Investors and product managers encounter companies that have failed and some that have succeeded in their product-led growth (PLG) efforts.
The PLG path is never easy, but it can be a steady path to sustainable success.
A series of experiences are condensed below into a short list of previous key elements that increase the success factor.
Create (or rebuild) to be a self-service experience
A popular approach to embarking on a PLG journey is to create a registration page and make the entire product available for self-service consumption. Maybe add a fancy marketing campaign.
Now, unless the product is so simple that the user can, on their own, arrive at a satisfying customer-facing experience in a matter of minutes, this approach never works.
In a PLG environment, there should be no human being to set the stage or guide the customer through the product. If the home page doesn't make sense in a few seconds and the product doesn't work in a few minutes, the client will absolutely discard everything the startup offers.
It is necessary to propose brief experiences to the client, each of which would be a significant result for the user.
Optimizing time to value requires figuring out the smallest, most atomic, self-contained units of value that can be packaged into a self-service offering. It has the benefit of not overwhelming the prospect and providing incremental value while keeping them engaged.
Some founders argue that their products are too complicated to render in PLG mode. Instead of giving up self-service altogether, how about designing an experience that shows the essence of the product with the complexity pre-packaged or isolated? For example, depending on the use case, this could mean an offering that works in a preconfigured multi-cloud configuration or runs on multiple virtual endpoints.
Self-service does not have to mean that the entire product works in the configuration desired by the customer.
Instrument, measure and manage touchpoints
Product-driven growth can be notoriously difficult to fix due to the inherent low-touch nature of this approach to face-to-face communication.
Consider a scenario where conversion to a paid product is low. Is it because too much free product is being given away? Are the benefits of the paid product not clearly articulated? Is it because you are targeting a customer segment with no budget? Is the price too high (or low)?
To determine what the problem is—product packaging, positioning, pricing, market segmentation, or some combination—you need data to inform process and problem resolution. That's why multiple customer touchpoints (including but not limited to product usage) need to be carefully orchestrated before even implementing a self-service product.
Equally important is investing in the right set of tools to collect various metrics and then stitch them together into an actionable stream of data. Finally, craft a process to actively manage metrics, including a clear line of responsibility for who owns what metrics and how often they are reported.
Align everyone in the company with the customer journey
By definition, a PLG effort requires everyone in the company to align around the product as the primary vehicle for scalable business growth.
This requires engineers to know who they are building for: the person of the end user. What other tools do users use on a daily basis? How technical (or not) are they? Marketing needs to know what message will resonate with users who have tried the free version of the product and are exploring more advanced functionality. Customer experience needs to see product functionality that drives upsells and triggers support requests.
Having a common vocabulary and shared understanding of the customer journey is vital for each functional role to be efficient and effective. Focused founders can make it easier—for themselves, their teams, and any newcomers to the company—by writing the customer journey and making it a living document as it evolves.
Finally, while it is crucial to break down traditional sales/marketing/product silos, it is also important to clearly delineate responsibilities. For example, marketing takes care of the work of getting the right users to try the product, sales takes care of upselling, product takes care of the roadmap, and empowers other teams by freely sharing usage metrics and engagement, customer experience takes care of retention, etc.
Teams function effectively and consistently when they have a shared vision of the customer journey with meaningful metrics and clear ownership.
Partner early and smart
Technical founders fall into a common trap: the desire to build as many products as possible. While there is nothing inherently wrong with building deep product moats, it is wiser to focus on a few niches where you can be at least 10x better than others. That approach requires choosing not to do certain things.
Now, these other things may be exactly what the customer is asking for, because they're doing side-by-side product comparisons, or maybe they want to reduce the number of vendors they get the "full product" from.
Still, for the startup's long-term viability and (hopefully) success, it's important to ignore these "questions" at least until you fully dominate a smaller niche. You can still create the "full product" your customer is looking for, but not by building everything yourself.
Instead, partnering with complementary solutions in the market is the way to go. All in all, the end customer should be able to get everything they want if they can effortlessly work with you and your partners.
Often startups that brag about the number of integrations or the brand of their partners. There's nothing inherently wrong with that, as long as you remember to optimize for customer outcomes and partner motivations.
For example, Snowflake or Databricks may not be the best partners for your data startup if
(a) your product does not influence the acquisition, the use or customer retention for Snowflake/Databricks, or
(b) what your customer does immediately before or after using your product has nothing to do with Snowflake/Databricks.
Foster user communities with a people-first mindset
Some companies will create a channel of Slack to push their effort through communities, but they rarely go any further. Others will ignore communities because they have so many other things to do, like create products, sales, marketing, and customer service.
Admittedly, it's hard to add a more seemingly delicate item to your to-do list. But if managed well, your user community can become a differentiating moat that can be difficult to emulate overnight. The best part is that everything from creating the right products to selling them becomes easier when there is a strong user community.
The key to building strong user communities is understanding why people join in the first place. It often boils down to two things:
- They have similar problems for which they want to explore possible solutions.
- They like to be recognized as experts among their peers.
Once you understand these basic needs of a community, it becomes easier to know how to build and nurture communities.
Here are some key points to consider:
- Support the two-way exchange of ideas, resources, and expertise across multiple platforms (webinars, blog posts, community forums, Slack channels, etc.).
- Both content and engagement are important. If you're starting a community, plant it with thought leaders and people who like to produce content and ideas (rather than just consume them).
- In the early days, be selective about who can participate in the community. Scarcity principles can be helpful in creating intrigue and demand.
- Remember that you don't always need to build a community from scratch. Following in the footsteps of a large existing community is a smart way to optimize resources and start down the road.
