If your company is trying to market and sell a B2B tech product, embracing a product-led growth strategy could enable you to drastically improve customer acquisition, experience, and retention.
But what is product-led growth, really, and how do you determine whether a strategy like this is the right fit for your business?
In this episode, Wes Bush chats to Matt Dodgson about his experiences using product-led strategies to increase revenue and accelerate growth in B2B tech companies.
Who they are: Wes Bush, CEO of ProductLed.
A bit of background: Wes began his career in conventional marketing roles before realising the transformational impact a product-led strategy can have on businesses. Since then, he’s gone on to write a best-selling book about it, as well as launching a company that provides training and coaching in product-led growth in the B2B tech sector.
Where you can find him:
Here you’ll find some of the best advice from the podcast that you can easily digest and learn from.
Before we begin, it’s probably worth first defining what product-led growth really means. According to Wes:
“A product-led business is one in which your product is the main vehicle for acquiring customers, activating and onboarding them, retaining them, and also expanding into those accounts.”
Essentially, a product-led business uses the software product itself as the primary channel for customers to purchase and use it, without following a traditional sales process. This makes a great deal of sense in the B2B tech space when you consider most software-as-a-service (SaaS) products are intended to be used in a self-service context, as well as being designed with an emphasis on simplicity.
This also reflects, or perhaps has created, the recent shift in buying habits and buyer preferences in the B2B tech sector. Your customers no longer want to follow a traditional long-winded sales process to begin using a product if they can download and set it up themselves. They want to do their own research, test competing products on a free trial basis, and experience the product in their own unbiased environment.
So, rather than spending unnecessary time and resources on a traditional sales team trying to pitch your product to people who don’t want to be sold to, a product-led strategy is a more customer-centric alternative.
Typically, this is done by offering some form of basic use or free trial of your product first, allowing your target audience to register and begin using it by themselves. The product itself then facilitates the transition into a paid subscription. This way, your audience comes to you and converts into paying customers because of the value they gain from your product once they’ve tested it on their own terms.
Wes explained, “It allows you to deploy the dominant growth strategy in your particular business. If you’re going to become the best in your class and dominate the space, you have to have the best product with the best price and the best value.”
“There are only so many ways you can do that. When you have a product-led approach, it allows you to offer your product to a lot of people for a fraction of the cost because you don’t have to manually onboard people. That’s all automated. You don’t have to talk to them anymore, even when deciding which plan they’re going to pick, because you’ve automated that too.”
“So, a product-led strategy allows you to offer better product experiences for a fraction of the price. Customers love it because, now more than ever, they want the same experience as they get from their consumer apps.”
“It’s also just a lot more capital efficient,” said Wes. “If you can run your business more efficiently, do it. It’s a good time to do it, with rising concerns of a recession.”
“From an acquisition perspective, the cost per acquisition, for even a free trial or freemium user, is a fraction of what you’re going to spend for a demo request. For onboarding experiences, a lot of sales-led companies have maybe two to four onboarding calls for every new customer. However, you could automate that and give the customer a better experience by empowering them to figure it out on their own.”
“There are so many cost savings here that all just add up to becoming more competitive and delivering greater value, which is a win-win.”
It’s important to note that a product-led strategy won’t automatically be suitable and successful for every B2B SaaS company, and Wes knows this from experience.
A shift this significant will require a great deal of thought, and careful evaluation, before you launch into offering free trials and self-service registration.
Wes said, “There are definitely some scenarios where I’d caution against trying to slap on a free trial, or a freemium model. I was guilty of this at first, as I thought developing a product-led strategy and deploying it in your business was simple. What I learned is that it’s like an iceberg. On the surface it doesn’t seem that much, but when you go below the surface you may start to see that you really need to re-evaluate some key things.”
Wes suggested first raising questions about your product, such as:
Wes said, “If these things aren’t right, there’s some work you need to do there from a product analytics perspective, but also about what steps people need to follow to get to that value.”
“What I’ve seen quite a bit is companies who rush into it because it’s the latest, greatest thing, and then get burned because there’s a lot more to it than they realised. So, the very first thing is to really consider whether you’re at the right point in time to do this.”
How to determine this is to consider the following points about your business:
“That’s a great opportunity for you to really lean into becoming more product-led,” said Wes. “If you’re before that, and you really don’t understand who you’re helping, how you’re helping them, or even what your product does, and you’re just trying to automate because you don’t want to talk to your customers, it’s a recipe for failure.”
Following on from the previous point, there are some other pitfalls and common mistakes it’s important to avoid if you do decide to take on a product-led approach.
Wes said, “One of the biggest pitfalls to be aware of is just making sure you have the right team and resources in place, and buy-in from the top.”
“As much as I’d like to say becoming product-led is a bottom-up strategy to get adoption for the companies you sell to, it almost has to be top-down to be successful when you’re getting this strategy rolling in your business, to get people bought in. It’s one of those shifts where you’re re-tooling and changing up your entire go-to-market strategy, so you must have buy-in and support from the top for it to see success.”
For example, particularly in larger organisations, it’s common to attempt a shift into a product-led strategy without the full support of the senior leadership team. When this new approach doesn’t return positive results immediately, people who were against it will panic and abort without giving it a fair chance.
Wes added, “One of the other pitfalls that falls within this is that a lot of people just expect this stuff to work right away. But when I look back at my experience in a previous company, our free trial wasn’t even successful the first time. I make my living now talking about this stuff, but that first time it wasn’t even successful. The second time, however, it was totally different.”
“So, just keep on this path and find out what things make a difference. For example, one of the big factors that helped us was that we had a team that was dedicated and it had the right resources. Whenever I see that top-down buy-in, they give it the resources, they have a team dedicated towards this. That can make a huge difference.”
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