How to Make the Transition to Product-Led Growth: Sneak Peak of The Product Analytics Economy

Hey there 👋 you’re about to read an awesome chapter from our new book The Product Analytics Economy. Get your free copy of the whole book right here.

Rachel Obstler is the VP of Product at Heap. Heap is not only an established Product Analytics company, they are also one of a growing number of organizations whose primary means of growth is Product-Led. Product-Led organizations are replacing Sales-Led organizations across industry verticals, as more companies awaken to the opportunities this model provides. Here, we look at what Product-Led Growth (PLG) is, and the challenges you may face as you try and transition to a PLG model.

What is Product-Led Growth?

Product-Led Growth is a go-to-market model where:

• Your primary interaction point with your customers is in your product
• Your product is your primary support tool and primary marketing tool
• Your users are buyers — the end user is the buyer, there is no department in between
• Your model is scalable — your ability to acquire new customers is not limited by the number of calls your sales team can make.

Product-Led companies can grow, scale, serve their customers, adapt and deliver value better than Sales-Led companies. If you’re thinking about making the transition to Product-Led, then Rachel has some advice to help you navigate the challenges you will encounter along the way:

Challenge #1: Your Team

Challenge: In a Product-Led organization, growth is everyone’s responsibility. Teams used to working with “growth” assigned to one person/department may be used to thinking that growth is not a shared responsibility. But in a product-led organization, everyone contributes to growth.

Example: In a Product-Led organization, a PM focused on new functionality also has to keep in mind customer adoption by looking at self-service, scalability, and the ability for users to communicate their success outside the app. Even though the PM does not have “growth” in their title, they still need to factor in growth in every decision they make.

Solution: Communicate clearly to your team that growth is everyone’s responsibility. Make it clear that Product Design, Marketing, Sales, Engineering, Customer Success, Product, Management, Support, and Growth … are all aspects of Product.

Challenge #2: Process & Metrics

Challenge: To get a cross-functional team heading in the right direction you need to align around growth metrics that are different from sales metrics. While sales metrics look at pipelines and how close someone is to a conversion, growth metrics can factor in a whole range of different signals across the entire customer journey.

Solution: Understand the difference between growth and sales metrics. Determine the metrics that are important for growth, and optimize for them. Adopt a bottom-up strategy. If your bottom-up strategy is successful, sales can add value by taking the momentum higher up in the organization.

Challenge 3: Technology

Challenge: Product-Led Growth can only succeed if users can easily experience the value of your product, and easily pay you for more value. Many products, such as demo accounts with limited functionality, violate a key principle of Product-Led Growth by preventing the user from easily experiencing the value of your product.

Example: Heap helped their client, Amway, use autocapture to make their data analysis flexible so they could iterate quickly instead of having to wait months for tagged. By removing the friction and making the value of analytics easily accessible, Always was able to roll out Heap’s tool to over 200 of their employees.

Solution: Remove barriers from experiencing value and making payment in your product, and align all of your organizational technology — both internal and customer facing — around PLG goals. Structure your email campaigns around their stage in customer journey, as opposed to drip campaigns, and use analytics tech that gives you insights into user behavior.

Challenge #4: Friction With Sales Teams

Customers Switching away from Sales-Led to Product-Led can cause friction with sales teams, but it doesn’t have to. Fundamentally, understand that customers are in charge, and customers generally do NOT want to have a sales call if they don’t have to.

Example: 77% of B2B buyers want to self-serve (Source: Forrester, 2015).

Solution: Communicate self-serve, Product-Led solutions as means of supporting your sales team. Use the data you gather to provide better leads to sales, and demonstrate to them that once your users have realized the value of your product, they will be more willing to get on a sales call. If friction is high, consider offering sales teams commission on self-service sales during the transition period.

PLG presents huge opportunities for growth. Adopt it before your competitors do!

Don’t forget to pick up your copy of The Product Analytics Economy!

Welcome to the Product School community!

Want to get more involved? Take your Product career to the next level, with a Product Management certificate.

Or help us take Product Management into the future, as we build the Product Manifesto together.

This article was also published on The Product Management Blog, where we share tips, tricks, and industry deep-dives for PMs of all levels.