In an ideal world, all SaaS companies would offer products that allow their users to onboard themselves, and learn the in’s and out’s of the product in a timely manner. After all, this is what users want since, according to a consumer survey, 67% of them prefer self-service over speaking to a company representative.
Even though this idealistic situation may be appealing both for SaaS companies and the end-users, self-service is not always efficient. Moreover, 32% of SaaS companies today don’t offer a free version of their product. And from those, more than 80% admit that their product onboarding is lacking.
In that context, product-led growth (PLG)—even though a great go-to-market strategy—may not be for every SaaS out there. In this article, I am going to explain why product-led growth isn’t for everyone as well as try to give you some guidelines if you want to use to adopt a product-led approach for your business.
Chapter 1: Product-led Growth for Products With a Steep Learning Curve
Many products are a bit more complex to use. These products have—what we call—a steep learning curve. That doesn’t mean that users can’t get value out of these products—it just means that it takes time until users get to familiarize themselves with the UX and learn how to use the product.
For example, platforms and suites of tools (i.e. CRM, project management tools, Email automation tools) have a bigger learning curve, but still, have a lot of value for their users. In that case, these products couldn’t—and shouldn’t—be product-led, since users can’t self-serve themselves. Some examples of such products are:
- Power BI
Even though all three products are exceptional and have value for their users, they have a steep learning curve. This means that they may be complex to use and challenging to learn, but once you get to know them, the value that you experience is tremendous. Let’s take HubSpot as an example.
HubSpot is an inbound, sales, and marketing software for mid-sized businesses. The way someone can use the product is fairly simple: Sign up for a freemium account and upgrade as they grow. HubSpot has the following four products:
- HubSpot CRM
- HubSpot Marketing Hub
- HubSpot Sales Hub
- HubSpot Service Hub
From these four products, a new user can start using HubSpot CRM for free, without having to commit to a free trial. At the same time, the user can select one of the other three options and get limited use of each for free. The question we need to ask ourselves is: How easily can someone get value out of each product?
As you can imagine, with all these products and new features added often, HubSpot is a complete platform for mid-sized businesses. The truth is that it takes time for someone to excel at all of HubSpot’s products truly.
Having said that, you can’t expect a user to learn everything there is about HubSpot on her own. This is why users are encouraged to ask for help for some—or all—of HubSpot’s products. Simply put, a self-service approach can’t work here.
Does that mean that HubSpot’s products are not valuable for the users or that HubSpot is not using the product as its primary growth lever? Not at all. With over 64,800 customers in more than 100 countries, HubSpot is a perfect example of a product with a steep learning curve that adds tremendous value to its users.
It’s not realistic to expect that all products will have a small learning curve. Some products are more sophisticated, more complex, and thus more difficult to learn. However, once you learn how to use them, you can get tremendous value out of them.
Chapter 2: Product-led Growth for Products With High Time to Value
Time to value (TTV) is the amount of time required until a user reaches the Aha! moment. Of course, the TTV for each product is different, since the needs of the users using the product and capabilities of each product are different. Even though all SaaS companies want their users to reach the Aha! moment as quickly as possible, this is not always possible.
There are some SaaS companies that have adopted an aha-first approach. This means that the user experiences the Aha! moment very quickly and in some cases without having to sign up for a free trial or freemium account. A good example here is the Backlink Checker by Ahrefs.
All you need to do is add your website URL, and you’ll get a list of websites that link back to your website.
If you want to get a full list of the websites that link back to your website, you’ll need to sign up for a 7-day trial for $7. This makes sense—you can’t get all of a product’s functionalities and capabilities for free. Of course, this approach can’t be adopted by every SaaS business.
The TTV, in this case, is extremely short: The user inserts the website URL and gets back a list of websites linking back to her/his website. In most cases though, having such a short TTV is a very difficult thing to achieve, even during a free trial or for a freemium account. Thus, we understand that product-led growth couldn’t work in all these cases.
In the previous chapter, we mentioned Power BI as an example of a product with a steep learning curve. This means that Power BI—a business analytics and intelligence software by Microsoft—is a difficult product to learn.
This fact, combined with the high TTV—unless you have experience with similar tools like Tableau or Qlik—makes us understand that Power BI is far from being product-led. However, this is not a problem that has to be addressed. Some products require more time until the user reaches the Aha! moment.
We can’t expect that all products will have a short TTV—regardless if we are offering a free trial or freemium version of the product. Power BI Desktop (for Windows users) is free to download and use and yet is difficult to get value out of the product.
Once you start getting value out of it though, it is almost impossible to switch to another business intelligence and data visualization provider. Thus, we have to be realistic as to what the time to value for SaaS companies should and can be. Many products may have a high TTV but can add value to their users consistently after that.
Chapter 3: Product-led Growth for Marketing or Sales-led Companies
Companies that adopt a product-led growth approach over a marketing or sales one, optimize for Product Qualified Leads (PQLs). According to a recent survey, only one in four SaaS companies with a free version acquires more than 50% of their customers via self-service.
Moreover, 45% of SaaS companies don’t seem to track PQLs, while 32% of them intent to do it in the near future. This shows us that a) Not all SaaS companies are ready to start optimizing for PQLs and b) Most SaaS companies still need human assistance to make the sale.
Pure freemium has a low ceiling in B2B, but high-touch sales is expensive; combining the two motions to efficiently sell to free users could be your team’s next breakthrough.
O’Donnell further explained that a breakthrough moment for HubSpot came when the company started thinking the sales team as a “Revenue API” for the product. This means that whenever the product needed assistance converting free users to paid, the sales team would come in and help convert the users.
On the other hand, when the product team had a self-served product that needed no assistance whatsoever, they would just offer the product, and users would convert based on the value they experienced. This way, product and sales (through customer success) coexist and assist each other.
This is just an example of a company that adopts a product-led approach and is combining great experience with assistance from sales (through customer success). And there are many other examples of SaaS companies that use a product-led approach, but still, use marketing and sales to grow. Another one is Appcues.
Appcues is a product-led growth platform, which helps companies like Atlassian, Segment and SendGrid “deliver frictionless, product-led experiences to their users on-demand.”
But, even a product like Appcues with little-to-no friction in their onboarding and high feature adoption offers users the chance to talk to a product specialist through a live demo. This means that Appcues understands the significance of human assistance in many cases since not all users are savvy nor have the same needs.
It is obvious that marketing and sales may be secondary in a product-led company, but they can’t be completely ignored. According to Hiten Shah, the role of marketing for a product-led company should be the following:
You want to know what kind of product experience you need to create to get people to sign up, and then—down the road—what the product needs to do to retain those people, engage them more deeply and potentially upsell them.
Thus, we understand that marketing in product-led companies should not be focused on actions like creating content that generates or building sign up forms that convert. It should be focused on how to get the user try the product, convert from free to paid, and stick with the product.
In the same vein, sales should not focus on getting just any user to sign up for the product. They should focus on getting the right users to sign up instead and provide assistance in every step of the process.
Also, some businesses are so heavily dependent on sales and marketing for growth that the transition to a product-led approach is not easy. Of course, we’ve explained that this is not the right approach—since the Customer Acquisition Cost (CAC) is constantly rising—but it is the case for many SaaS nonetheless.
Thus, it’s not realistic to expect that a SaaS company can operate without assistance from sales and marketing. The role of those two departments should be different, but you still need them both to grow a successful business.
Chapter 4: Final Thoughts
Product-led growth is an ethical and idealistic approach to growth. Think about it: The product has to be good and add value in a self-served manner for the company to grow. However, as I hope it is evident by now, this is not always possible.
There are many things involved in the process of growing a SaaS company, and having a good product is not always enough. In many cases, a self-served product is a good product—a good product is not always a self-served product.
We shouldn’t believe that all products are self-served or have a short time-to-value. After al, not all products have to be self-served or easy to use. That’s what keeps the magic in them and makes users want to learn how to use them. Thus, it is evident that product-led growth is a great approach to growth, but it’s not for everyone.