Categories: Product Marketing
| On 8 months ago

The Flywheel model and its application to SaaS products

By Aggelos Mouzakitis

What is the Flywheel model? How can user segmentation be achieved with the Flywheel model? What actionable insights can segmentation offer us? How can the Flywheel model be used as an action plan to strengthen a SaaS company’s GTM strategy?

These are all questions that we will be answering in this article. It’s important to note that this model can be implemented by SaaS companies of all shapes, sizes and growth stages. Whether you’re getting ready for a product launch to a new market of potential customers or you’ve already established an army of product advocates that love your software.

I recently spoke with Eric Keating, VP of Marketing at Appcues, about the Flywheel model and how product-led businesses can use it as a roadmap to segment their users, optimize their performance and bolster their marketing plan and sales strategy for competitive advantage.

The Product-Led Growth Flywheel is a proven framework for growing your business through investing in a product-led user experience. If your SaaS company has not come across this framework before, this article will serve as the perfect entry point.

Eric Keating is passionate about solving the problems that product-led companies encounter on their road to success. He has been in his role at Appcues for just over a year and previously worked at a number of SaaS startups, helping them reach their target audience.

Appcues has been at the forefront of the product-led discussion, propelled by its exceptional content on the matter. Just a quick search on Google will show you this! The Flywheel model caught my attention and I was keen for Eric to explain the model of user segmentation.

“When we started looking at what’s happening in the software world, it all boils down to this major shift in how [decision makers] want to buy new software. People are now expecting personalization in everything they do and SaaS experiences are no exception to this.

Eric continued, “They want to be able to try products before buying them. There’s a lot of data about the vast majority of software buyers wanting to learn about the product without talking to a sales team. Traditional B2B business plans have been sales-led, so this is definitely driving change”.

Eric noted that a lot of this change has been driven by consumer experiences, citing Amazon’s ability to personalize every touchpoint as an example. He sees this as something that is bleeding over into every aspect of our day-to-day lives.

Appcues took a look at this and saw that there wasn’t really a great framework for how you think about this new world and the user experience within it. So, as Eric explained, they started talking to a number of different companies, interviewing them on how they see their user journey.

Sprouting from this initial stage of research, Appcues developed the Product-Led Growth Flywheel. “It’s being used already by a tone of product-led SaaS businesses and they’re using it as a framework for thinking about user experience”, Eric said.

It’s really designed to increase user satisfaction and advocacy. We’re seeing that advocacy is a large driver of customer acquisition. There’s no marketing that compares to recommendations and word-of-mouth. The Flywheel breaks it down into four key phases and actions that are correlated with those phases.

Eric wanted to give us a real-world example of how the Product-Led Growth Wheel works. “Spotify is one of my favourite apps. Here’s how they think about these four segments. The idea is they’re using the user’s behaviour as an indication of what stage of the lifecycle they’re at”, Eric explained.

Evaluators

Eric wanted to dive into the four segments in a little bit more detail to help us understand what they consist of. “Evaluators are those in a trial or demo phase of the new product. They definitely haven’t started to build it into their daily workflow, they’re just checking it out. At this stage, they haven’t felt any deep connection with your product yet”, Eric explained.

Evaluators want to experience your SaaS product and get a basic understanding of it. They do not want a comprehensive overview of every single product feature during this initial introduction.

As Eric told us, “When someone discovers your product for the very first time, their goal isn’t to learn every single thing about your product, it is to get something specific done and to see the value proposition as soon as possible. Guiding them towards features can help them realise that value.”

You may have data on what a prospective customer was trying to achieve when they signed up for your SaaS product. This data could then be used to point these people specifically towards areas of your new products that are likely to help them solve their problem.

Beginners

Once a prospective customer has seen the value proposition in your new product and has ‘activated’, they’re going to want to understand the broader value that the product delivers. They already understand the basic value, but they want to learn more and explore features and functionalities.

“You want to help them to build foundational knowledge, discover additional features and understand best practices for customer success. The metric we use here is ‘adoption’. This is all about users developing a habit and becoming a regular user”, Eric told us.

Regulars

Regulars are people who have incorporated your SaaS product into their workflow and are gradually starting to spend more time using it to achieve their objectives and ambitions. Eric likes to use the analogy of a coffee shop to describe a ‘Regular’.

As Eric explained, “You’re a regular at a coffee shop when they know your order. These are the people you can count on. These people want to explore deeper layers of your product and see what else it can do. They will often be interested in learning about new features and want to be informed about new updates”.

For these people, it’s all about education. They want to learn the skills and best practices for using your new product and then become masters of your SaaS. To meet their needs, you need to be proactive and provide opt-in access to content, support and create feedback loops.

“Ultimately, you want these people to start to adore your product and this is where the emotion starts to come in. They’re starting to feel a passion for your product and the value proposition it provides. They then become invested in the success of your SaaS company”, Eric told us.

Champions

The final segment represents people who are actively participating in the future of your SaaS product by providing thorough feedback. They want you to succeed. Ultimately, these people become a vital instrument for customer acquisition and an essential part of your marketing strategy.

As Eric told us, “These are the people who drive your product team to a point of frustration because they’re so eager to see your product develop and improve. That’s not a bad thing, it’s amazing that people want this. These are the type of people who are going to wear your brand t-shirt around”.

Eric suggested that you should offer these people advanced guidance on power-user features and advance access to beta versions of the product. At this point they’re comfortable enough with your SaaS product that they’re willing to go through some wrinkles in the rollout.

”The most important thing – that really completes the Flywheel – is that when these people are asked to take part in a case study, testimonial or review, it isn’t going to feel like a burden to them. They want to do it. It’s your responsibility to leverage that passion and eagerness to talk about your product because it’s going to help your SaaS business in a very significant way”, Eric said.

Actionable Strategies

After listening to Eric Keating talks about the Product-Led Growth Flywheel, I wanted to get some actionable strategies and examples of what they’re doing at Appcues for each of these segments, particularly the Evaluators segment. Many SaaS companies often have dozens of Evaluators that they struggle to turn into Beginners.

In response to my questions, Eric shared his thoughts: “I think the most important thing is, in order to have a really successful free trial model, when you introduce the model, you’re going to start seeing a much higher volume of people making use of your product. You really need to start looking at what you can do at-scale to educate these people and make sure they’re successful.”

Eric continued, “In the broad sense, you want to understand what the behaviours are that are driving people to be successful. So, what are those who convert into a paying customer doing differently? What are the behaviours that they’ve exhibited? How can you drive more people to do these things?”.

From Eric’s perspective, this can be addressed in several different ways. “You could do it manually, talking to people one-on-one, however at-scale, the product or sales team are focused on optimizing the actual product experience itself to drive towards those behaviours. There are also tools that can be layered on top of your product to drive those behaviours as well.”

Final Thoughts

It’s clear that we’ve entered into a show-don’t-tell era when it comes to customer experiences and expectations. If you don’t start doing things that are more product-led, your SaaS company is going to start shrinking. Even if you have an incredibly complex product, this Flywheel can still be of use – you would just need to rethink the tactics at each stage.

If you have a super-complex SaaS product, you may need to consider whether a free trial is right for your go-to-market strategy at this time. Maybe you could offer a simpler version of your product for the free trial? You could then have a premium version with all of the product features.

I hope you have found this article useful. You should now be equipped with the knowledge to make a decision on whether or not a Product-Led Growth Flywheel will be beneficial to your SaaS company. Ultimately, it’s all about getting more people to advocate for your product, boosting your GTM marketing strategy to attract your target market.

Aggelos Mouzakitis

I have over 8 years experience in Digital and Growth marketing. Currently, running Growth Sandwich, a London based Product Growth Lab. Before turning in Growth Marketing and Product Growth, I had the chance to pass by head marketing and head digital positions in Athens and London, work with numerous tech startups but also build and run companies. In my spare time, I am consulting ambitious startups about their Growth and Business strategy.