What does it mean to be product-led?
I prefer to call it product-led go-to-market strategy vs. product-led growth – I define it as a repeatable and scalable process that helps you use in-product usage data to acquire, retain and grow your customers. A product-led strategy allows you to get people inside of your product sooner, then you can use information about who they are and how they’re using the product to ensure that the product is more tailored to them.
How has B2B sales and marketing evolved to bring about product-led strategies?
20-30 years ago salespeople would travel around and push the customer to buy – generally, marketing was advertising so that when the sales team would have those conversations with a prospect, they would recognize the brand.
During the SaaS transition, content marketing and lead generation rose – the idea for lead generation was to capture that demand and nurture the lead until they’re ready to buy.
Within the last 10 years, a bottoms-up sale approach emerged – more companies started offering freemium models or free trials. You avoid the lead generation form and get end-users the product directly so they can experience first product value. The goal is to get to the point where the company will buy the product at the top level for the whole organization to adopt.
What are the roles on the product growth team?
Growth product manager – the responsibility of that person is to drive the vision for the team, making sure that operational things are happening with the team, setting the stage for the roadmap, and prioritizing initiatives.
Designer – I like the designers to also be co-owners of the customer experience. As the growth PM, I take my designer to customer calls and talks with salespeople because I view the designer as my counterpart to communicating outside on behalf of the customer.
Engineering – to provide the actual development, but the product manager should make sure to build a relationship with the engineering team in a way that you can go through prioritization together. As we work together as a team, engineers can come back and say, “hey, I know we wanted to achieve X, and I know we had option A, but right now, we can do option B in two weeks, or we can do option C.”
Data scientists (in the early days, the product manager does this) – they create a framework for the reporting and they own the tracking of how we communicate to our organization about what we do. They also focus on implementing and stitching different data pieces together.
When should you hire specialized Growth PMs?
Someone on the founding team should have growth management responsibilities from the beginning – because the PM has the widest position (aside from CEO) at the company. In the early stages, before you hire someone specific, you still need to make sure that someone is leading customers through the initial sign-up and showing them value in the free trial.
Hire growth PMs when you have traffic to work with – if you hire them and have no traffic or haven’t achieved a market fit already, it’s going to be very difficult for them to grow product.
What makes a good growth PM?
- Has a customer and experience-oriented vision
- Makes data-informed decisions – know what your current data tells you and what it’s not telling you.
- Focuses on testing and optimization – it’s never perfect, so never stop focusing on improving the customer experience.
- Has an operational focus – you want to figure out how your team can operate better together. Attempt to AB test your operational processes too.
How do product growth and marketing coordinate their efforts?
Sign-up is the point of demarcation – pre-sign up, they’re a visitor; after sign up, they’re a prospect. Marketing is responsible for driving high-intent sign-ups, then the product growth team takes over.
- What are your north star metrics? – what’s going to be the item that both marketing and product growth focus on and keeps the two teams centered.
- Map the customer journey. What’s more difficult than it should be? – when you map it out, you can visually identify opportunities to make the journey simpler.
Meet regularly – product growth teams should have a bi-weekly meeting with their Marketing VP or CMO. Product growth should give marketing a roadmap of decisions that need to be made so they can get prepared.
How do product growth and sales work together?
Product-led changes what sales does – if you can get more unique companies to sign up into your product, you can better predict how much revenue and how much pipeline you can create. Product-led growth isn’t about removing or adding salespeople, but it’s about changing what they do. Instead of just talking to the leads, you already have people who’ve done a trial, so you can be more personalized and effective in your demos when you’re trying to sell to them.
- Flag positive triggers – that show the customer is ready to buy. For example, as soon as a customer completed a key step within the product, we’d notify sales because the customer had already realized the value.
- Flag incomplete usage – the salesperson can intervene and see if they’ve run into any difficulties.
Help sales do better demos with data – you can tell your sales team what features the potential customer is using the most, so your salespeople can create a more tailored demo for them.
What are the key marketing activities aimed at visitors (pre-sign up)?
Content drives everything (with a call to action to go inside the product) – for example, if you’re running paid ads on LinkedIn, your destination page could be a content-driven page with a video or an article that answers particular questions.
Test if different entry paths to the product make a difference – for different pages, the sign-up flow can vary, so test to see if a certain journey works better for your customers.
- Content production – how much is your team creating?
- Amount of traffic – that your content gets. Keep in mind that it can vary on different channels.
- Customer acquisition cost (connected to conversion) – you can then connect this data with exactly how much the trial costs for your organization.
What are the key conversion activities aimed at trial or freemium customers (post-sign up)?
The first goal is to drive initial value – for different companies, this is measured with different metrics, but it’s usually closely related to some sort of activation action.
3-5 touches via email – while the customer is still realizing the first value of the product. These emails should focus on leading the customer toward realizing that initial value. In-product communication won’t work yet since the customer may not be using the product regularly.
- Conversion from sign up to value – % of sign-up who meet your value realization metric
- Conversion from value to customer – % of customers who reached initial value who become customers
- Customer lifetime value –
- Customer satisfaction – using NPS scores
Optimize and test to improve conversion – if you have good numbers on all of your conversion KPIs, then you can dive into where there might be a problem in the customer journey if a low number of prospects aren’t converting/ moving to the next stage.
- Ask only for info that helps you give more value – for example, if you’re signing up for a credit card, it’s understandable that they’re asking you for your social security number. If you’re signing up for a note-taking app and they’re asking you for that information, there’s a huge mismatch between what you’re providing as a value and what you’ve asked your customers.
- Look at the signup strategy holistically, then at each step individually – let’s say you have flow with 5 steps. First look at the whole flow and talk to customers to understand how it can be improved. Then, work/test/optimize each step separately. Since now you know what each step should achieve you can test and optimize the best way of doing it (the “how’’). Look at the messaging you have, the type of call to action you have, and do prospects understand what they’re being asked.
- Include social proof – what’s your overall messaging at the top and what’s your sub-messaging? Sometimes the social proof provides a sort of validation of the step that the customer needs to take.
- Test different calls to action and flows – don’t make customers click through extra pages and break down the information into larger chunks if you can. If you have smaller chunks, and a bunch of pages to click through, there can be a larger opportunity for miscommunication between the customer expectation and what the product actually asks for.
How do you identify your north star value realization metric?
Find a metric – that gets you 90%+ confident that they’ll stick with you. The Slack number was 2,000 messages; Slack found that customers who’d sent 2,000 messages had a 95% chance of staying with them for a longer period of time.
- If your product is meant to be used often, quicker is better – look at historical data to see how long it takes for a customer to reach your goal or begin paying for your product. If your product is of the “the more you use it the more value you get” type, then you want to condense this to as short of a time period as possible.
- If your product is insurance-like, it can be more complicated – if a customer doesn’t run into a problem very often, then it’s possible that they won’t have to use your solution as frequently, and a time-based goal won’t be appropriate.
How do you target top-of-funnel marketing to high-converting prospect types?
- Look for the largest, most profitable customers – this could be a certain type of person in the organization that correlates with the higher customer lifetime value.
- Look at industry – if you have a certain industry that has a higher potential customer lifetime value, you’ll want to target that in marketing. You might also want to optimize a separate flow for them inside of the product.
- Look at customer lifecycle – because if it takes a shorter period for them to buy, that means you’re less likely to spend time convincing them about the problem. Shorter lifecycle customers already knew the problem, so they just look at the value and the solution.
- Talk to sales about their easy processes – ask them about their top five customers that were the easiest for them to close, along with asking which ones are the most profitable and which are the easiest to work with. This isn’t data-driven; it’s qualitative.
What tech tools should the team leverage?
- Pre-sign-up marketing analytics – e.g. Google Analytics
- Post-sign-up product analytics – e.g. Mixpanel, Amplitude, Heap Analytics
- Pre-sign-up marketing automation – a general marketing automation tool for sending emails about events or newsletters. These emails will be more generic than what product is sending out
- Post-sign-up product emails – an email sending tool that’s based on product usage. The goal is to get them back into the product. You’re sending emails based on “in-product” actions. These emails don’t always have to be oriented around getting customers to buy. They could be for product releases or you could be reaching out to a small number of your customer base to test out a specific feature.
How should you think about free trial vs. freemium?
Trial design is the responsibility of the product growth team – typically product growth knows the customer, product values, and roadmap better than other people on the team.
- You can see value from a portion of the product – for example, with Dropbox it’s very simple to know what you’re getting, which is a certain amount of free storage space. Freemium also works well if people can easily sign up and can experience the value without hand-holding from the organization.
- There are enough prospects – with freemium a 10-25% conversion rate would be healthy (this varies a lot, but it’s almost never 80-90%). You want to have a lot of people trying out your product so that you’re still making enough of a profit when only a minority of them convert.
- You have a more complex product – if it’s a more complex, enterprise product, you have to invest more time for prospects to onboard and see value. You probably want to set up a system where you invest more, and get a higher conversion rate, at least 30%-50%.
- There are operational costs – if you have an enterprise product, and you do a lot of AI machine learning or you’re going to use a lot of AWS space, testing the product can be expensive. A trial gives you more control so that you can understand what margin you have and make sure you’re not spending too much.
Time for the free trial should be based on time to realize the value and make a purchase decision – you don’t want the trial to be too long because you don’t want to push that decision making longer, but you don’t want to make it too short for the organization or the buying persona to not be able to experience that value.
What are the most important pieces to get right?
Diagram the customer journey – think about the customer experience and all of the multiple stages in the process. How do your customers arrive at different products?
Get qualitative and quantitative data – don’t be data-driven, be data-informed. Your current quantitative data only tells you what your current processes are, so it’s important to have the qualitative piece of talking to the customers. For example, data can tell you which button is better or worse for conversion, but it can’t tell you if the two buttons are better or worse than other options for things you could have had on the page.
Focus on first value – if you don’t make a connection with the customer right away, they might never come back and you lose the opportunity.
Keep feedback channels open – both in and outside of your organization because the product team needs to have as much feedback as possible from everyone. It’s their job to translate and digest the feedback into a prioritized roadmap.
Communicate the product vision, especially within your internal teams – for example, if someone on the sales side said, “hey, we want to have this feature,” and they send the request, but they don’t hear from you, they’ll be upset and you’ll end up losing feedback communication in the future.
What are the common pitfalls?
Missing a piece of the product growth team – the product growth team should have a core structure that includes the product person, a designer, a lead engineer, and a data scientist. Not having one of those makes it difficult to move fast and do optimization.
Not engaging customers as they go through onboarding/trial – sometimes customers will come into a trial and leave in the middle without realizing the initial value. You need to engage them to bring them back in and try to understand why they left.
Not engaging the whole go-to-market team – the product growth team can’t succeed on its own. In order to have a huge impact on your sign-up process and getting to the initial value, you might need marketing to remove a lead form or change the content they’re doing. On the sales side, you might have to work with them to see what type of data they need to know so that they have a more prioritized demo.
Optimizing too long and never starting over – optimization is an S curve; at some point, no matter how much investment you’ve made or AB testing you’ve done, the marginal improvements will be small. It’s hard to know when you’ve reached that point, but sometimes you need to completely reset.