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The Past, Present, and Future of Product-Led Growth

While the term “product-led growth” was coined by OpenView’s Black Bartlett in 2016, the strategy itself has been around for much longer. Over the past 20 years, discovering, trialing, and implementing software has become easier than ever—leading B2B SaaS companies to turn their attention toward impressing end-users, not just executives. Product strategy has shifted in kind, with more focus placed on listening to customers and incorporating their feedback to improve their day-to-day jobs.

Today, product-led growth is continuing to evolve. At Elsewhere, we recently coined an iteration we like to call “pragmatic product-led growth”: The idea that your product can demonstrate value to everyone in the client organization, from end users all the way up to C-suite.

We’re sure to see more ideas and iterations emerge as product-led growth becomes more popular. According to Wes Bush, best-selling author and creator of the ProductLed community, this potential for transformation is the most exciting thing about product-led growth: “What kind of got and sustained me [in product-led growth] is this fascination with how far it could go. It’s still being defined, and I think the next five years are going to create the playbook for everyone.”

I recently hosted a webinar panel last month on the evolution of product-led growth with Wes and two others experts—Heidi Farris, COO of workforce analytics platform ActivTrak, and Dan Schoenbaum, a two-time CEO and Elsewhere operating advisor. Here are four main takeaways from their conversation on the enduring themes of product-led growth, the future of the strategy, and how startups can implement it now.

1. Show, Don’t Tell

Dan’s first experience with product-led growth happened long before anyone had coined the term: In 1993, his company installed a lightweight version of their product on a CD and handed it out by the thousands at trade shows. Potential customers would take it home, install it on their devices, and call his team back once they experienced the value of the product.

This anecdote captures an aspect of product-led growth that Wes calls “de-risking the product experience.” Instead of telling people how great your product is, you show them. Today, of course, instead of handing out CD-roms, companies can provide free trials or freemium versions of their product.

“It’s really about serving versus simply selling your product,” said Wes. “The best product-led businesses lead with the experience of serving—helping you experience the value of the product—before the selling conversation.”

2. Adopt a data-driven mindset

Heidi Farris didn’t seek out product-led growth: She was “spoiled,” as she says, to begin her career at SolarWinds, a company that adopted this mindset from the beginning.

“We had unbelievable conversion rates with a try-before-you-buy model. Coming out of there, I was a little naive, going to other startups and thinking every tech company had surely figured this out,” she said.

As a data-driven person, she was eager to implement product-led growth in her new roles in order to capitalize on the useful insights that come with the strategy. Product-led growth inherently encourages paying closer attention to the numbers—and today, there is an ever-growing list of tools to help you track product insights.

Wes said to think of your product-led growth tools as a three-layer cake in order to prioritize and organize your options:

  • Basic Data Layer: Invest in an underlying product analytics tool, such as Heap, Mixpanel, or Amplitude, to provide general insight into what’s going on with your product.
  • Conversation Layer: This layer starts a conversation with your customers and guides them through the product experience. For a small company, this layer might be something as simple as individually emailing new customers, asking them, “Why did you join?” and “What are your core challenges?” As you grow, you’ll eventually want something that’s triggered automatically, such as App Cues or Pendo, to track and improve product adoption.
  • Conversion Layer: Once you have all of this product data, you can pump it into tools such as Customer.io or User List to identify opportunities for proactive customer support and conversion. This is all about figuring out what the customer needs in order to get the most value out of the product.

(Not going to lie, I was thinking about ordering cake for the rest of the webinar.)

3. Consider your buyer and your user

While product-led growth has led to an overall increase in focusing on the end-user, Heidi made the strong point that B2B SaaS companies still need to consider the potential differences within their core audience. B2C companies have the same buyer and user, but that’s rarely the case for B2B businesses.

“Your buyer may be an IT person, but your users may be managers,” said Heidi. “You have to really think about who your buyer is and who your evaluator might be. You have to understand those different pieces, which then ties into your lifetime value, because in B2B, lifetime value is going to matter differently to those customers.”

This brought our conversation back to Elsewhere’s idea of pragmatic product-led growth. As an investor, I’ve noticed many of our most successful portfolio and product-led companies build value into the product for multiple audiences. For example, you can build lifetime value or return-on-investment calculations for the individual user, while providing a summary view for the manager or director.

4. Think about product-led as an evolution, not a revolution

If you’re thinking about taking the leap into product-led growth, but still feel intimidated, our panelists had plenty of tips on how to get started.

As Dan noted with wisdom, change is hard for all of us and fully adopting product-led growth won’t magically happen overnight—but it’s a journey worth taking. “My advice: Don't do it alone, reach out to meet anyone on this panel,” he said. “Reach out to people who have done it already and get help and advice as you need it along the way.”

Wes followed-up with the observation that as you're making the transition, remember that product-led growth is an evolution, not a revolution: “If you ease your way into this and find some of those quick wins, then you're naturally going to get more buy-in.”

Ready to take the product-led leap? Download our e-book, “A Guide to Pragmatic Product-Led Growth for B2B SaaS Companies,” as your first step.

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About the Author

Josh Stephens

Josh is CTO at Elsewhere, supporting the investment pipeline and providing portfolio companies operational and domain expertise beyond capital investment. He has been an Elsewhere Operating Advisor since 2015 and advised numerous companies including Vyopta, ActivTrak, BurstIQ, and others. Hear more from Josh on his podcast CapitalGEEK and Twitter.