Product-Led Growth - Summary and review

Pricing is like volleyball. It's easy to stand around and watch the ball being dropped in the middle.

And, pricing touches all parts of the business:

• Marketing

• Sales

• Product

A value metric is the way you measure value exchange in your product.

Examples of value metrics:

• Is it messages sent?

• Number of users?

• Total revenue generated?

• Method 1: Subjective analysis

  • Write down all possible value metrics - run them through the value metrics scratch pad by Openview

• Method 2: Data-driven approach

  • Vet results in subjective analysis

  • To get meaningful insights out of your product data, look for patterns among your best and worst customers. For instance, ask yourself these questions when analyzing your data:

    1. What do my best customers do regularly in the product?

    2. What do my best customers not do in the product?

    3. What features did my best users try first during onboarding?

    4. What similarities among my best users - demographics, team structure, ability - led to success?

For churned customers, ask:

• What were some of the main differences between their user journey and that of your best customer?

• Specifically, what activities were different? What outcomes did your churned users achieve and not achieve?

• Were these churned customers in your target market?

• Why did the majority of these customers churn?

When trying to answer these questions, go through your product data to validate EVERYTHING. After you’ve come up with several viable value metrics, stress test their potential.

For your best customers, ask:

1. What do they do regularly in the product?

2. What do they not do in the product?

3. What features did they try first during onboarding?

4. Similarities amongst them - demographics, team structure, ability - led to success?

• Is it messages sent?

• Number of users?

• Total revenue generated?

Me giving talk on Growth Hacking at KTH Innovation - Referring to in product virality and the PLG book by Wes Bush

Going PLG means you should start tracking growth, if not doing it already. Tracking KPIs help you follow your progress and make sure you put effort where it matters.

Some of the key growth metrics you want to include are the following:

• revenue generation

• cost per lead

• cost per customer acquisition

• conversion rates

• the number of active users

"Truly great SaaS companies are built to be product-led."

- Wes Bush

Here are three reasons why Sales-Led Growth (SLG) is broken.

Sales-Led products are expensive. But expensive is not a problem if the product is more valuable Ie. you get a product of higher quality.

The problem is, the premium price of sales-led products is often NOT because of a superior product quality. But rather, because the acquisition model (CAC) is more expensive when running Sales-Led Growth (SLG).

Do you want to pay because it's expensive selling to you, or because the product is of higher quality?

Sales-led organizations inherently have inefficient customer acquisition models. There are a few reasons for this:

1. Marketers are incentivized to gate content

2. Content consumption is used as a leading indicator

3. SLG rewards introducing friction in the buying process.

"98% of marketing-qualified leads (MQLs) never result in closed business."

- SiriusDecisions

Also, SLG leads to a disconnect between marketing and sales.

SLG leads to a broken organizational structure that hinders great product development.

Profit centre:

• Sales

• Marketing

• Customer success

Cost centre (creates product:

• Engineering

• Product