This article is part of the Crunchbase Community Contributor Series. The author is an expert in their field and a Crunchbase user. We are honored to feature and promote their contribution on the Crunchbase blog.
Please note that the author is not employed by Crunchbase and the opinions expressed in this article do not necessarily reflect official views or opinions of Crunchbase, Inc.
Product-led growth (PLG) is officially the software trend of 2021. PLG is an end user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion and expansion. Think about how you discovered tools like Calendly, Twilio and Zoom. Was sales involved? Probably not for a bit, but did you get a lot of value before being asked to pay? Absolutely. That’s the product taking on some of the heavy lifting for sales and marketing—aka PLG.
Like any trend, there are going to be early adopters, and there will be imposters – those who claim to be following a PLG model but are lacking specific operational requirements. COVID-19 forced SaaS companies to rethink their approach to go-to-market strategy, and many of them decided to introduce product-led tactics like free products or free trials. But adopters can be imposters and not even know it. There is still work to do and it can help to know the signs of a PLG imposter.
Sign #1: Your pricing isn’t transparent
Product-led businesses give away a little bit of value to all users for free. They then align the rest of the value they provide with how much a customer is willing to pay for it. Some PLG imposters try to work around this core pillar by having three pricing tiers: free, mid-range and a “contact us for enterprise pricing.” The trick being that enterprise typically has the features businesses need to feel comfortable using the product.
Naming your own price doesn’t win over the hearts of your customers; ensuring the value your product provides aligns with what they pay does. That’s why most top product-led businesses have shifted to a usage-based pricing model. This type of pricing model allows a customer to start at a low cost, attracting more customers to get started while still preserving the ability to monetize a customer over time. Take Autodesk for example, it’s one of the least product-led software vendors out there, and in order to provide an excellent experience for its users, the company launched pay-as-you-go pricing. It’s infinitely scalable and a great experience for your customers, too.
Sign #2: Your trial or sign-up call-to-action is actually just a lead form
Product-led models mean that users can get into the product for free, so a “try it now” or “get started now” call to action is usually a sign that a company is following a product-led motion. But, there are still companies with the sort of CTA that leads nowhere. The old “gotcha” trick still works really well on toddlers and puppies, it’s not controversial to say it’s not making prospective users very happy.
Take a crawl, walk or run approach to keep users in the loop 100 percent of the way. For example, when Axonius first launched its free trial, it had a simple sign-up form that triggered an email to both the support team to set up a trial, and back to the signed-up user to tell them to hold tight. That’s a great first step if getting a free version of your product tied back to a sign-up form proves to be a heavy technical lift for the team. Just make sure to keep iterating, and reduce as much friction between sign-up and product as possible to guarantee a delightful user experience.
Sign #3: Your sales team takes a spray-and-pray approach to outreach
More is more, right? Not when it comes to where your sales team spends their time. One common pitfall with organizations opening up their top of the funnel with a free model is that their sales team spends equal amounts of time on all new leads. Are they wasting their time? Absolutely.
Automation tools like Salesloft make this type of outreach possible, but that doesn’t always mean that outreach is better and is going to convert your users at a higher rate. Instead, successful companies “throttle” their funnel with a qualifying process powered by the product itself–using high-value usage indicators like revisits and triggers. These are called product-qualified leads, and while they can sometimes be a big change for sales teams, they will be much happier to see their commission dollars going up, and the number of nonresponsive accounts going down.
Recent data shows PQL adoption within organizations remains stagnant, probably because priorities shifted and implementation can be challenging, depending on how your product analytics is set up. But, it’s safe to assume your competition isn’t using PQLs, so you’ll have a leg up on them if you do.
Conclusion
Product-led doesn’t have a one-size-fits-all playbook. It’s a state of thinking about your users and the experiences they value before they become your customers. If you try to apply a traditional SaaS playbook to this model, you lose the simplicity and frictionless experience that makes PLG so wonderful for end users.
