Streamline Your Lead Funnel Management for Product Management

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hi there my name is josh fechter i'm one of the founders of product manager hq and i'm also the head of product and founder of a software company called squibbler and i'll be diving deep into a question that a lot of people have been asking which is what exactly is product like growth and as you may know project life growth or plg has been a buzzword as of lately and that's not going to change anytime soon and today's video i'm going to dive right into what it is where it came from how it works and why it's important but first if you haven't already done so make sure to go ahead and to subscribe to our channel so you can get great content about product management right in your youtube newsfeed from product experts now let's go ahead and dive right in i'm sure you've heard this phrase and maybe that's from product marketers or growth managers or people who work in product management and they have complicated ways trying to explain what it is when all those convoluted or really complex explanations aren't necessary to put it in its simplest terms product led growth is a go-to market strategy or methodology in which the features and value proposition of a product are what drives growth as opposed to growth hacks or elaborate marketing campaigns it's very much a try before you buy an approach in which the customer doesn't have to go through a traditional sales cycle to get value out of the product this is because the product itself is good enough to add a real value to the customer so the emphasis is placed there on designing a great product as opposed to focusing heavily on marketing or advertising for that reason we could say that plg uses a self-serve model in which the end user can just use a product often without paying a single cent but we'll talk more about this later and get faster access to the value it brings take slack for example with slack you don't have to go through a lengthy process that involves you speaking to one of their sales reps and then getting approval to use the app instead you can simply sign up create channels and communicate with your team members it's as simple as that there aren't any complicated steps or obstacles in between which later equates to higher customer acquisition retention provided that the perceived value overlaps with the experienced value and engagement growth is dependent mainly on word of mouth and referrals let's now talk about what product lip growth entails as i mentioned before plg is an approach that implies that your product needs to be solid since after all you're not leaning heavily on marketing or advertising as opposed to ensuring that your product really does provide value for that reason there are a number of things that characterize product led growth the first one i'd like to touch on is product usage in the product's early stages plg focuses heavily on how much the product is used usually there's no paying customers who will provide you with some direct monetary benefit for your product in most cases the customer can just go to the company's website or to their app store download the app sign themselves up and use the product if they want to upgrade their plan or subscribe after a free trial the steps should also be simple the second thing about products like growth i'd like to draw your attention to is that whenever you practice this type of approach you need to go all in for your users plg is highly user-centric and not so much customer-centric what's the difference here well customer-centric means that you're catering to the person paying for the product not for those who would use it for example if a c-level executive is the one buying a product for their team to use it a customer-centric approach would focus on appealing to the c-level executive as opposed to catering to the actual team members who will be using the product so in this case the end users on the other hand user centric focus places the end user in mind while actually designing the product with this approach your main focus is to solve the problems of whoever uses your product that way less customers will end their subscription or stop using your service this means that the product team instead of working individually will have to work closely with engineering sales customer success and marketing teams each one of being driven and turned by the end users pain points the third thing i'd like to say about plg is that it's not for all sas business models it only works for self-service models which usually has a low price tag and is less complicated in terms of its sales process as is the case with companies such as slack or zoom that said the model can also work for transactional products that are more expensive but are still simple to get started with an example would be tv shopping where there's a sales person seen on screen who tries to make their products likable and appealing the point here is not for you to focus on the sales person per se but to make viewers pick up the phone and buy even if there's never any return business there's always more customers tv shopping the next day similarly in the case of sales models usually speaking we are dealing with two plg models one geared towards simple low-priced products and a second one geared towards simple yet expensive products last but not least it's important to remember that the product like growth the top of the funnel or tofu is wider than the average sales funnel since there's very little friction a product like growth model gets new users or new customers much faster than a sales led one however keep in mind that a wider tofu won't help you scale sure it will get new users faster but if you fail to deliver a positive customer experience you're going to lose them just as fast before we dive any further into the product like growth methodology and where it came from and how to create an effective gtm strategy based on it i'd like to go ahead and discuss the differences between the plg and traditional sales led growth approach now a sales led approach is a traditional sales tactic where sales processes and teams take the driver's seat to grow the revenue with this approach leads have to be informed educated and finally convinced to use your product normally your marketing and sales strategy would be what you use to convert leads into customers now that we've understood the basics let's talk about the key differences between plg and slg first and foremost as i've already mentioned earlier a key characteristic of the product like growth model is that it's a self model the user doesn't necessarily have to get in touch with someone in the company to understand the benefits of the product and how to use it they figure that all out by themselves sales led growth is different sales led companies take the longer route which involves marketing to customers informing and educating them about the value that their product offers through different mediums such as white papers all in effort to convince them to use the product and finally converting them to become customers remember that the sales led approach isn't necessarily a bad thing most software companies that operate on this methodology aren't doing so just because they can but because it is the most viable option for them based on their business model and the solution they're offering another key point of differentiation between plg and slg is that with the slg the customer acquisition cost or cac is almost always higher just to be clear your cac generally includes things like advertising costs marketer salary and cost of sales people all divided by the number of customers acquired as you can guess slg's customers acquisition cost is higher because it requires a lot of marketing effort in taking a lead from the awareness stage to the conversion stage on the other hand with product led growth the cac is usually low since a company won't be employing many marketing campaigns be it for user engagement or retention after all it is a self-service model another major difference between the product led and sales led approach is that the sales led one relies on a product qualified lead metric to gauge growth whereas product led looks at marketing qualified leads as well as sales qualified leads just to explain here a product led lead is someone who after actually using your product for free found some value in it this is very different from a marketing qualified lead or a sales qualified lead because neither of them actually ties back to actual growth for example a sales qualified lead after converting and trying out your product may still not see any meaningful value in your product in that sense using pqls as a kpi is far more meaningful since they tell you a lot about your product how users perceive it and how you can further improve it to get more business now that we have a clear distinction between product like growth and sales-led growth it's time to discuss why so many sas companies have started taking this approach here's an overview of the timeline it all goes back to the 80s and 90s when the software industry was relatively young and when cios and executives called all the shots and that time enterprises were exploring ways to leverage wonders of computer technology for increased productivity and reduced costs as long as the product helped hit the key performance indicators they didn't care about how their end users who by the way happened to be their employees felt about the solution all the decision making was made in the boardroom with little to no input from line staff and today it's all about the end users ever since companies like salesforce launch and sas became a thing we saw a gradual shift occur with rising competition software companies began i think differently and create products in ways that helped do more in less time and better companies began to create products that brought value to their end users this in turn gave birth to a concept that doesn't require extensive hands-on selling but just a solution that drives growth by itself and the rest is history so how do we make our product life growth strategy work a product like gross strategy sounds wonderful on paper and has even been proven to yield faster growth than a traditional slg approach that said it's not exactly easy to create and to execute while there are no universal steps to follow there are certain foundational principles and rules that are crucial for product-led growth the first is that it's important to truly understand the value you want to deliver in product led growth success depends on the actual solution you can provide for the end user your vision should be to create a product that your users just can't live without after trying it once you've identified the value you're about to deliver formally write it down and make it an overall part of your go to market strategy second thing is that you should go all in on communicating product value this is where your marketing comes into place a common misconception about product like growth is that it doesn't involve marketing this is wrong and this idea stems from the idea that product like growth is a product that sells itself while that's not completely true both sales and marketing are still vital components of the go to market strategy after all in the beginning stages you'll have to do some extensive marketing to get people to try out your product that entails communicating the value you have to offer to your user base using different tactics furthermore making sure that you're distributing the product in places where your user exists once you get the user to try out your product from there it's all about convincing them to join your customer base the third step is to justify your pricing software companies can't make grand claims about what their products can do and get away with it they need to truly share the details such as the different modules the individual features and the specific things that the users can accomplish using those features with clear pricing your customers will know exactly where their money is being sent and last thing is you have to remove the barriers for the end users as discussed earlier a key aspect of product-led growth is having a funnel that's free from friction points of friction could be a paywall that prevents a user from trying out their product instead you need to allow your users to sign up and be allowed to instantly use your product in a self-serve environment it should be as simple as going to your website or downloading your app now let's take a look at why project life growth is very popular among sas companies that's because it allows them to get their product out there and scale faster one of the main reasons that it's easier to scale and acquire more customers with plg as mentioned earlier you get more customers since the tofu or top of funnel is much wider than a traditional sales funnel when more people try out your product and the time to value for those people is lower the overall buying process is faster this in turn results in a higher conversion rate and lower churn if you successfully deliver on what you promise the next reason for its popularity is because usually customer acquisition costs are lower which is something that we've already explained at length and a model which implies a lower cac will always be attractive to companies in closing here let me just say that a product like growth strategy when executed properly will scale the customer base of a new product much faster than it would otherwise with users having all the information at their fingertips they don't need to rely on the executives or anyone else to make decisions for them to make a decision they'll simply just need to try out the products in order to understand if they can get value and you just have to get users and give them that delightful experience and that way and if you can do that then they'll go ahead and pay and if you're interested in implementing a product led growth in your company i highly recommend you check out some of our training that we have on product manager hq where we cover how to implement a product like growth strategy in our certification courses and that way you can help level up your product game and if you're working for a sas company or thinking of starting a company if that's when you use this model those courses can really help you and there's lots of other information we have on our blog that's totally free that you can go and look at to really get an understanding of how to product manage a product blood growth strategy and before we go i'd like to test you on how well you've been following this video i have a quick question which is what is the main difference between a product like growth approach and a traditional sales lead growth approach leave your answers in the comment section below and that's it for today i really appreciate that you stayed with me throughout the video and i wish you the best of success in your career journey and if you enjoyed this video don't forget to like it and subscribe to the channel and i'll see you until next time cheers