Grow your B2B Business with a Product-led Strategy

Welcome, Introductions & Housekeeping

Rina Alexin | 00:00:00–00:03:30

Hello everyone, welcome and good morning. Thank you so much for joining us today. We will be discussing how to grow your B2B business with a product-led strategy. This webinar is another installation in our Product Management Leadership Series.

My name is Rina Alexin and I’m the CEO of Productside. I absolutely love product-led growth. We’ve been talking about this topic at Productside for the past few years, but I really feel like the momentum is just starting to build. We’re really seeing teams everywhere embrace the techniques and the strategies to drive real value for their business and their clients.

I’m joined today by Joe Ghali, one of our Principal Consultants and Trainers at Productside. Joe, how’s the weather treating you in Milwaukee today?

Joe Ghali | 00:03:30–00:04:00

It is a balmy 22 degrees Fahrenheit, but I’m not complaining, Rina, because there’s no snow on the ground. And I can handle cold weather as long as there’s no snow on the ground, so we are in good shape.

Rina Alexin | 00:04:00–00:04:30

You know, I’m actually calling in from Colorado today and I am trying to get used to the snow myself.

Well, thank you so much, Joe. I’m excited to hear you present on product-led growth today.

Before we get started, let’s first go over a few housekeeping items. After this webinar — not “weather” webinar — continue to stay engaged with the product management community. Join our LinkedIn leadership group today and use it as a forum to share best practices and tips with your peers. We’ll be sharing a URL in the chat box shortly.

At Productside, we love, love, love to stay engaged with you. This time is really for you, so please, we encourage you to ask questions. There is a Q&A box on the bottom of your screen. Please ask questions throughout the webinar. We will be leaving time at the end to go over Q&A, but with Joe’s permission I’ll be trying to take some of those questions while we’re live.

Our most popular question is, “Can I watch this later?” And the answer, of course, is yes. All attendees will be receiving a link to the recording after the webinar has ended.

Our agenda for today: After I go over a little bit about Productside, we’ll be going over the history of product-led growth, the benefits of using it as a strategy at your business, illustrating that with a case study from Craft.io, and we’ll leave the webinar with a few tips to help you get started.

About Productside & Mission

Rina Alexin | 00:03:30–00:05:00

At Productside, our mission is very simple. We want to empower product professionals with the knowledge and tools to build products that matter. Unlike other companies, we’re really focused on the needs of product professionals. Whether you’re looking to grow in your own career or you’re a leader looking to maximize the efficiency and effectiveness of your team, we have the services and expertise to get you to the next level.

Check us out at Productside.com.

Well, Joe, let’s get started, and I think we’re going to launch this poll.

Audience Poll: Where Are You on the Product-led Journey?

Joe Ghali | 00:05:00–00:06:30

Yes. So please, in Zoom — Michelle’s going to launch a poll, which I see is now out there. Just let us know where you are in your product-led journey within your organization. That’ll help me as your facilitator or presenter to kind of guide our discussion. So just give everyone a minute to fill out the survey.

And if you don’t know what product-led growth is, that is absolutely okay. That’s why we’re here today. So we’ll be really covering some of the basics of product-led growth strategies. Of course, after this webinar, if you want to learn more, a lot of the content we’ll be going over today is also available in our Digital Product Management course.

Rina Alexin | 00:06:30–00:07:00

Yep, absolutely.

Speaker Introduction & Background

Joe Ghali | 00:06:30–00:08:00

Well, look, hey, listen everyone — my name is Joe Ghali. As Rina mentioned, I am calling in today from sunny Milwaukee, Wisconsin. I’ve been in the product management space for almost 20 years. I started out in online travel and then touched a little bit of publishing, fintech, power generation, and then most recently in consumer packaged goods.

So I’m also a principal trainer and consultant at the Productside and, like Rina said, we are so excited to talk about this topic.

What Is Product-led Growth?

Joe Ghali | 00:08:00–00:11:30

All right, so let’s just kind of level set on what product-led growth is. In short, product-led growth refers to a model that uses your product and your users as a primary mechanism to drive growth through acquiring new customers while retaining and monetizing your existing customers.

Now this is in stark contrast to the well-worn model of using sales and marketing teams and other programs for these efforts. With this new model, all customer-facing transactions are handled inside the product — like implementation, onboarding, support, upsell, renewals, etc.

The key to note here is this — and I put that image on the far right — the idea is it helps to ignite and kick-start your business. And this is critical with digital products because that medium or that channel allows you to be in constant contact with your customers.

History of Funnels & Traditional Sales-led Motion

Joe Ghali | 00:11:30–00:14:30

Now, to understand product-led growth, let’s go back in time. And I’m not talking about November 5th, 1955 for all you “Back to the Future” fans, though…

If you think about it, the funnel — the history of funnels — kind of starts around that time. In the past, we had the funnel concept that had been the way that our sales and marketing teams described how they would take a broad accessible market and work through these stages to turn a prospect into a buyer.

Marketing worked to get attention at the top of the funnel and then they would hand off their leads to the sales team that had shown significant signs of interest in your product. Sales would come on the scene to work with the customers on budget and timeline and hopefully get them to close the deal.

Now, many types of companies are discovering a new way to grow, which is product-led, and even combining or replacing their prior funnels with different tactics.

In this webcast, we’re going to talk about how you can apply this in B2B. It can be applied not only business-to-business but also business-to-consumer. But really it can be broadly applied to any product, any type of market — basically any product that has a user can have product-led growth techniques applied to it.

Rina Alexin | 00:14:30–00:15:00

Absolutely.

Rise of the End User

Joe Ghali | 00:14:30–00:18:00

All right, so when we’re looking at this slide, we’re talking about the rise of the end user. The key takeaway — at least for me, the way I look at it and explain it to our classes and people that we partner up with — is: look at who is driving the decisions around technology adoption within your organization.

Go back 20-plus years, 30 years. It started on the far left with the CIO making those decisions. He or she was driving what technology decisions were going to be made for an organization, and that infrastructure was in the form of big, ginormous servers with software that needed to be updated. There was significant cost, and how that was facilitated was a salesperson from that technology company would come in and try to sell their product to you.

Now we go back 20 years — we’re going down a level and we’re looking at the executive level. So not at the very top but maybe a rung below. They were the ones making the decisions. Technology evolved away from those big physical servers to the cloud, but it was still a relatively new concept. That allowed organizations to save money, and a lot of those discussions were facilitated via phone call. People didn’t want people in the office as much; they were busy; the internet was growing; they had to multitask — they were facilitating a lot of these discussions over a phone call.

Now, if you look at today, it’s not at the executive level or director level — it’s us. It’s you and I. We’re the ones driving those decisions. We’re the influencers. Our cloud infrastructure is very powerful; that allows our users to test the product before even making any kind of decisions. And in some cases — and actually in most cases in product-led growth — you can facilitate a purchase without talking to anybody from sales. You’re making that decision on your own, and you’re influencing people when you’re talking about an enterprise solution.

Rina Alexin | 00:18:00–00:19:30

Right. I also want to add here that the rise of the end user also had real implications for product management. There used to be, in the CIO era or even the exec era, pretty much a big divide between the people actually using the product and the buyers. The buyer persona really was the source of requirements for product managers back in the day.

Bringing the user much closer to the decision and much closer to the product manager allows us, as product managers, to get much clearer on requirements and create much better products that influence product-led growth.

Product-led Funnel & Product Qualified Leads (PQLs)

Joe Ghali | 00:19:30–00:22:30

So now, we talked about that funnel from before. Now this is what the funnel looks like, where it’s really being driven by the product and user, and their interaction with your product is driving the decisions and the reaction from the marketing and sales team, which then influences the purchasing decision, which then impacts retention.

You’ll notice this concept of PQL — product qualified leads. We’re going to talk more about how this impacts your sales and marketing organization, but the beauty — one of the key benefits of product-led growth — is when your sales individual starts interacting with customers, they’re already using it; they’re already qualified, so it’s going to be a more efficient use of their time.

I’m going to get to some of these examples a little bit later, but one of the really terrific benefits of being product-led is the referral component of it. And I’ll share a story I just was telling Rina right before we got on the call today about my own daughter’s experience with a tool and how they were able to get their high school to buy a contract with a product-led growth organization.

Again, the tagline reads here: product-led growth means that our users and product experience drive the growth. That’s what PLG stands for. That’s what it means.

Benefits & Market Impact of Product-led Growth

Joe Ghali | 00:22:30–00:26:00

So, there are benefits, right? We talked about why it’s great for the end user — let’s really talk about the outcomes that you’re going to achieve with product-led growth.

According to OpenView Partners, a Boston-based venture capitalist that does a lot of research and writing about this topic, product-led companies perform better. Their index of public companies has a cumulative market cap of over 200 billion dollars — and this was last summer — and this number has been consistently and significantly outperforming the S&P 500 index.

When we look at this particular graphic, we kind of summarize the main benefits. Product-led growth helps you minimize customer acquisition cost. We’re not having to deploy a group of sales and marketing folks out there to raise awareness. They’re actually engaging with your users; they’re engaging with the users of your product. That then results in an improved lead quality.

You’re able to give your buyers the ability to self-serve while also providing a consumer-style experience at the same time.

Market Examples & Quizlet Story

Joe Ghali | 00:26:00–00:30:00

We talk about the impact of product-led growth in the marketplace, and you can see here in the last — I mean, this is eight years — the number of organizations, B2B and B2C, that are really growing because they are employing product-led growth strategies.

I just want to share a quick story. I have a 15-year-old daughter who’s told me she wants to go into business one day. And so one of the things that I do before I do a webinar is I’ll do a dry run with her, because my belief is if she can understand it, then I think I can explain it in a way that everyone can understand it.

She was asking me what product-led growth was, and her response to me was, “Well, Dad, is it like Quizlet?” And I’m like, “Well, Casey, tell me a little bit about Quizlet.” And she’s like, “Well, you know, we ran out of note cards at home and I needed to build some note cards to help study for my biology test. So I went to Google and I did a search for virtual note cards and I found this website called Quizlet.”

She said, “Well, I signed up because you can try it out.” So she built out some note cards for her biology test. She shared it with her friends. The whole class then shared it with their biology teacher. The biology teacher found so much value in it that he shared it with their technology director at the high school. So now Quizlet was able to execute a contract with her high school.

But look at the main emphasis of the story: Quizlet didn’t approach the high school in the beginning. That was influenced by my 15-year-old daughter and her group of friends. And that’s the key, right? We’re going to talk more about what are the things Quizlet did — or Craft.io — what steps they took that enabled that self-service experience for their customers.

And the reality is, for a 15-year-old, this is all that they know. That’s their experience with using technology.

Rina Alexin | 00:30:00–00:31:00

You know, actually Joe, that’s a really important point because that is going to be the expectation of our future consumer. They’re going to be so used to having a choice and a voice in the type of technology that they’re going to be using.

I mean, we see it in Slack, right? It’s really hard for us as a company not to have Slack because it’s so easy to use, and the users who are using it are the ones who are really making the business case to upper management for why we need to continue to invest in this product.

Joe Ghali | 00:31:00–00:31:30

Absolutely.

Organizational “Prism” & Cross-functional Alignment

Joe Ghali | 00:31:30–00:35:00

Now, we’ve talked about the value to the end user; we’ve talked about the value to the organization. Let’s dive a little bit deeper into this, and this is a graphic I use a lot of times when we do some of our classes.

We talk about prisms, right? When light passes through a prism, it’s fractured into the different colors of the rainbow. When I explain the benefits of product-led growth within an organization, I explain it like this. I say: okay, let’s reverse the concept, and the different colors correspond to an organization’s different teams — different business units — which are now working together to form a single bright light, resulting in a premium user experience.

That’s the key, right? The key is working together to improve and have that premium user experience for your product.

Rina Alexin | 00:35:00–00:37:00

Now Joe, can you go back to one slide? I want to make a point here.

So “product-led” — I’ve heard this before from a marketing person — they think product-led is really about marketing a better product, and that’s really not the case. It really does change a lot of the roles, again because of the techniques and strategies, some of which we’re going to show today.

If you are a product manager that is trying to encourage their company to become more product-led, know that there is a change effort involved here. And Joe, you know a lot about change efforts. You have to really understand how the roles here change for the benefit of the company — because it’s for the benefit of the end user — but it’s going to be your job to then articulate the change in the role and bring in those “what’s in it for me” for each of these departments to make this work.

Joe Ghali | 00:37:00–00:38:00

Yeah, that’s a big part of it. And we’re going to talk at the end about how to get started, but there’s most definitely a change management piece, and that’s really all about understanding what’s in it for me and making sure you have that alignment and transparency.

Because it’s not — I’ve seen it in some blog posts — it’s not about removing jobs, it’s about improving the jobs. It’s about making the job of converting a prospect to a sale more efficient. It’s about creating a better experience for a prospect when they start to engage with your product.

We’re going to talk about this with Craft.io in just a second, but how do you rally the troops as an organization? How do you lead using some of these concepts so that everyone has that collective mind and they feel like, “Hey, the work that I’m doing is helping to create that premium user experience that I mentioned.”

Evolving the Sales Role in a PLG World

Joe Ghali | 00:38:00–00:42:00

So, in a lot of articles — and articles that we’ve seen and we’ve written — we even talked about this briefly: the role of sales doesn’t go away, it just evolves. And it evolves because of what our users expect from us.

We’re going to talk — we’ve talked about Slack, Quizlet — these are tools where you get to use the tool first before you engage with a salesperson, before you engage with a PQL. So, the way that sales interacts with your users is going to be more of a push where you are using analytics — we’re going to talk about this a little bit later on — to understand at what point users are finding that value and when you want to trigger, “Hey, I should reach out to this individual and talk to them about perhaps expanding the amount of features that they have access to within that product.”

So not cold calling, but converting your existing users. Being mindful of the concept of free trial. Going back to Casey, my daughter — she didn’t need to pay or put a credit card down; she could just start using Quizlet and finding value in it right away.

So, in lieu of “Here, I’m going to install this, I’m going to make it available to you,” then you can see and make that determination whether or not it’s going to provide value. It’s putting a demo of the product on the website versus saying, “Hey, I want to schedule time to do a demo.” It’s some of that self-service that enables you to have a much more impactful conversation with that potential customer on a day-to-day basis.

The other big piece of this is, again, enabling your customers to add SKUs, add-on features. I think a lot of people on this call have used LinkedIn, right? There’s a free version; there’s a premium version; you can keep on adding on. And there are value metrics — we actually have in our DPM class, we talk about what value metrics are — but at a point where it looks like, “Hey, this could be an enterprise relationship,” then LinkedIn will call you. They’ll reach out to you and say, “Hey, I think there’s an opportunity here where we can mutually work together.”

And it isn’t a one-size-fits-all. It’s going to really depend on the needs of your organization, and that’s really where product-led growth can kind of help guide those conversations.

Q&A: Is PLG Just Freemium?

Audience Question & Answer | 00:42:00–00:46:00

Rina Alexin: So Joe, we have a couple questions and I want to take one right now. This one is from Galina, where she says that some of these examples are alluding to the freemium model. And then the question really is: how is the bigger concept of PLG differentiated from just being freemium?

Joe Ghali : So what you’re doing — we’re going to talk about the five rules. Actually what I want to do, Rina, is I want to answer Galina’s question by going through the five rules. I think that’s going to help distinguish the concept of product-led growth versus just freemium.

Rina: Absolutely. Good segue — go ahead.

Five Golden Rules of Product-led Growth

Joe Ghali | 00:46:00–00:51:30

So, five main rules of product-led growth:

Number one: Know thy user. What does that mean? That means: where can you find them? What are the things that attract them? Knowing that you’re building for the user and not the buyer.

Number two: Give before you get. Make sure you’re providing value before you’re asking for revenue. Is that a free trial? Is it freemium? It really depends on the industry, the competitive landscape, the pricing that you have set forth.

Number three: Obsess about growth. This is one that a lot of PMs really struggle with — the data analytics piece. Using data, using analytics of product usage to really understand when is that point where you stop giving it away for free and you start charging for it. You realize there’s a premium opportunity there.

Number four: Make it easy. Understand the key use cases for your product so that when someone begins to use it, it’s just a couple of steps. Give Quizlet credit — they built it in a way where, again, not to disparage my 15-year-old daughter, but she was able to quickly start using it. There was very little barrier for her to begin using the product.

Number five: Organize your organization around the product and the user. That’s more of a culture piece. It means understanding and rallying the troops around how your users are interacting and using the product, and being able to respond — being agile in the decisions you make from a backlog perspective.

Rina Alexin | 00:51:30–00:53:00

That’s a great answer. So Galina, here number two, “give before you get,” a lot of times will require some kind of free-forever or free-trial version of the product, because you want that user to start using it. But PLG is much bigger than just a free trial. If you’re onboarding is not great, that free trial is probably going to be a detriment to your growth strategy.

Q&A: Hardware, IoT & Non-SaaS PLG

Audience Question & Answer | 00:53:00–00:58:00

Rina Alexin: Joe, I have another question here. And I think maybe this slide is a little relevant to help answer that one. Bill essentially says that PLG in the examples that we’ve been giving is limited to software and SaaS products. Are there examples of hard goods — company examples, maybe IoT company examples — that can use product-led growth to grow their business?

Joe Ghali : Actually, that’s a terrific question. I spent some time in the power generation market — backup generators. One of the things that we built was a remote monitoring tool. This is where, for backup generators, we wanted to enable the dealers with the ability to remotely monitor and troubleshoot those backup generators.

So this was IoT in the sense that we had a physical antenna on the generator, but the actual remote monitoring was software-led. The generator came out of the shop with the antenna built into it, but the component of doing that remote monitoring, that remote troubleshooting, was software.

In that case, for the homeowner, what we enabled them to do was build a mobile app where they could just see, “Hey, is my generator working?” They would do a dry run every week — a scenario test — and they had the assurance of being able to do that.

If they wanted a premium experience, where they could do a dry run ad hoc or reach out to a dealer, then they would pay — I’m going to make it up — $9.99 a month, where they could have a full dealer experience and have somebody monitor their backup generator on their behalf.

So, most definitely this applies in the software space, but it can absolutely be leveraged in the IoT space where there’s a physical component being directed by software.

Rina: And services-type companies can also think about: what is that smallest piece of value they can offer at low cost to them — free to the customer? Is there an assessment or some kind of strategy you can think about that is product-led growth-like? I do agree that if you are investing in a huge hardware piece, something that costs a lot, this is a really difficult strategy. But what Joe just said — you can still think about what are the upsell opportunities that you can bring along with that hardware product.

Getting Started with PLG (Plan, Educate, Measure)

Joe Ghali | 00:58:00–01:03:30

All right, so how do you get there? I’ve been throwing some nuggets of knowledge as we’re going through our journey together. Let’s just take a step back and talk about how to even begin that journey to becoming product-led.

Again, it’s not a flip of a switch. It takes planning. One thing you’ll always hear from us is: you need a plan; you need to educate.

First: you’ve got to appeal to your end users. It’s all about them — that’s why you’re doing it, because you want to deliver value as quickly as possible to your end users.

Where it makes sense, price comes after value. Demonstrate the value — demonstrate that they can’t live without your product — then charge them for some of those extra features that they’re going to find value in.

Let them become raving fans — it’s one of my favorite terms. You want those end users to become raving fans so that when you do engage with customers with your sales team, it’s taking that qualified lead and converting it into something bigger.

And I think this is important in any stretch of the ecosystem of product management: measure, measure, measure. Make sure you’re understanding: what problem am I trying to solve? What questions am I trying to answer?

When you’re building your features, think of some of those non-functional requirements. In a lot of the classes I teach and where I’ve coached in the past, I say: make sure that when you’re building out, with your product owner or your PM team, those features, you’re thinking about the analytics piece of it. What tagging do you have in there? Be thoughtful about the tagging and be able to explain, “Listen, this is what I want to monitor, and this is how I’m going to use that data to help make better decisions around how my users are interacting with my product.”

It’ll help better inform you on what that inflection point is between free trial and freemium.

Start with Customer Onboarding

Rina Alexin & Joe Ghali | 01:03:30–01:07:00

Joe Ghali : Right. Rina kind of stole my thunder on this earlier, but where do you start? Customer onboarding. Just think about my own personal experience with my kid. You’ve got to make your MVP release easy to understand.

Always, always, always ask, “What’s in it for me?” when building your product. What’s in it for the end user? Make it easy. This is where checklists and guides are super useful in the product-led growth environment. Guide them along — maybe it’s an email, maybe it’s a note encouraging them, celebrating those successes — and then make sure that each of your customer touchpoints has a clear purpose. Why are you reaching out to them? What do you hope to achieve? Again, we go back to planning — have a plan for your engagement.

Now, to that point, I always talk about measurement. The question I always get in our class or in our coaching engagements is: how do you know that you’re being successful, or what are those measurements from a PLG perspective? How do you know you’re executing on it correctly?

A while ago, people were really focusing on how many profiles, how many email addresses — go back to the email marketing era 20 years ago — or how many Facebook likes. What we learned, much like the profiles today, is that you’ve got to be careful. It’s kind of a false metric — it’s a vanity metric — because there are bots out there, or maybe you have college students that are signing up because they’re doing a project, or I know a couple of venture capitalists that will just sign up just to see and evaluate the product. They’re not really your end users.

So, really what you want to measure are those activated signups. It’s up to you to determine what “activated” means, and that’s where the analytics and the measurement really comes into play.

What I mean by that is, let’s take Facebook. How did Facebook measure an activated signup? It was that they liked five or more posts, right? Or if you’re looking at Quizlet — the example I showed earlier — it was my daughter sharing those virtual note cards with three or more of her friends. Then they were adding on to it; they were building a community of Biology 101 note cards. It went from a single user with 10 cards to a community of 100 users using that one set of note cards.

You have to be able to use analytics to really drive and understand what an activated user is. Once you have that, that’s really your truest indication of success with being product-led — how many of those activated signups have you converted into a premium, or have you activated into an enterprise agreement?

Rina Alexin: Why start with customer onboarding? And Joe, sorry for stealing your thunder, but the saying is true even with products — you only have one time to make a first impression. If you’re going to start somewhere, you have to start at the start of the user experience with your product.

This is going to be really key if you’re going to be implementing a freemium or a free trial and your user signs up, logs in, and has a terrible onboarding experience — doesn’t understand how to use your product, gets lost in the features, there’s no guide as Joe said — they’re not likely to refer additional business or build a business case for your product.

So definitely start here. This is going to be not just an important measure for product-led growth; it is product-led growth. So, absolutely agree.

Q&A: Free Features, Cannibalization & Packaging

Audience Question & Answer | 01:07:00–01:13:00

Rina Alexin: Hey Joe, we have a few questions. Before we get started, if you really liked what you heard today and you are interested in learning more about how to manage a digital product, we of course offer our Digital Product Management course. We have a live course starting at the end of this month on February 28th and it’s filling up fast.

There is going to be a $500 off coupon for all attendees today, so if you’d like to learn more about how to be data-informed and outcome-driven, please take this class. If you are also interested in any of our customized engagements — our custom workshops or our assessments and our optimization programs — please reach out to us. You’ll find our contact information also in the chat box.

So let’s get started; we have some really great questions today.

I want to start with this one. This comes from an attendee who asks: sometimes their management has concerns that enabling certain free features will essentially cannibalize the paid version or dilute it. So how do they encourage leaders to embrace certain features as being free features to encourage users to get that value right away?

Joe Ghali : So, I have an idea on this one. It starts with experimentation, right? You want to be thoughtful in the way that you share your hypothesis with your leader. You always want to drive decisions in an organization — especially one where there may be some consternation around giving away a product or giving away a feature — with data.

One way that you can do that is take a segment and do a trial — almost like an A/B test. The idea is you want to do a test with a group of users where, in that use case, for a period of time you’re testing out your hypothesis and then you’re taking the data from that experiment and you’re using that as the driver for why you should expand that free trial or that freemium offering.

It lessens your risk. One of the things I always tell product managers is you want to drive with data. If you tell your manager, “I think we should do a free trial,” that’s opinion; that’s riddled with opinion and you’re going to get a lot of heat for it. Whereas if you try to do a trial with a segment and you gradually grow what that experimentation looks like and you use that data, then it’s, “Hey, based on the experiments I’ve run, I believe this is something we should continue to expand from a product-line perspective.”

Rina: Joe, I just want to add to that that this is definitely a packaging question. There are going to be dimensions of value for your users, and how you gate certain value is really going to be important and going to be reflected in your packaging and your pricing strategy.

One of the examples we like to use at Productside is Zoom Webinar. Zoom offers that free-forever version of 45 minutes because they know business meetings take usually an hour. So getting cut off at 45 minutes on the free version still gives your user that value and that experience of the product, but it really gates it at the point at which, to get the real value of the product, you really need to upgrade to the paid version.

So think about not just giving features completely away, but how can you optimize such that users get some value but they want more — they want more from you. Great question.

Q&A: B2B Services, One-time Use & Trials

Audience Question & Answer | 01:13:00–01:19:00

Rina Alexin: This other one also I think is similar. It comes from Ashish: oftentimes in a B2B service or a software service it’s not possible to offer a free part of that service. How do you manage that in a B2B model?

Joe Ghali : I think it’s the same way. Going back to one of the golden rules of “know thy user,” we talk about personas. What are the pain points that your decision-makers have, especially in the B2B space? You have a buyer persona — what are the pain points you’re trying to overcome with that buyer persona, and then also understanding what are the problems to be solved for the end users?

It’s making sure that you’re able to find those channels, communicate your value, and demonstrate why there should be payment up front for that particular product, especially in a B2B space. It’s a little bit more complex, but again, it’s all about understanding who those touchpoints are.

Rina: I also want to add here that we’re not necessarily suggesting that every part of your product is free. There are real costs to delivering even free software products — like support costs, added support from users. What we’re advocating for is instead a strategy focusing on the end user and almost flipping that funnel upside down.

The more users you can have using your product, the more advocates you’re going to have in the market, the more likely you’re going to have market share, and the more likely, as those users grow in their needs, they’re going to think of you, your product and your service when they’re thinking about a paid version that will solve their problem.

Rina: We also had a question: “Is a time-limited trial of the full set of features an idea that you would recommend or not?” I think this is essentially thinking about free trials versus a freemium version.

Joe: It depends. We actually dive into this very topic in our DPM class. A freemium model — it depends on what type of product, and whether you’re trying to raise awareness of your product, trying to be a disruptor, or whether your strategy is around revenue generation.

If brand building and brand equity are your strategy, you might lean more into freemium. If your strategy is around revenue generation, you might lean more into time-limited trials. In the case of Craft, theirs is a free trial. I think it’s either 14 or 21 or 28 days. Their model is about revenue — they want to generate revenue — but they know they can’t get to that point unless they enable you to use the product for a period of time and find instant value. Whereas some of those freemium models — like Quizlet — if you want to have your limit always be 25 note cards, their model is all about raising awareness and being a disruptor in the market.

Rina: And there is definitely some data now out in the market around conversions from freemium versus free trial. I mentioned earlier that a freemium product also has costs with additional support and chat, so you really do need to still maintain that larger user base. Some of the data did show that free trials do tend to convert at a slightly higher rate to paid users, I think because people who are signing up for the free trial already have signaled intent to pay.

We also got a question from Nazia: how do you apply PLG, like a free trial, in a one-time use service?

I’ll try this one, Joe. In a transaction-type product, you can still apply product-led growth strategies. Oftentimes, I would encourage you to think about what is that little bit of value that they might not get without purchasing the full transaction — that one-time-use service. What is something that you can offer that is really low cost to you?

I’ll just use our own example at Productside. We have training products; you go through that class once. But we can deliver value to our users with these webinars, with giving you a trial to maybe experience one module of the class. There are ways to break up a service into its components and see which of those components you can use for a product-led growth strategy.

Q&A: Restricted Environments, White-label & Tiered Pricing

Audience Question & Answer | 01:19:00–01:25:00

Rina Alexin: We have another question here. This is a question on environments. Deepak points out that in some B2B cases the end users are restricted on their environment machines from actually trying out a product that is not “recommended.” Are there any strategies here to overcome that entry barrier?

Joe Ghali : I think it is being able to eloquently identify the need or the problems that they’re running into and be able to quantify the value of solving those problems. Let’s take Slack. Let’s say they were prohibited from signing up for Slack, but they were able to build a diary, a use case that said, “Look, I have to keep on resending emails,” or “I’m finding it difficult to collaborate, especially in a virtual environment,” and they’re able to quantify that — “I probably spend two hours a day correcting these mistakes,” or “I spend hours a day doing these workarounds.”

The idea is being able to build a case of why and the value of “Hey, I think we should try these types of tools to see if they can help us be more efficient, find more time where we can be more strategic in our roles versus some of the barriers that make us inefficient at what we do.”

So if you can’t actually use it at work, then it’s trying to build that business case, or maybe building it at home — using your home PC or your home device to use those tools and just show the value that can be acquired by using that tool. Again, it depends on the situation, but you always need data. You need to be able to understand the who and the what and the why, and then be able to quantify the value in solving that problem.

Rina: Joe, you make a really great point — it’s really about them being able to build the business case. In this particular situation, I would try to enlist the help of your marketing team to either create more unrestricted content about using your product on your website, encourage them to get reviews and case studies from people who are currently using it. That way, even if you’re not able to actually try it yourself, you’re going to want to try it enough to convince people in your company to maybe change the rules for the environment or those barriers that you’re experiencing.

Product-led growth is absolutely a team sport. Marketing is very much involved in making sure users can try that product even if they may be restricted from doing so.

We have another question from Salman. In an environment where you’re white labeling to financial services and you’re white labeling that product, how could you use PLG strategies to help you? I think they’re trying to do a solution for credit unions. In a white-label service, is there also ability to put PLG in?

Joe: I think it’s more of stacking on the features. If you’re building, let’s say, an account aggregation tool for a credit union customer, could you provide a basic tool where maybe you’re able to link two or three accounts so you can see what your net worth is? Then, if you want to link your home value, or your life insurance, or more than one 401k provider, you pay more.

So there’s definitely a basic experience where you’re going to get value through the white-labeled tool — kind of like your A product — but then, as they become more engaged, you could charge for that B, C, or D level of services that you can offer for that customer. It’s just about enabling what steps or what levels you want to push out through an API to a third party to use on your behalf.

Rina: And Salman, I see the messages: “Would that be tier pricing or product-led growth?” Tier pricing is one technique that is used as part of product-led growth. We’re trying to separate that: product-led growth is more than just freemium and free trials. It’s a strategy and set of techniques for getting your entire company focused on the end user experience and using that to fuel your business.

Closing, Courses & Upcoming Webinars

Rina Alexin | 01:25:00–01:28:00

All right. Well, I hope everyone here learned something today. I know that I did. Joe, wonderful presentation.

Next at Productside, we have an Ask Me Anything on women in product management happening March 3rd, and the following week we have “Should You Be Data-driven, Data-informed or Data-inspired,” also happening on March 10th. I encourage everyone here to please sign up.

And thank you again for joining us this morning. Bye everyone.

Joe Ghali : Bye everyone.

End of webinar.