Product-led Growth: Marketing, Flywheel, Funnel, Onboarding.

Get to know the key players, the hottest trends, and opportunities when it comes to Product-Led Growth.

Author

Marcos Machado
May 27, 2023

Scaling with Machado #0001

Scaling Ideas

Product-led Growth: Marketing, Flywheel, Funnel, Onboarding.

“First-time founders are obsessed with product.
Second-time founders are obsessed with distribution."

💎 Why does this matter?

Distribution is more important than the product itself.

🔍 Problem

Sales-led models limit your product's adoption.

💡 Solution

Build a product that sells itself.

Let users try it before they buy it.

That’s what product led growth is all about.

 🏁 Players

⭐ Opportunities

  • The most critical stage of PLG is onboarding. Use onboarding and activation surveys to uncover user intent. What “job” is your product being “hired” to do? Customize experiences based on user goals. If I want to use your graphic design tool to make a poster, start me in the editor with a poster template rather than a blank canvas. Here’s a great article that covers the dynamics of product-led onboarding and how Hubspot used it.

  • Optimize time-to-value. Once you know the user’s goal, measure if users can achieve it and how long it takes. Here are five ways to optimize your user activation.

  • Help users recognize the value they're receiving. Loom shows how much time you save instead of having a meeting. Stripe shows how much money you've made. MailerLite shows how many emails you've sent. Sync the value received with the perceived value.

  • Apply product-led learnings to non-SaaS businesses.

    • Communities • Here at Scaling with Machado, we have an onboarding survey.

    • Agencies• Neil Patel uses UberSuggest to attract clients.

    • Marketplaces • Airbnb attracts more hosts with easy listing.

☠️ Risks

  • Silver bullet • (Despite the trend) Your customers may not adopt a 100% self-service experience. Segment your experience and introduce PLG in parts of your product, starting with the connection between acquisition and activation and expanding deeper over time. Particularly when below benchmark conversion metrics (I'll provide these numbers in the "Hot Topics" section), monitor customers who drop out of self-service stages and contact them to understand what's missing in their experience.

  • Data, attribution, and tracking • In a survey led by the SaaS tool GainSight, only 17% of respondents could fully track their PLG actions' results, such as time-to-value (TTV). Only 26% could track activation rates, and only 24% could track their PQLs (Product Qualified Leads).

  • Lack of support • PLG doesn't work alone. To solve distribution problems, you need other distribution channels supporting this sales channel.

🔑 Key points

  • Product-led growth is much more than freemium and free trials. Sales, support, and development/tech teams need to focus on acquisition, conversion, and revenue expansion as one team.

  • Remove as many steps as possible in your onboarding process. Prioritize simplicity and fluidity. If possible, delay email or phone validation.

  • Help users self-educate. Invest in documentation. These documents can serve as a basis for creating guides and leveraging your organic and inbound channels. A study by market research firm Focus Vision showed that B2B buyers/users read an average of 13 pieces of content before making a purchase decision.

🔥 Hot topics

  • About 9% of free account convert to paid accounts. Use this number as a benchmark. Products with an annual contract value of R$ 5,000 to R$ 25,000 have an average conversion rate of around 10%, while cheaper products can have conversion rates as high as 24%.

  • Product-led growth strategy is usually led by Product and Marketing: Product is involved in 49% of cases and Marketing in 42%, according to a survey by productled.com.

  • Be creative, there are many ways to apply PLG concepts to your business:

    • Start with a free self-service product and then introduce a sales journey for enterprise leads.

    • Begin as a sales-led company and then add a freemium product or free trial after a few years.

    • Use product + marketing to drive all new sales and only use sales and customer success teams to expand revenue and make upsells/cross-sells within this acquired base.

😠 Haters

"Ahhhh, I'll lose my enterprise accounts without a sales team."
Product-led growth and sales are not mutually exclusive. See the cases of Zoom, Slack, and AWS.

"My product is too complex for product-led growth."
If that's true, okay. If not, you'll find out sooner or later. You can lead and disrupt your market or (eventually) be disrupted. Your choice.

"PLG is not new."
No-code isn't new, AI isn't new, remote work isn't new. Some things are. Customer acquisition costs keep rising. Code and products are becoming commodities, so companies are increasingly competing in distribution rather than products. That's why companies are obsessed with product-led growth.

  1. Great Book: Product-Led Growth • A fantastic book on PLG by Wes Bush.

  2. Great Content: Exemples and more examples of PLG in practice • A comprehensive article with dozens of product-led growth examples in practice.

  3. Great Course: Product-Led Growth Masterclass • Learn how to eliminate unnecessary steps.

🙏 Thank you

Especially to my wife, Leticia Machado (@psico.tomista), for supporting me and taking care of the kids while I research and write for hours on weekends and late at night.

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Thank you and see you next time!