By Kim Wachtel, VP of Growth Engineering and UX, JumpCloud
It’s no surprise product-led growth (PLG) is an industry approach capturing significance. The core tenet of PLG is value delivery; a product team develops and iterates a solution based on a deep understanding of their users’ problems. This is different from a traditional product approach of planning a roadmap and features based heavily on what corporate buyers will want - without considering users’ perspectives or experience. Pursuing PLG means an acute focus on what users want and need, presuming end users will be more likely to try and influence purchasing decisions as they see their needs reflected in the product.
Software-as-a-service (SaaS) companies are suited particularly well for a PLG model, as ongoing value aligns with ongoing subscriptions. And the benefit is obvious, as Forrester recently found the median enterprise value (EV) of PLG companies is 2x higher than the public SaaS index, creating more than $208B of market value.
But PLG is not simply a label. Product-led growth is a comprehensive approach involving a reengineering of operations, a shift in marketing, and an adjustment of company goals. Here are a few best practices for incorporating PLG:
- Focus on the end user
End users want their problems solved. A PLG roadmap is interactive and dynamic based on what features are accessed most frequently, where users are getting stuck, and what they report they need. Depending on the product, there might be multiple user personas. It's critical for businesses to understand users’ role in using, influencing, and buying the product to ensure they’re applying the right lens to the product they’re using, and it’s essential to work to understand how solving user problems connects directly to business growth.
- Obsess about data
Fast-moving SaaS companies run the risk of creating a product bubble, where excitement about a product feature and the momentum of building it eclipses the higher-priority questions:Does this create value? Do my customers want it?
In the PLG model, feedback and observability are critical. To solicit and collect valuable feedback, give users every possible way of communicating. Methods may include a chatbot or live chat within the product, direct email to support, a guided tour with comments enabled, etc. The more information you solicit and evaluate, the more likely you’ll get insight into smaller details of what is inhibiting product adoption and what irritating issues could build up enough over time that they churn—then use that information to proactively create improved products, rather than wait for unidentified issues to become problems.
If you don't have product usage analytics yet, start working to collect them. Here are some metrics to consider:
- how long users are spending on new features, including whether this time leads to increased engagement or has little impact on it.
- the most commonly searched for terms within an admin portal
- users’ most common questions
- the actions in the product most predictive of becoming a paying customer
- what features or conditions lead to conversions if using a freemium or try-before-you-buy model
- which parts of the product aren't engaging your users and when do they stop engaging? (e.g., they don’t deliver value or the value isn’t communicated clearly).
- Addressing considerations such as these helps make product development centered on data-driven insights, not intuition.
- Reimagine your approach to sales
While some fear that change means less focus on sales, instead PLG redefines the sales role. With PLG, reps aren’t absorbing generic product information only to turn around and push product. Instead, the role of salespeople becomes much more consultative and relational.
As customers have access to feature-full products to test, sales reps can highlight features that might be particularly useful and how the product can most directly address the customer’s needs. These conversations can be driven by data—both from this customer’s usage to date and from cumulative analysis of how similar customers have interacted with a product. Salespeople can take on a role as product experts and technical teams can become indirect sales contacts.
Also, consider ways to empower customers to buy within the product itself by enabling self-serve sales. Buyers are increasingly expecting it, and it can be a more scalable model; more transactional sales can be conducted through the product and more complex sales can go through the sales reps.
For many SaaS companies, now is the perfect time to consider a PLG approach. As B2B buyers create an increasingly sophisticated journey to software selection, demonstrating a commitment to being a useful and collaborative partner is key. You want customers to fall in love with your product and grow with you; PLG gives you the tools to make that happen.
About The Author
Kim Wachtel, as vice president of growth engineering and UX at JumpCloud, designs innovative technology experiences that flex to people. Kim has 20 years of insight into all phases of the product development life cycle. Kim's career includes positions as a developer, software engineer, product manager, UX designer, and growth engineer and spans all size of business, from small startups to the 126-year-old General Electric.