just wasn’t enough.
That is why they created a digital solution, with a simple design, that allowed all team members to see the progress of tasks and projects. And that allowed them to be more in communication with each other without having to talk so much between them or send hundreds of hard-to-find emails.
Integration to employee stack
To achieve this you must think like an end-user and not like an executive (surely there is something in your work environment that you think could be done better).
Your products will be better integrated into the team’s workflow if you manage to reduce the friction that prevents it from reaching them. For example, if you have to pay for the product to start using it, you will probably never use it.
So no more “Talk to sales” button and more “Sign Up”.
It’s much easier for end-users to use and buy your product if they find value in it.
Deliver value before the paywall
Imagine that you enter a store they asked you to leave your credit card details or to pay for shoes that you have not tried on yet. It sounds a bit crazy, like a science fiction story.
Users are intelligent, they do not need you to be on top of them explaining every detail of your application. Your software must be able to speak for itself and convince users with its functionalities.
Nobody wants to pay for an app without knowing if it’s going to make all their days miserable because it constantly crashes.
That is why companies that apply freemium, free-trial models or that sometimes do not even require payments are so loved by people. This is one of the best ways to acquire customers quickly according to ProfitWell.
Still in doubt of how to apply this to your company? If you’d like us to talk about how to follow up on your users to learn and improve your features, feel free to book a demo of Palabra.
Think product-led growth is just startup lingo? We found it tells a story on how the software industry adapted to a rapidly changing market, and we want to tell you all about it.
Do you remember when you first started using software you use every day today?
Have you ever started using an app almost by accident and then it became a central part of your life?
That’s the magic of the product-led growth methodology.
When we first started selling and buying software, we had to buy (pretty expensive) products before even seeing or trying them.
It doesn’t happen so often anymore, and that’s because the people who buy software (us humans) have changed the way we buy them, and the industry has changed with us.
In this article we’ll walk you through this huge industry shift and share a few benefits about growth led by product, hoping it’ll help you navigate your software business.
Previously in the software industry
The software industry has rapidly expanded and changed since it started sprouting in the 1980s and 90s.
As we write this, our industry is moving from a sales and marketing led era to a product-led one. Let’s see how that happened.
The marketing-sales-led era
The software industry exploded in the 2000s.
Although software existed before, it was only acquired by people who had technical knowledge.
With the rise of personal computers, technology costs started to go down. This allowed the industry not only to be able to sell more and more software at lower prices, but also to implement a “software rental” system (SaaS business model)
This brought about a change in consumers. The experts were no longer the only ones who bought software, now people who did not know how to program were beginning to acquire and use software too.
Now as software users grew, so did the knowledge on how they use it. Companies started leveraging all the information they suddenly had about their users to grow their business.
Most acquisition strategies became a mix that leans towards marketing (for consumer products) or sales (for B2B products) as the sole driver of growth.
We’re still relying on MQLs and SQLs to sell our software. But other traction drivers are starting to gain leverage.
The users thoughts and opinions when consuming these types of products began to become more important.
The end user era
Even if marketing and sales growth strategies are still pretty much standard in software, it’s becoming harder and harder to rely solely on them to grow.
Today, end users are able to find, get, and use software on their own. Thus, any member of a company is able to bring the value of an application to their own work or to the workflow of their team.
Customer success became not just a service to customers, but an ongoing strategy that includes improving the product itself to keep people from moving to a competitor.
Andrew Chen wrote a few years ago about how lower barriers to the software industry and rising costs on advertising are making it harder on small companies to grow.
That’s where Product-led makes its entrance on the scene.
Product-led growth: know your new methodology
The Product-led Growth methodology (or PLG for short) according to Blake Bartlett, who coined the term in 2016, is:
an end user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion and expansion.
This means you don’t have to spend tons of money on marketing or sales, but rather start by investing time and money in making a product that is viable, usable and potentially loved by your future users.
Please don’t fire your marketing team yet. Continue reading.
Unlike the sales-led or marketing-led model, the product-led does not focus on the product promise, but is responsible for effectively bringing it to reality, in the hands of the users.
Product-led works by removing friction from end users’ lives.
It manages to provide them with a tool that they can use practically from anywhere and at any time. The software designed from this model is easy to start using, which provides value from the ground up.
To put it simple: try before you buy.
But being product-led isn’t just having a freemium or talking about virality in your team meetings. It is not a go-to-market magic formula either. It’s a methodology and a set of principles that any company can adopt to improve their product, their product experience and, at the end of all, their efficiency.
There are 4 axes to this strategy:
- End users are always first
- Invest in your product to grow your business
- Giving before receiving
- Integrate your sales or marketing team into product design and development.
What Product-led Growth can do to your business
Now you know how the industry changed and what most users expect from new software.
But being product-led isn’t just a survival method for startups. It can bring multiple benefits for your company (and your team) as well.
Firstly, more communication and collaboration between areas is needed as you move from marketing or sales led growth towards product-led growth.
Quick iterations and feature development is key, as it’s making the right product decisions for your users and prospects.
Furthermore, according to Wes Bush, CEO of ProductLed, some of the main benefits that PLG can offer for your business are:
Rapid global scale
With PLG each user can test the product on their own, where they are, without having a sales manager drive (or fly) into their premises. There are fewer geographic limitations to marketing as well, since product adoption isn’t driven by targeted or physical ads.
It’s much easier for companies adopting PLG to have a global reach in less time.
With product-led strategies you can reduce acquisition costs per customer (yes, the one that’s been increasing dramatically over the last 10 years).
Less ad spent means lower CAC and a profitable business.
Faster sales cycles
PLG does not focus on having more users in less time, but instead focuses on getting quality users, who trust your product and like it.
Leaving the product in the hand of your users will reduce distribution costs and efforts of your sales team.
Showing people how your product works not only shortens sales cycles, it builds trust in your brand and your product.
Integrations between companies would have sounded crazy 15 years ago, and now it’s one quick traction channel.
As you have seen, Product-led growth is not a passing fad, but the logical result of a whole process that has been in the making for more than 20 years.
Applying these principles and learning from how new features impact your users will allow your business to grow without burning your runway in advertising.
We’ll write about these principles and tips in upcoming posts, so make sure to subscribe if you want to get them in your inbox.
And if you’d like us to talk about how to follow up on your users to learn and improve your features, feel free to book a demo of Palabra.
Getting people to get value from a product is not an easy thing, but looking into the funnels it has can help make it easier. Wait … aren’t funnels a marketing thing? 👀
What is a funnel anyway?
Imagine a pyramid, now invert it and then slice it into different parts: congratulations, you have a funnel.
A funnel is a concept usually applied to marketing strategies, and refers to a series of steps that the visitors or customers must go through to complete a concrete action. They have a top, middle, and bottom section; that can vary according to the use of the funnel, e.g: the AIDA funnel model (Awareness, Interest, Desire and Action).
In other words, a funnel is a system to understand how customers move towards a desired action.
Every business is different, so everyone has to plan out their own funnel to use it correctly. You can imagine how your funnel should be and then you can adjust it as business grows.
Outlining every funnel in your business is the first step to be able to optimize them and meet your goals.
Funnels aren’t just for marketing
Yes. Funnels are traditionally associated with marketing. However, at Palabra we quickly learned funnels can also be used to improve your product.
Business goals are important for product teams, but so are the users. So they need to converge: funnels are the perfect tool for such a task.
According to Alex Iskold, partner at 2048 Ventures, we can think of every department in a startup as a step in the funnel: Marketing would be at the top and Customer Success at the bottom. And the product? right before Customer Success. That means that Product and Customer are the two main cores of the startup and there’re where your focus should be applied.
What if… your product is a funnel?
Once you get the funnel concept out of marketing, you find that you can apply it to just about anything. Including the product.
You can go deep into your funnel to find the precise actions that make up your product success, and the exact steps people take to get there.
In a funnel, the beginning of the process is where the largest number of users enter. As they go through the steps, many of them are lost throughout the process. The final number that reaches the conversion is a minimum percentage of the start.
Studying the metrics of the funnel process allows you to work to reduce the loss of users in each step of the process.
For example: Let’s say your product is a video upload platform. Success for that product is not to get people to upload videos, but rather to do something with that upload.
We may want users to embed the video in their website, or share it with someone else (that depends on our business goals as well). That’s the end of the funnel. And the steps users take to value are what makes up that funnel (like signing up, uploading a video, maybe installing a plug in).
Once you find your product’s main funnel, you’re ready to start optimizing each of those steps. We may find, for example, that most users fall out before embedding the video. Looking into it, we may find there’s a UX improvement we can do (or a notification we can send).
Optimizing one or more steps in a funnel is the easiest way to improve your product KPIs.
Likewise, this can be applied with all facets of your product. You can visualize each of these stages as a funnel in itself.
Some examples for product-oriented funnels:
An important part of delivering a product is that your users can reach value soon to understand it. If you have many steps people need to take to get to value, you’ll probably have a lot of users falling out. Finding where the drop off is and optimizing your onboarding will improve your activation.
Free to paid funnel
Whether you have a free trial or free plan in your product, you probably want to keep track of the steps users take to move from free to paid users. There can be infinite reasons why users are not converting, so tracking more than one funnel on free to paid is an easy way to meet business goals with your product.
Why we chose funnels as a tool for product teams
Product teams are used to think about user flows rather than funnels. We think funnels provide unique insights to teams, helping connect business goals with product efforts.
While creating Palabra, our focus was in creating an easy way for product teams to create and see their main funnel.
In the sea of information, product teams have to navigate to get answers and prioritize features, funnels are a good way of creating order within the chaos.
By focusing on a specific funnel (or even specific steps within that funnel), you can quickly look into what you can do to improve conversion, and prioritize features.
The best part of funnels is that they give you something to focus on.
Ours is not the only funnel-oriented product tool, of course. Most analytics tools use funnels, like Mixpanel, Smartlook and Amplitude.
We’d like to extend that use of funnels for non technical teams, and are working towards it.
If you haven’t yet found the funnels within your product, or the tools you’re using aren’t working for non-technical roles within your team, we’d love to help out.
You can book a demo if you want us to discuss your funnels in depth.