Imagine no more awkward cold calls and instead letting customers sell your product for you.
No need to dream it. All you need is to put a product-led growth strategy into play. Today on Recur Now, we're all about product-led growth and how you can make it work for your business.
Listen wherever you get podcasts:
Table of Contents:
1. The future is product-led
2. A PLG recap
3. Product Drive: The Ebook
4. A++ examples
5. Against the Grain
1. The future is product-led
2. A PLG recap
3. Product Drive: The Ebook
4. A++ examples
5. Against the Grain
The future is product-led
The traditional SaaS growth approach involves building a product and then hiring a sales team to sell that product. It’s not to say this approach doesn’t work... there’s just a more effective strategy to acquire new customers. That strategy is product-led.
The simplest way to describe product-led growth? Have a product so great, users can’t live without it. When users find something they can’t live without, they’ll stay on longer—and probably even recommend it to their friends.
A product-led growth strategy is a bottoms-up approach allowing you to use your product value to expand in the market.
Today's special edition provides the foundation for building a product-led growth strategy. I’ll walk you through the main principles behind PLG, how to implement it, and the metrics to track its success.
The principles behind PLG
There’s four main principles behind PLG: leveraging product need, using your product to expand, retention through customer satisfaction, and strong referrals.
1. Leveraging your product need: This means building a product that satisfies the needs of entire markets. So think of Dropbox. Dropbox is hugely successful, all in the name of PLG because they built a product people desperately needed: easy file sharing.
2. Using your product to expand: Meaning if customers love your product, upselling and cross-selling becomes easy.
3. Keep retention high through product satisfaction: aka make your product essential in your customers’ daily routine.
4. Acquire customers through referrals: Using DropBox as an example again—they’re referral strategy is kick-ass. Users who referred their friends to dropbox, earned more storage—so, more users for dropbox and an enhanced experience for current users. A win-win.
These are the four main principles, so how do put them into action? Well, first, two transformations need to occur.
Let’s break them down.
How to be product-led
To be truly product-led, two transformations need to occur. One within your product and the other within your organization.
For your product: make sure you deliver on the value promised. Optimize your product by tapping into user data. Discover what the people need and add features to deliver on these needs.
As for your organization, product-led growth moves fast so your teams need to be cross-functional. Departments need to coordinate and collaborate together to stay in-tune with customer needs and scaling your product.
Once these transformations occur, you’re ready for PLG. Now of course, once a strategy is implemented, you can’t just walk away. You need to track and measure its success. So, let’s go through some metrics to track PLG.
Metrics to track
Four top metrics for tracking product-led growth and its success: revenue, churn rate, usage, and referral rates.
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Revenue: Tracking revenue, either annual recurring revenue (ARR) or monthly recurring revenue (MRR), will trace whether you are earning or losing money overtime. If revenue increases month-to-month, then your PLG strategy is working well.
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Churn Rate: Churn rate is the percentage of customers who leave your service over a given period of time divided by the total remaining customers. A successful PLG strategy will result in churn rate going down overtime.
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Usage: This simple statistic shows how much customers are in need of your product. High usage rates mean your product is integral in your customers' daily lives. If you find that your usage rates are low, it's time to discover how you can adjust your product to make it more of a necessity.
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Referral Rate: Referral rates track how many new customers come from referrals. This is crucial to track since PLG is having a product so great, customers sell it for you (via word of mouth). If this is true, then your referral rates should be high.
Additional metrics to track:
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- ARPU (average revenue per user): Divide MRR by number of customers to reveal the overall health of your business
- Customer LTV: How much revenue you can expect from a single customer during their time with your company
- Expansion revenue: Measures revenue generated from existing customers
- Virality: Happens when a product's rate of adoption increases as more people share it
A PLG recap
The four main principles behind a product-led growth strategy are leveraging product need, using your product to expand, retention through customer satisfaction, and strong referrals.
A product-led growth strategy is a bottoms-up approach allowing you to use your product value to expand in the market.
Implementing PLG requires cross-functional teams and discovering what customers want from your service. Once your product-led growth is off the ground, be sure to track it’s growth.
For more on the basics of PLG → click here
How to become product-led → click here
For Patrick Campbell's product-led tactics → click here
How is the B2B SaaS market trending?
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📈7 day +1.04% | 📈30 day +4.75% | 📈90 day +13.04%
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MRR LOSS +2.65%
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Your B2B SaaS Index is up +1608 points—with overall growth increasing 1.04% over the last week.
The MRR gain Index, aka upgrades and new revenue, has gone down 2.61% over the last 24 hours, while MRR loss (namely, representing churn in the market) has gone up 2.65% over the last 24 hours.
Be sure to check your subscriber newsletter for regular updates to your index.
You can also share the data with friends and fellow industry players that could use it right now. Send me their email address to grace.g@profitwell.com and I’ll get their name on the list. Or they can subscribe directly at index.profitwell.com.
Product Drive: The Ebook
Hey—got 10 hours to spare? Just kidding, I know you don’t, and so does Userpilot—which is why they put together an ebook with highlights from this year’s Virtual Summit for Product Managers.
All the information, spread across the two-day event, is packed into Product Drive: The Ebook.
The ebook is all about product—ranging from analytics to growth and leadership and more.
And Something specific in this ebook for my product managers out there: how to lead people who manage products.
Leading a team of people who work on something as valuable as your product is tough—but Product Drive says there are three main principles:
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- Learn to let go, aka, don’t micromanage your team
- There’s no one-size-fits-all management style; adapt your management to support the needs of your current team.
- And finally, appreciate and acknowledge what each team member brings to the table—because they certainly have various talents and skill sets.
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For more valuable takeaways from this Virtual Summit → download The Product Drive Book here
A++ examples
And more on product...
I stumbled upon a tweet by Jeff Weinstein from Stripe who asked his Twitter base:
“What are some A++ examples of asking for qualitative product feedback at scale?”
What are A++ examples of asking for *qualitative* product feedback at scale?
— Jeff Weinstein (@jeff_weinstein) July 14, 2020
I always liked the phrasing: "Would you kindly mind jotting down a few bullet points of feedback? What did you like? What do you wish?"
Other surprisingly great feedback prompts or UIs? https://t.co/0Ud0MYtOUF
Lots of good responses, notably one by our friend Hiten Shah from Product Habits who replied saying asking for opinions is much more effective than asking for feedback.
This thread is a good conversation on how we can leverage feedback to improve our products.
Against the Grain
HelpScout—the help-desk software—has a new docuseries we think you should check out.
It’s called: Against the Grain. They’re sharing the stories of businesses putting their customers, craft, and community first. Watching it will enlighten how you can be successful in business without sacrificing your values.
To watch Against the Grain → click here
And now—let me introduce you to our ProfitWell featured User: airfocus, the all-in-one product management platform.
Some of airfocus’ cool features include prioritization—channeling opportunities based on defined values and cost criteria. There’s also roadmapping so you can communicate your product strategy. And then of course collaboration, to help you achieve cross-functional teams within your organization.
We talked in-depth earlier about a product-led growth strategy—and using a platform like airfocus will help you get there.
To learn more about airfocus → click here.
That is a wrap on this week’s B2B SaaS happenings. Catch you back here next time with more news and more data. Make sure you're subscribed at recurnow.com or wherever you listen to podcasts.
If you have news to spread or resources to share with our audience, you can always connect with me at grace.g@profitwell.com to get the good word out there.
