Part of Kathy Caprino’s series “Leading Entrepreneurial Success Today”
Product-led growth is a key approach for business and entrepreneurial success in 2022 and beyond
There’s been a major shift in the market in the past 5-10 years where buyers of all kinds want far more control over what they spend and how they buy, the ways in which they make those spending decisions, and the degree of personalization (and quick gratification) that’s possible once they’ve purchased the product.
According to ProductLedGrowth.org, “buyers want to self-educate—a 2015 Forrester report found that nearly 75% of B2B buyers now say they’d rather buy through an app or website, rather than a salesperson. And personalization is expected—not only are 80% of people more likely to do business with a company that offers personalization but Salesforce’s 2017 State of Marketing report found that 52% of B2C customers would actually switch brands if they weren’t getting a personalized experience.”
According to OpenView, the term “Product-led growth” was coined in 2016 by Blake Bartlett, and signified that “the End User Era is here. Product-led growth is how you thrive in it.”
Further, PLG has been described as “an end user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion, and expansion.” And the key benefits of PLG involve delivering high value to end users through easy-to-use, self-service experiences.
To learn more about Product-led growth and how leaders can achieve it more successfully, I caught up this month with Mahesh M.Thakur. Thakur is an award-Winning B2B SaaS founder and CEO, and Stanford University Graduate School of Business certified board director with experience delivering $600M in revenue by building high-performing organizations that drive product-led growth. Thakur is a former engineer with a focus on delivering strong business outcomes and supporting high-stakes initiatives collaboratively.
Here’s what Thakur shares about the importance of product-led growth for businesses, and how to achieve it effectively:
Kathy Caprino: Mahesh, how would you describe product-led growth? What do successful enterprise companies do specifically in terms of product-led growth?
Mahesh Thakur: PLG is the most organic way of finding out what customers want, letting them try it, and scaling it after the customers have validated the product. The chief product officer, chief revenue officer, or chief marketing officer would always have a goal to scale the customers and the revenue. PLG provides a scientific method to do just that. Zoom video conferencing and Slack messaging platforms are some of the examples of how PLG is applied to scale and grow.
Companies with a PLG approach let the customers try out the product without charging them a penny. This is the most organic way of letting customers interact with a product and see for themselves if it is solving their problem or making something easier for them.
You let the customer try out the product and see if it solves a problem for them. GoDaddy launched a range of services or products that small businesses can try for free (freemium model). And until the small business sees the need to go live with a website, or until they see the need to collect payments, they can build it for free for as long as they feel the website is ready to go live. Or their business is prepared. That is adding value to them in a product-led way early on in the journey of their business formation.
Caprino: What are the key steps companies can take now to engage more successfully in product-led growth?
Thakur: The key steps an organization needs to start with, to power up their PLG efforts are:
Begin with the customer
This requires a change in the mindset across the company. Product Management, Engineering, Sales, Marketing, Customer Care all need to be genuinely interested in what would make the customer experience better. Aligning and then pursuing the shared goal that is in service of the customer is the biggest change the company can adopt.
Test and learn
Embrace the methodology to test and learn. Make it a part of your culture. The best products in the world were built through iteration. WD-40 got its name because the iteration after thirty-nine was a huge success. Today, there are many avenues to test and learn scientifically so the answer may appear sooner than forty iterations.
Shorten time-to-value
Gather customer usage data for your product, dive deep, and analyze how your product or service delivers value. Then figure out avenues to do this sooner in the customer journey. The shorter the time for customers to realize value through your product, the better will be their engagement and stickiness.
Caprino: And what you would say are the three biggest mistakes organizations are making in trying to achieve PLG?
Thakur: The biggest mistakes I have seen companies make are the following:
Misalignment of Goals: Product-led Growth is not just a function of the product or sales teams. It takes a village to make PLG work. You need your Engineering, Data Science, Customer Care, Marketing, International—every team—to come together, align on the shared goals, and work on PLG.
Lack of Visibility: For new and existing customers, you need to have a company-wide consistent view on how they are performing in their product journey. This includes customer onboarding, first time product use, and frequent usage. Unless you have that visibility, and unless that visibility is made available across all disciplines, you cannot improve what your customers are experiencing. And that can inhibit the impact PLG can bring.
Caprino: You share a lot about goal setting and that’s an age-old process that enterprises engage in continuously. What did you suggest doing differently regarding goal-setting, as you did at Intuit or GoDaddy, which are both companies focused on Software as a Service (SAAS) and small-medium enterprises?
Thakur: GoDaddy and Intuit are both companies committed to helping entrepreneurs thrive. No matter the company size, the mission statement (aka true-north) needs to be inspiring for your teams to feel energized and do the best work of their lives. And the product vision needs to articulate how it will help advance the company mission.
Executives who relentlessly pursue execution also articulate the core metrics that matter. In SaaS organizations, examples of core metrics include product usage, cLTV (customer lifetime value), CSAT or NPS (customer satisfaction score or net promoter score), and customer retention.
The leaders in the organization need to align with these metrics and then elaborate on how their teams will specifically contribute to those metrics.
For example, the product and engineering team leaders together to align on product roadmap items that will specifically increase cLTV. The customer success and the marketing leaders come together to align and work on strategic items that would boost the customer NPS.
Caprino: What advice do you have for leaders and managers of startups and small businesses? What have you seen work at companies such as Ziotag and Mentorcloud where you are a board member?
Thakur: Success hinges on the people who are not just driven but also aligned with your company's mission and goals. They are in it with the right attitude and are ready for the grind. The work you put in is huge, and the journey can be worth it. But first, start with building trust.
As Kirthiga Reddy, public company Board Director, formerly Partner of SoftBank Investment Advisers and Managing Director of Facebook India & South Asia shared with me, "There is a relentless shift toward the customer-first era in which you let the customer decide what works best for them. Product-led growth and breaking of silos across functional teams enable that shift. As a software company, you can build the product but if you want to scale it, product-led growth is the most organic way to do so."
Caprino: What common fears do CEOs and the C-Suite at small and medium companies have and how does that impact product-led growth?
Thakur: Not having enough funds and not having the right talent are the founding CEOs and the C-Suite's biggest fears. There is always a limited availability of resources while the goals are audacious.
One of the common questions that get asked is “how much runway does the company have until its next round?” The reason this is important is that it gives the new and future employees confidence. If they are confident, they will focus on the mission and getting things done. If they are worried about the company’s financial strength, they may be distracted and may find other opportunities.
Another key area is to retain top talent. The founders must do everything to create a culture where everyone involved thrives. Everyone has a chance to learn and grow professionally and personally. You may attract good people, but how you treat them will decide how long you can retain them. It is a competitive market, and you must do everything in your power to retain top talent and help them visualize their benefits and growth alongside that of the company.
Caprino: What is the most important mindset for startup founders, CEOs, and startup boards who may have limited resources to apply Product-led Growth?
Thakur: Without putting a huge sales team on every call, you can expand your customer base. Their mindset should be very curious, willing to take risks, and being scientific in their approach.
Here are key traits I’ve seen that characterize successful mindsets of startup founders and corporate leaders:
Customer obsession
This is one of my favorite leadership principles from when I worked at Amazon. And it has stayed with me. Be obsessed with what the customer wants and how to serve them 10x better than what they currently have. Find ways to deliver value to the customer early on in their product journey aka customer lifecycle and create a huge value for them.
Let's take the example of Amazon, with Amazon Prime, Amazon Marketplace, Echo, and more. Behind each of these huge successes, there were many iterations. These companies remain obsessed with solving what is most important for the customers and delivering exceptional value
Lean on best practices and platforms
Leaders need to lean on experts and on the platforms that enable delivering breakthrough customer experiences throughout the customer lifecycle. This not only prevents their engineering teams from being stretched too thin but also enables them to double down on solving the core problem their product is meant to solve.
Learning mindset
Sometimes, it's best to let the product and the customer be together. And learn from what that interaction teaches the organization. Please don't get in the way, don't mess up the validation signal, let the customer tell you exactly how they want this experience to be built. Founders must have the learning mindset to learn from customers and partners. They should adopt a scientific way to run A/B tests and learn from every experiment.
Product-led growth is a powerful approach to go-to-market. It is a strategy that needs to tie into who your customer persona is, what their pain point is, and how they would discover your product. If you are a large enterprise company, PLG requires a shift in mindset.
In that, you need to allow more self-serve options for customers to use your product for free. Every company with a digital product needs a PLG strategy to acquire new customers and keep their existing customers meaningfully engaged.
For more information, visit Mahesh M. Thakur and hear Thakur speak in depth about this topic here.
Kathy Caprino is a career and leadership coach, author, and speaker helping professionals and teams achieve greater success and impact.
