Historically, startups have operated under the mentality to experiment, iterate, and grow as quickly as possible. In the current economic climate, this strategy must shift.
Even when growth is still top of mind, today’s companies balance it with efficiency. They need to do more with what they already have, and drive growth without significantly driving up costs. While this isn’t an easy or simple task, software companies already have the best tool to fuel efficient growth: their product.
This was the topic of our latest webinar, where we brought together four experts in product-led growth: Nichole Mace, VP, growth at Pendo; Scott Brinker, VP, platform ecosystem at Hubspot; Logan Hutchinson, senior staff product manager at Drift; and Curt Townshend, senior director of growth at OpenView. They discussed why product-led organizations are best positioned to maintain efficient growth, and shared best practices for doing so effectively.
The business impact of going product led
Our experts had plenty to say around the positive business outcomes they’ve experienced from utilizing product-led growth strategies. Here are some of the highlights:
- Driving revenue from free product offerings by converting free users to paying customers.
- Creating ways for customers to expand their subscriptions and entitlements themselves in-product, without having to talk to sales.
- Empowering people to use and train themselves on your product on their own, so that your team saves time and can dedicate resources to more high-impact work.
- Putting more of a focus on the end user. This means teams build products that users love, use, and return to—which can drastically reduce customer acquisition costs.
- Making the buying process easier so that you’re not forcing your product on customers, but instead providing value early on (i.e. with a free product) and then asking users to pay.
Whether you’re an early-stage company or a more mature startup, here are four tips for leveraging your product to get to (and through) your next phase of growth—efficiently.
1. Set your foundation with a free product
It’s important to set a strong foundation for product-led growth from the onset. Nichole Mace pointed out that it’s crucial to establish some way for people to try your product for free, whether it’s through a free trial, freemium product, or both. From there, your focus should be on getting users in the free product and driving usage—the more value free users experience, the more likely they are to pay for your premium offering. Logan Hutchinson echoed this, noting the importance of delivering enough value with your free product so that users get to the point of being excited to upgrade. Finally, double down on organic content that educates potential users (read: future buyers) and aligns your free product with solutions to their most pressing problems.
2. Choose metrics to measure success
Just like any other product initiative, teams can use data to measure and improve their product-led growth tactics. Curt Townshend noted the value of product data early on, from which you can start to see how well you’re doing based on usage for your free product. This data can help you understand where free users are finding value (based on the features they leverage the most) and identify friction points that need to be addressed. It’s also useful to leverage this data to showcase positive results to your investors.
When it comes to choosing which metrics to prioritize, Mace recommended these four categories of growth metrics:
- Retention (e.g. second day retention, second week retention)
- Conversion (e.g. free to paid, trial to paid)
- Virality (e.g. referrals, product invites within an organization)
- Engagement (e.g. feature adoption, workflow completion)
3. Put experimentation and customers at the center of development
During the discussion, a key question arose: What should be the role of experimentation at product-led companies—particularly startups? As Scott Brinker put it, “Having an experimentation mindset is the single greatest capability a startup can have.”
Growing startups should use experimentation as the key driver in how they build their products. You can move fast by testing, analyzing, and iterating on ideas—just be sure to have a well-formed hypothesis for what you’re experimenting around. With this experimentation mindset also comes the need for teams to be comfortable with failure. If something that you’re testing isn’t working, don’t be afraid to scrap it and move on.
Another key input to product development for growing startups? Your customers. When you’re a young company with limited resources, talking to end users about their problems and needs is key. This way, you’re able to build products and features that help solve their problems, getting users to value quicker and fueling adoption and growth. In other words, make sure you’re involving customers at every phase of product development.
4. Get other teams on board
Product-led organizations hinge on collaboration, so the last thing you want is for your product-led growth strategy to exist in a silo, or only involve a single team. Our experts recommended creating a cross-functional tiger team that’s focused on product-led growth, with representatives from across the business (e.g. marketing, sales, product, customer success). This way, multiple people (and departments) feel ownership, helping to ensure this work doesn’t slip through the cracks.
Your core growth team should also ensure the rest of the organization knows about all of the product-led initiatives that are in the works. “As a growth leader, part of your job is to educate. There’s an excitement around product-led growth, and it’s important to maintain that level of excitement company-wide,” Nichole Mace explained.
Another way to get the rest of your company on board is with data. Scott Brinker recommended feeding product data into existing automations for sales and marketing. Product data can serve as a shared language across the company, and inform how teams like customer success, sales, and marketing target and communicate with customers.
Want to dive deeper into product-led strategies and best practices? Head to the Product-led Hub. If you want to watch Nichole, Scott, Logan, and Curt’s full discussion, check out the recording below.