Product-led progress (PLG) is an business buzzword usually thrown round by product and advertising groups. However how do you truly outline product-led progress and measure your PLG movement? At Amplify 2022, we invited the unique thought-leader that coined the phrase, Blake Bartlett, alongside together with his accomplice at OpenView, Kyle Poyar, to shed some mild on Benchmarking Product-led Growth.
The rise of the top person period
PLG was born out of a significant shift in how software program is adopted at present. Bartlett shares how adopting new software program was once a laborious course of that concerned lots of people, a variety of time, and, frankly, a variety of eye-rolling from customers.
Beforehand, executives would inform their crew what software program to make use of, and customers would haven’t any alternative within the matter. Now, finish customers discover and undertake that software program on their very own, then ask their boss to pay for it.
Be taught extra concerning the shift from the chief period to the top person period in Bartlett’s weblog submit.
How do organizations adapt to this shift? You guessed it—PLG. In keeping with Bartlett, “Versus human effort out of your gross sales and advertising crew alone… the first driver of your go-to-market movement turns into the product itself.”
How do you benchmark for PLG? Bartlett and Poyar establish 5 core pillars of PLG that can assist organizations embrace the top person period:
- Construct for the top person
- Distribute with person discovery in thoughts
- Create a frictionless onboarding expertise
- Present worth earlier than asking customers for cash
- Gross sales groups assist with growth, not demand
Extra data on every of those pillars and how you can benchmark them may be present in OpenView’s Product-led Development weblog submit and OpenView’s 2022 Product Benchmarks report, respectively.
1. Construct for the top person
Organizations ought to be particular concerning the persona they’re constructing the product for. “There’s no such factor as a generic person,” Bartlett states. “Establish the individual you’re constructing for. Is it the precise person of the product, or is it the chief that runs that division?”
Conversion benchmark: Web site customer to free account signup
How are you aware when you’ve efficiently constructed a product that solves person ache? In keeping with Poyar, the conversion metric PLG firms ought to give attention to is the share of web site guests making a free account. “For those who’re fixing for a robust sufficient person ache, of us will probably be prepared to undergo the trouble of supplying you with their e mail as a result of they need to leap into the product and see if it truly works for them,” says Poyar.
2. Distribute with person discovery in thoughts
PLG facilities round client empathy and understanding. When you’ve constructed a product that solves the top customers’ ache factors, assembly them the place they’re at for distribution is crucial.
Distribution benchmark: Share of latest signups from completely different sources
As a result of distribution for PLG firms is all about discovery, Poyar suggests the metric it’s best to have a look at is the place your new person signups are coming from.
Don’t depend on conventional paid channels
OpenView’s 2022 Product Benchmarks report reveals that standout PLG and freemium PLG firms don’t get a lot acquisition from paid adverts and outbound gross sales. “It simply doesn’t work with how customers discover and need to purchase merchandise,” says Poyar. “The instances when these channels do come into play are round testing. As an illustration, testing new messaging or working campaigns to new audiences. They’re not the core method of attracting an viewers.”
The place ought to PLG firms make investments as an alternative? Bartlett and Poyar share 3 ways firms have efficiently approached discovery.
1. Virality, collaboration, and product invitations
The best method to promote a product is to have it promote itself. Bartlett shares that firms with a viral loop or collaboration hook ought to capitalize on it as a distribution channel.
One instance Bartlett shares is Calendly, a scheduling instrument that must be shared with others. “You possibly can’t schedule a gathering with your self, proper?” asks Bartlett. “So, when you’re utilizing Calendly and sending that hyperlink round, by definition, you’re additionally serving to to advertise the product as effectively.”
Figma and Slack are comparable examples in that they lean on collaboration and community results.
Whereas product invites aren’t as important within the early levels of an organization, Poyar says they shortly acquire significance as firms scale.
2. Natural product-specific search engine optimization
For those who don’t have virality in your product, optimizing your web site for natural search outcomes is one other method to purchase customers.
Poyar shares how Zapier scaled its product discovery by way of search engine optimization by creating touchdown pages for each product use case, workflow, and app integration. Zapier additionally offers a seamless signup expertise on these touchdown pages, so customers can instantly attempt the product and expertise worth.
3. Social media channels
Whereas conventional paid channels don’t assist PLG firms purchase new customers, social media could be the exception to that. In keeping with Poyar, PLG firms are more and more leaning into paid Instagram and Tik Tok adverts, in addition to paid influencer posts. “This is a chance for PLG firms to actually stand out and outcompete their conventional friends,” says Poyar.
3. Create a frictionless onboarding expertise
Finish customers don’t have the endurance for conventional gross sales cycle friction. They demand self-service options they will entry instantly, corresponding to automated onboarding with social login.
Onboarding benchmark: Activation fee
It is best to monitor product activation to measure the way you’re assembly your audiences’ wants once they get began. In keeping with Poyar, “Product activation actually simply signifies that you’re fixing the issue for a person that introduced them to your product within the first place… They get to their aha second. These activation metrics are going to be completely different for each product, relying on what your product does.”
OpenView’s 2022 Product Benchmarks report discovered that solely 20–30% of latest customers attain activation at standout PLG firms. Thus, it’s important to repeatedly check and tweak onboarding flows to cut back time to worth for customers (as indicated by activation charges). Poyar urges listeners to begin monitoring activation—in the event that they don’t already—because it’s elementary to PLG.
4. Present worth earlier than asking customers for cash
On the finish of the day, your organization has to generate income. However when and the way you select to make the person pay on your service is a vital resolution. “You’re gonna need to ship worth first earlier than customers hit the paywall,” says Bartlett.
Barlett shares his personal expertise as a loyal, long-time person of Spotify. He initially began with the freemium model and didn’t transfer to a paid membership till he skilled the platform’s worth over time (creating playlists, discovering new music, and so forth.).
Worth benchmark: Free to paid conversion
Free to paid conversion charges sign whether or not your product is offering sufficient worth for customers to make the change. Based mostly on OpenView’s 2022 Product Benchmarks report, firms with free trials sometimes see greater conversion charges than these with freemium experiences. However Poyar notes that freemium firms sometimes have extra web site signups and virality by way of product invitations. “In case your product will increase in worth the longer somebody makes use of it,” says Poyar, “freemium tends to be an excellent possibility.”
Poyar additionally reminds listeners that freemium entry and a free trial aren’t unique. Actually, among the most profitable firms use a mixture. Beginning with a free trial showcases the worth of the product—together with options prospects could not even know they need but—earlier than switching to a freemium model. “When you’re utilizing these options, you don’t need them taken away from you,” says Poyar. “It drives the urgency and have discovery of a free trial enterprise, whereas nonetheless permitting you to have interaction that lengthy tail of customers who want a bit of bit extra time, like a freemium enterprise does.”
Poyar encourages companies to contemplate which mixture or single mannequin will work finest for his or her particular product.
5. Gross sales groups assist with growth, not demand
Historically, firms rent their gross sales crew first, however with PLG firms, the inverse is true. Gross sales is actually extra about buyer growth—taking contracts to the following stage—moderately than soliciting customers. PLG firms rent as demand builds, moderately than hiring to construct demand. Bartlett describes the build-up for PLG firms within the following method:
- Received customers? → Rent Help
- Received Groups? → Rent Success
- Received Departments? → Rent Gross sales
An instance of this mannequin that Poyar shares is Zoom, which reported that 55% of its clients that presently spend $100K began as one free person.
Gross sales benchmark: Product-qualified leads
By hiring gross sales final, PLG firms are in a position to make use of product knowledge to judge accounts for Product-Certified Leads (PQLs). Firms can begin utilizing buyer knowledge in actually easy methods to begin uncovering PQLs: “As quickly as you hit 5 customers in the identical account,” says Poyar, “possibly the gross sales rep will get notified, and you’ve got a plan of action that they need to take, after which construct extra PQLs from there.”
On this method, gross sales groups don’t waste their time calling random leads, however solely those which might be proven to be certified. “They’re truly in a position to enhance the gross sales course of and drive higher conversion charges and a greater buyer expertise,” says Poyar.
PLG is the way forward for enterprise
In keeping with OpenView’s 2022 Product Benchmarks report, PLG firms are rising sooner and exhibiting 80% greater income multipliers than conventional firms.
As Poyar so aptly put it, “The top person period is right here. PLG is the way you adapt.” With the core pillars of PLG and the corresponding benchmark metrics in your again pocket, the sky’s the restrict. Wish to be taught extra about PLG? Take a look at the total session and different knowledge, advertising, and product talks from Amplify 2022.
