We’ve seen that oversaturation lead leading tech companies like HubSpot to search for different acquisition channels for their products. Besides, we know that acquisition has become tougher and more expensive, as the customer acquisition cost (CAC) is up nearly 50% over the past five years.
On top of all that, we must acknowledge the fact that not all companies can grow using a product-led approach. And, in that context, SaaS companies have to find other ways to acquire and qualify their users. One of these ways is by creating sub-products of their main product.
These sub-products is what we call Product Lead Magnets (PLMs), and in this article, I’ll tell you everything you need to know about PLMs: What they are, why they are essential, where you can use them and what are some examples of successful product lead magnets.
Chapter 1: What is a Product Lead Magnet?
Product Lead Magnets are sub-products that help SaaS companies achieve two main things: a) Acquire more users for their main product and b) Qualify their users based on the behavior they indicate while using the product lead magnet. A PLM works as a standalone product that lives outside of a company’s main product.
Let’s use an example to see how a PLM looks like for a software company. If you are into SEO, then the chances are that you’ve heard of—and even used already—the MozBar. The MozBar is a Chrome Extension developed by SEO software company Moz. It is a Chrome Extension that gives you useful information related to a page’s SEO performance.
To use the MozBar, you need to sign up for a freemium Moz account. From there, you can start using the MozBar in two ways: a) to analyze the Search Engine Results Pages (SERPs) and b) to analyze specific pages that you are visiting online. The best part is that you can use the MozBar, without having to buy one of the company’s pricing plans.
The MozBar by Moz—which we’ll further analyze later—is a perfect example of a product lead magnet. It is a standalone product that helps Moz generate new leads and helps the company gradually “push” users to its main product (or suite of products). The definition of a PLM shows us precisely that:
A Product Lead Magnet (PLM) is a free standalone sub-product that helps you generate leads. Ultimately, the value leads get from it should encourage them to use the main product. Product lead magnets can take the form of extensions, widgets, and similar downloadable assets.
As you may or may not know, a common way to acquire new leads in marketing is through lead magnets. According to Optimonster: A lead magnet is an incentive that marketers offer to potential buyers in exchange for their email address or other contact information.
An example of a lead magnet is a free eBook that users can download on your website, by sharing with you their Email address and other personal and business information.
These lead magnets where—and in many cases still are—very effective for companies using them. The main problem with lead magnets is that they indicate interest only on a marketing level. This means that a SaaS company can’t really use lead magnets to understand if users are qualified to use the product.
Lead magnets may be sufficient to help you collect Emails and get more Marketing Qualified Leads (MQLs) at your door, but they can’t help you with product qualification. On the other hand, using your main product as a vehicle for product qualification can be more helpful, but in many cases, even that is not possible.
Thus, SaaS companies need to find another way to qualify their users on a product level and get more users to use their main product. This can be achieved through PLMs which—as I already mentioned—work as sub-products for the main product that a SaaS company is offering. Some of the main characteristics of PLMs are:
- Freemium use
- Low cost to build and sustain
- Unique functionality (single feature product)
- Short ‘aha’ moment and high value perceived
- Leads to rapid and repetitive delightful user experience
- PLMs are easily replicable because of their low technological cost
Product lead magnets have traditionally been helping SaaS companies acquire new users, 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 (more on that in chapter 3) over the years with outstanding results.
In the next chapter, we’ll present four use cases for product lead magnets. In other words, we’ll explain when can product lead magnets work for a software company and why.
Chapter 2: Product Lead Magnet Use Cases
Product lead magnets are sub-products of a company’s main product, and they can help the company acquire more users through an extended product-led approach. 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 company’s main product may be complex and challenging to learn. In these cases, instead of pushing users to the main product right away, the company could build a PLM and use it to develop a relationship with its new users, before prompting them to use the main product.
An example here is HubSpot. HubSpot—which is a great product overall—is not an easy product to learn. This is only natural since HubSpot has many features that the user has to learn how to use. So the solution here would be to create a product lead magnet that users could use independently of the main product.
This way, HubSpot could acquire new users and help those users become familiar with its sub-product before trying the main product. Of course, a software 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 from you right away. In fact, 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%.
This means that if 1,000 visitors come to your website this week, roughly 84 of them will sign up for a free trial and 9.24 of them will become paying customers. It also means that SaaS companies need to find other ways to acquire new users. One of these ways is through product lead magnets.
It’s easier to get someone to sign up for a PLM, than signing up for a company’s main product. After all, 42% of SaaS companies still don’t have a free version of their product, while users are obviously waiting to try before they buy.
Use Case 3: When activation rate is low
According to Appcues, a company’s Aha! moment is “related to your product’s activation event but from the user’s perspective.” However, only 44% of software companies seem to be defining activation nowadays. This means that:
a) Most companies are not sure if users have reached the Aha! moment, and
b) 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. Products like Buzzsumo have a very quick time to value since users can experience value from the product right away. However, this is not always the case even for product-led companies.
In most cases, when the time to value is high—for example, when users have to install a certain script on their website to use the product or pass through the onboarding process first—a PLM could be very useful in helping users experience some value of 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 of those PLMs and try to understand how they contribute to 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 that helps the user track their Emails (i.e. how many times an Email opens) and keep track of their Email communications. Think of it as a CRM for Gmail.
To use this product lead magnet, you need to sign up for HubSpot. There is a distinction here though: you are not signing up to use HubSpot’s main product—you are just signing up to use the Chrome Extension. This free PLM allows users to experience value right away.
Something really important here is that in some cases, the main product and the product lead magnet have a different go-to-market strategy. This means that the main product may not have a free trial, but it’s PLM to be offered for free. Having said that, there are no limitations as to how you can do things when it comes to launching your own product lead magnet.
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: a) to analyze the Search Engine Results Pages (SERPs) and b) to analyze specific pages that you are visiting online.
After inserting a search query in Google Search, the user can get useful information on the different results, as shown below:
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.
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, 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.
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.
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. 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 can be. Software companies can build and launch PLMs in a concise time frame, get feedback, and iterate based on that. 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 users 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 users, engage them with their primary and sub-products and help them get value out of the product in a timely manner.
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.
Even though we believe that the product-led approach is an excellent way for SaaS companies to drive growth, we believe that product-led growth is not for everyone. PLMs can help software companies not only to acquire more users but to acquire the right users. Make sure to use them for your SaaS company.