Shift From Launch to Adoption Approaches, including PLG.
Nearly 20 years ago, I was the head of marketing for an early SaaS provider called FrontBridge (acquired by Microsoft, it was initially called Big Fish, and I came up with a much more appropriate name over a weekend, but I’ll save that story for later!). FrontBridge was in what was known at the time as hosted or managed services. The company provided a message management service that filtered spam, blocked viruses and prevented denial of service attacks, among other related messaging and security services.
One of the key strategies I drove in marketing was a trial program. During my tenure, we converted nearly 90% of trial users to paid subscriptions, a success rate I’ve yet to replicate (and I doubt many other companies have exceeded this lofty rate on a sustained basis). One of the reasons we had success in both trial and conversion is because the value proposition was clear and compelling, required no hardware or provisioning on the client’s part, and the product worked well, delivering an immediate reduction in network bandwidth consumption, unwanted messages and a commensurate boost in IT, security and overall staff productivity.
Having a trial motion, as well as managing the user experience, both from the UX of the application to the operational processes, including the entire web experience to user communication, to onboarding and conversion to paid subscription is huge. If any of these key success measures is lagging, it’s likely conversion from a free trial to paid will be suboptimal.
Not every company, however, has a product that is suited to either a trial usage/motion or a freemium offer. The vast majority of SaaS offerings follow similar adoption models as many legacy on-premise solutions did: sell to a new logo customer, provide great user, implementation, service and support experiences, and then begin the upsell, cross-sell customer expansion motions.
None of this can happen however, unless a company is adept at what I call the 4 P’s of product marketing, namely: Product, Positioning, Pricing and Promotion. If a company is comparatively weak or not competitively priced, it will be very difficult to attract, secure, retain or grow one’s customer base. Every company also has to have a compelling value proposition that delivers demonstrable ROI and, especially in times of economic uncertainty, provides an attractive payback period (ideally less than 1 year).
Having started my tech career there, I’ve often found that many in product marketing are adequate at product understanding and perhaps competitive analysis and pricing, but many lack sufficient skills in messaging, positioning, packaging and promotion. These are all critical skills since the goal is never to simply launch products. The goal is to speed and maximize product adoption and customer lifetime value (CLV).
There’s probably an entire eBook that could be devoted to PLG, so for now, I’ll just share what my ChatGPT prompt returned, as it contains the essence of PLG, but not the how to do it, and more importantly, do it well:
Product-Led Growth (PLG) is a business strategy and go-to-market approach where the primary driver of a company’s growth is the product itself. In a PLG model, the product is designed to be self-service and easy to adopt, and it serves as the main channel for attracting, converting, and retaining customers. This contrasts with traditional sales-led or marketing-led approaches, where sales teams or marketing efforts play a more prominent role in driving growth.
Key characteristics of a Product-Led Growth strategy include:
- Free or freemium offering: The product often has a free tier or a freemium model, allowing users to try out essential features at no cost. This helps lower the barriers to entry and encourages a large number of potential customers to give the product a try.
- Viral features: The product incorporates viral or word-of-mouth features that encourage existing users to invite others to use the product. This viral loop can help in organic user acquisition and growth.
- Self-service onboarding: The product is designed to be intuitive and easy to use, allowing users to sign up and start using the product with minimal assistance from sales or support teams.
- Product-driven conversion: The product itself is responsible for converting free users into paying customers. Users typically experience value quickly (author’s note: often described as the “ah ha moment”) and the product’s features and benefits drive them to upgrade to premium or paid plans.
- Data-driven iteration: PLG companies often use data analytics extensively to track user behavior, identify pain points, and make data-informed decisions for product improvements and optimizations.
- Customer-centric focus: Since users can easily try and experience the product on their own, PLG companies put a strong emphasis on customer satisfaction, user feedback, and providing ongoing value to users.
Popular examples of companies that have successfully employed Product-Led Growth strategies include Slack, Zoom, Dropbox, Trello, and many other software-as-a-service (SaaS) companies.
PLG has gained traction in recent years due to its potential to drive sustainable and scalable growth, especially in industries where product experiences are critical for user adoption and retention. However, it’s important to note that PLG is not suitable for every type of business, and its success depends on factors like product-market fit, target audience, and the nature of the product being offered.”
In summary, there are a variety of approaches and competencies required to maximize product adoption, and just like other parts of a given business, striving to continually raise the bar in terms of operational excellence is the surest way to remain competitive and compete for customers and increased market share.
CMO Mentor 