Customer acquisition has become tougher and more expensive, with customer acquisitioncost (CAC) rising up nearly 50% over the past five years. This is a reality we are experiencing due to the increasing number of players in the market.
As a result, new SaaS products where the user needs some time to familiarise himself find themselves spending enormous amounts of money in acquiring users that never get activated.
Not all companies can grow using a product-led onboarding. Some of the most popular products in the market have a steep learning curve and cannot activate the user in a few simple steps.
The question is, in an era where the user wants to serf serve, what happens with all these products that cannot support that 100%? How a powerful, yet a bit complex tool can acquire users without breaking the bank? The answer comes through the Extended Product-led Growth Go-to-Market strategy (GTM Strategy) and the use of sub-products.
We call these sub-products Product Lead Magnets (PLMs), and in this article, we are going to share everything you need to know about PLMs: What are they? Why are they an essential element of a SaaS company’s go-to-market strategy? Where can you use them? What are some examples of successful new product lead magnets?
Chapter 1: What is a Product Lead Magnet?
To discover the benefits of product lead magnets, we first need to understand the role of a traditional lead magnet in a marketing strategy.
Traditional lead magnets are a popular GTM marketing strategy for gaining new potential customers.
According to Optimonster: A lead magnet is an incentive that marketers offer to potential buyers in exchange for their email addresses or other contact information.
An example of a lead magnet is a free eBook that users can download on your website, by sharing their email address and other personal or business information with you.
Image Source: ProfitWell
These traditional lead magnets can still be a very effective marketing strategy for companies. However, traditional lead magnets only indicate buyer interest on a marketing level. In other words, a SaaS company can’t really use lead magnets to understand if users are qualified to use the product.
SaaS companies need to find another way to qualify their users on a product level and get more users to use their main product. Product Lead Magnets (sub-products) are designed by SaaS companies for two core reasons:
- To attract (or acquire) new users to their main software-as-a-service product.
- To gain insights into user behaviour while they’re using your product lead magnet.
PLMs are standalone products that live outside of a company’s main product. They are simply designed to attract the target audience to the main product. Here’s the full definition of a PLM:
A Product Lead Magnet (PLM) is a free standalone sub-product that helps you generate leads (potential new customers). The value proposition of this sub-product encourages the potential new customers from your target market to buy the main product. Product lead magnets can come in the form of extensions, widgets, and similar downloadable assets.
Let’s look at an example of a product marketing lead made by a SaaS company…
If you know a thing or two about SEO, then you’re likely to be familiar with the MozBar. The MozBar is a Chrome Extension offering useful information related to a page’s SEO performance.
Image Source: Chrome Web Store
The MozBar is a perfect example of a product lead magnet. It is a standalone product that helps Moz generate new leads, pushing users to its main product.
Product Lead Magnets for SaaS companies have several defining characteristics. These PLMs are typically…
- Free to use, otherwise known as ‘freemium’
- Low cost for SaaS companies to build and sustain
- Single feature products with unique functionality
- Offering a high-value proposition for target markets
- Providing a user experience that ensures a competitive advantage
- Easily replicable because of their low technological cost
Product lead magnets enable SaaS companies acquire new users (known as customer acquisition), by giving a taste of their main product, through smart and easy-to-use sub-products. This tactic has been used by many software companies over the years with outstanding results.
In the next chapter, we will present four use cases for product lead magnets. This will explain the value proposition provided by product lead magnets and why a SaaS company should create their own for their GTM marketing strategy.
Chapter 2: Product Lead Magnet Use Cases
Product lead magnets are sub-products of a company’s main product, and they’re used in SaaS marketing plans to acquire more users. In this chapter, we are going to explore some of the most common use cases of PLMs.
Use Case 1: When the main product is complex
Sometimes, a SaaS company’s main software product may be complex and challenging to learn. Instead of pushing users to the main product right away, a company can build a new product lead magnet and use it to develop a relationship with its new users, before prompting them to buy the main product.
For beginners, HubSpot is not an easy product to learn. It can definitely take some getting used to. This problem is solved by HubSpot creating a product lead magnet that users can use independently of the main SaaS product.
Image Source: HubSpot
This way, HubSpot could acquire new users from their target market and help those users become familiar with its sub-product before trying the main product. Of course, a SaaS company like HubSpot wouldn’t have missed such an opportunity and is already doing that. We’ll see the PLM it is using in more detail in the next chapter.
Use Case 2: When the buying intent is low
Very often, users are not ready to buy a new product from you right away. According to research by Capterra, the average visitor-to-lead conversion rate for software companies is only 7%, while the average lead-to-qualified opportunity conversion rate is 36% and the close rate is 27%.
Image Source: SalesHacker
If 1,000 visitors come to your website this week, roughly 84 of them will sign up for a free trial, while 9.24 of them will become paying customers. SaaS companies must find other ways to acquire new users. They can reach their target audience by creating a product lead magnet with a strong value proposition.
It’s easier to get someone to sign up for a PLM, than signing up for a company’s main product. Who doesn’t like a freebie? After all, 42% of SaaS companies still don’t have a free version of their main product. Many users love try-before-you-buy because it reduces risk – so why not make this part of your marketing strategy?
Image Source: OpenView
Use Case 3: When the activation rate is low
Only 44% of software companies can define ‘activation’. This means that:
- Most companies are not sure if users have reached the Aha! Moment (when prospective customers see value in their product).
- Most companies don’t know for sure if users have passed the activation phase.
Also, as Ben Winter, Head of Growth & Marketing at Fairmarkit, explains, many SaaS companies are “forcing users towards their Aha! moment or provide only a single path to activation.” All these indicate the need for choosing a different path to activate new users and get them to try the main product of the company.
Use Case 4: When time-to-value is high
The fourth use case for product lead magnets is when the time-to-value is high. In other words, it takes too long for users to get value out of your main product. Products like Buzzsumo offer users value almost instantly. However, this is not always the case even for product-led SaaS companies.
Image Source: Buzzsumo
In most cases, when the time to value is high, a PLM could be very useful in helping users experience some value from the product right away
Chapter 3: Product Lead Magnet Examples
Now that we’ve defined PLMs and understood how they work through four different use cases, we can present some examples of successful product lead magnets. We are going to break down the main elements of each PLM and learn about their contribution to the value of the main product.
Example 1: HubSpot Sales Chrome Extension
The first PLM example that we are going to see is the HubSpot Sales Chrome Extension by HubSpot. This is a Chrome Extension helps users to track their email open rates.
Image Source: Google App Store
To use this product lead magnet, you need to sign up for HubSpot. You are not signing up to use HubSpot’s main product – you are just signing up to use the free Chrome Extension. This free PLM allows users to experience value right away. It acts as a free teaser for those interested in purchasing Hubspot’s main product.
Image Source: HubSpot Sales Chrome Extension UI
Example 2: MozBar
As we mentioned earlier, the MozBar by SEO software company Moz is another example of a PLM. Also, as we’ve seen already, the MozBar can help the user in two main ways:
- To analyze the Search Engine Results Pages (SERPs)
- To analyze specific pages that you are visiting online.
Image Source: Google Search
After inserting a search query in Google Search, the user can get useful information on the different results, as shown below:
Image Source: SERPs
The most important piece of information here is undoubtedly the number of links that each of the ranking pages has and the page and domain authority (according to Moz) for this particular page. If you happen to know one thing or two about SEO and organic growth in general, you’d know that the number of links and the authority of a website are two fundamental concepts.
Thus, it is clear that MozBar’s users get high value out of the PLM’s features. One of the most critical aspects of MozBar’s success is that it is free to use. Of course, if someone wants access to some of the PLM’s premium features, they have to subscribe to one of Moz’s paid plans, which makes sense.
The second way users can use MozBar is through on-page recommendations for the pages they are visiting. As you can see below, users can get a quick overview of some critical SEO elements for the page they are currently at and make decisions for their own pages based on that.
Image Source: MozBar UI
What Moz has achieved with the MozBar is phenomenal. This is why other SEO and marketing companies replicated this tactic. Above all, Moz can display the value of its core product and address a real pain point, through a free and easy-to-use PLM with accurate data and seamless UI.
Example 3: SEOquake
Similar to the MozBar, SEOquake is a PLM for SEOs and people trying to drive organic growth. This product lead magnet—once again—allows users to a) to analyze the Search Engine Results Pages (SERPs) and b) to analyze specific pages they are visiting online. In the SERPs, SEOquake offers useful information for each of the ranking pages.
Image Source: SERPs
Users can sort the results page by links or other metrics, and even export the results in a CSV. The functionality here is multi-dimensional, but the product lead magnet is easy-to-use, and time to value is extremely low. When it comes to analyzing specific pages, SEOquake gives users a series of critical information related to SEO across marketing channels.
Image Source: SEOquake UI
This can be very helpful for someone who conducts competitive research or for someone who wants to see how a page is compared to another. The learning curve here is very short, and users can experience value right away which reinforces the GTM Strategy for an existing product or a product launch.Something worth mentioning is that the chrome extension has thousands of users, many of which probably end up using the main product which is SEMrush.
These three PLM examples show us how easy and effective PLMs are to implement into a marketing strategy. SaaS can build and launch PLMs in a concise time frame and implement them into their marketing strategy and sales strategy. Now that we’ve seen what a product lead magnet, what are the use cases for PLMs and what are some good examples, let’s close this with some final thoughts.
Chapter 4: Final Thoughts
PLMs are not just another way to acquire new target markets at scale. We’ve passed from marketing and sales qualification to product qualification, and in that context, SaaS companies have to find ways to qualify their target customers, engage them with their primary and sub-products and help them get value out of the product in a timely manner.
Using a go-to-market strategy, SaaS companies need to find new product qualification methods.
Thus, we understand that PLMs are essential for product-led companies that either have complex main products or find it difficult to activate their users and help them reach the first meaningful outcome. Of course, this doesn’t mean that PLMs can’t be used from companies with seamless onboarding, low learning curve and quick time to value.
The product-led approach to marketing a new product isn’t right for every SaaS company. To drive growth, we believe PLMs can help software companies not only to acquire more users but to acquire the right users. Make sure to add them in your roadmap and action plan.