There is no one-size-fits-all when it comes to business models. Even when narrowed down specifically to B2B SaaS Tech scaleups (aka our clientele) we see a different combination of approaches in marketing and sales to increase and sustain growth.
So, can we say Product Led Growth is a tool generally suitable for all SaaS businesses? If so, how should you use it to gain the most benefits from it? Should it lead your strategy or be a complementary method?
These are the questions we discussed at our 16th CEO Forum.
What is Product Led Growth (PLG)?
PLG is a business methodology in which lead generation, conversion and retention are primarily driven by the product itself. It can be both a sales and a research tool that helps align sales, marketing, development and even customer success. When used well, it can be a key element to your sustainable business growth. There are many approaches to PLG, some of the most popular ones:
- Free Trial
- Guided Trail
A survey of our CEOs has shown that PLG is a relevant and favoured method in the SaaS sector – Free trial, Guided Trails and Demo used by all but one of their businesses (except the one that offers large enterprise solutions that takes longer than ideal for PLG to implement.) Primarily used as a market entry/testing methodology, added benefits such as better qualified leads, accelerated market penetration, driving strong, cross-functional working and culture change and building early trust were quoted among the top reasons why businesses turned to this model. Interestingly so, there was a split in views on whether PLG can – or should aim to – also reduce the need for salespeople: while in some cases this was the main motivation, to others it is a means to improve upon the inbound sales funnel, reducing Customer Acquisition Costs (CAC).
When PLG is discussed, a common question arises: can a brand new unqualified or semi-qualified lead be relied upon to identify the benefits of your product? Our CEOs agreed that if a customer cannot gather sufficient information from the product and supporting materials available, chances are you need to review/reengineer both. PLG has to be positioned appropriately and like most business processes, regular review and adjustments may be needed to maximise results.
| Read this article from Alastair Bathgate with useful insights into navigating through a B2B growth journey
B2B SaaS business face another challenge: their customers are usually organisations with many stakeholders often involved in the decision-making process. PLG by default requires a more ‘do it yourself’ attitude from the customers in evaluating whether your product is suitable for them and to understand the benefits it would bring them. However, multiple stakeholders can mean multiple possible conflicting views and varying priorities, and some in that process might take longer – if at all – to accept this approach. One way to address this is by creating product champions in the buying organisation early on who will be your ‘inside’ promoters by being willing to test and share their experiences. Still, there will still be many cases where more flexibility is required in accepting a more traditional approach including structured demonstrations and presentations of your product and its benefits. This is especially so if an amount of configuration is needed to make your offering more acceptable to your prospective client.
One of the biggest barriers to purchasing is often the customer’s hesitation to commit to implementing new processes/systems. Not only do you have to build trust in your product to eliminate this doubt but be mindful of the reasons behind that hesitation. Taking up a new system is a demanding process in itself, and the more problems your product offers to solve the more calibration it may need. This does not cancel out the potential benefits of a PLG method, but you should address them early on.
Purchasing involving Tender responses may well fall outside the norm as far as PLG is concerned.
Sales or Marketing?
As mentioned above, PLG can align the departments of a business, including Marketing and Sales: in a Marketer’s toolkit, it helps raise product awareness and increase interest, while for Sales (which might also be re-titled as Customer Success) it can remove – or at least reduce – the need for a demo or other preparatory phases and ultimately provide better quality leads. SaaS businesses rarely use PLG as a ‘pure’ model – which is better suited for stand-alone services, such as Zoom or Slack. Our CEOs agreed that for Enterprise Solutions (especially with a customisable User Interface) a hybrid model is likely to have a much better success rate.
| Read this article from Adam Hale discussing the 12 steps to great Customer Success
A great example for PLG is HubSpot, which has outpaced its rivals by building its business model on PLG, successfully attracting SMEs as clients.
In conclusion, Product Led Growth, when positioned appropriately, is a powerful tool to help scale your business by you accepting that more and more buyers want to purchase as consumers do, by a hands-on experience, building customer awareness and earlier trust, as well as reducing your marketing and sales costs by producing better quality leads, sooner. This can consequently improve your valuation and provide evidence to Funds that your growth is sustainable, which plays a significant role in their decision on whether to invest in your business.
On the other hand, many enterprise-level software solutions do not lend themselves to PLG today, not being fit for evaluation without the attendance of a product specialist from the selling organisation. So do be realistic in assessing your product’s stand-alone fitness and be prepared to invest to make it so if necessary, to gain the benefits described by the CEOs in our CEO Forum.