There’s a lot of writing about Product Led Progress (PLG). What’s it precisely, what are the advantages, and how one can get it proper.
But I’ve learn comparatively little about the important thing query: when ought to a startup even attempt to take the PLG route? And I’ve heard many misconceptions about it.
As a PLG founder myself (fast plug for tagbox.io), it wasn’t in any respect an apparent selection, and I used to be personally stunned by so many elements of it over the previous couple of years, I needed to leap into the dialog with this brief put up.
I’ll begin off by saying that despite the fact that we went with PLG, I nonetheless don’t assume it’s the only option for many startups:
To begin with, it’s not a very good match for a lot of corporations and merchandise. Particularly, in case you’re planning on enterprise contracts of $10k+ a 12 months, these are virtually unimaginable to do with PLG.
Second, It takes a looong time to create a working PLG pipeline. How lengthy? It took us 9 months, however I generally hear of corporations that took 1.5 years and extra to get any constant move of shoppers going.
The explanation for that’s that there’s no dishonest in PLG. To ensure that a pipeline to work, it’s essential to obtain all the following at a excessive degree:
- an ongoing lead-generation channel
- A web site that conveys the worth prop and converts customers
- A very good onboarding move that explains the worth inside a few minutes
- A very good product that can provide long-term worth
- Work out a very good enterprise mannequin that will get freemium/trial customers to transform into consumers
With Gross sales-Led, you solely want #4, and the remaining could be plowed by way of with good salesmanship.
Getting all of those proper takes time and a number of iterations, and time is strictly what early-stage startups don’t have a variety of.
At this level, you is likely to be saying to your self — hello, PLG seems like a horrible method to get began! I’ll simply begin off with some good ol’ gross sales, and alter my mannequin later, as soon as I’ve a while to breathe.
Mistaken! 🚨🚨🚨
Each as a result of it not often will get simpler after you fundraise, and primarily as a result of as exhausting as it’s to start out with PLG, it’s endlessly tougher to transition to PLG upon getting a working gross sales pipeline going.
Why? As a result of it’s going to imply shifting focus to a much less profitable mannequin for that 1.5 years or so. It means saying NO to these enterprise prospects that you just’re so used to getting with extra companies and customizations. It means telling your salespeople that you just’re transferring their results in self-service, costing them cash. And by that point, you’ve already constructed a lot software program that’s not appropriate for self-service, as a result of that was by no means a precedence. Belief me — there are zero sales-led startups with good onboarding.
Okay okay — can we do each then?
I imagine this thought goes by way of the thoughts of each founder who’s contemplating PLG. It actually did for us, and we did strive it for some time, till we understood that it’s principally unimaginable.
The explanation it’s unimaginable is the completely different prices. With outbound enterprise gross sales, it’s essential to attain out to many individuals to get some calls. You then have to make a variety of calls to get a critical prospect. Lastly, you want to spend so much of time with stated prospect to be able to shut the deal. And really even after that — prospects received by way of gross sales will count on much more onboarding, coaching and assist after the gross sales course of is completed.
To assist these efforts, you’ll have to cost them accordingly. Unit-economics-wise, it provides 1000’s of $$$ to your CAC, that means you’ll want to lift your costs considerably. For those who’re pricing your product at $200/month — you’ll want to alter that to $2,000/month.
For those who’re doing PLG and placing that $200/month in your pricing web page, it’s going to make it that a lot more durable to elucidate to these enterprise prospects why you’re charging them such a premium. I’ve had many such conversations — seems that simply because they need to get additional, doesn’t imply they’d prefer to pay additional. Persons are unusual that manner.
Additionally, and perhaps that’s the place I ought to’ve began — there are simply not sufficient hours within the day for a small staff to do each PLG and gross sales. Every of them individually is simply so unexpectedly time-consuming.
“Dang, son!” You is likely to be saying to your self at this level, “Seems like PLG is horrible! Let’s put it in a field and lock the lid for good!”.
Wait, let’s give it an opportunity. PLG does have advantage, and plenty of it.
It can provide you a critical aggressive benefit. In our case, there have been many costly, complicated, demo-gated enterprise options, and only a few self-service options. As a PLG firm, when a possible purchaser googled options, they’d be capable to strive us out manner earlier than the rivals’ salesperson acquired them on Zoom. That made us the benchmark to beat.
Additionally, in some industries, speaking to gross sales is simply not what prospects count on. For those who’re promoting to builders, that’s a no brainer, but in addition if you’re promoting to designers, entrepreneurs, and others — they normally like to simply strive issues out on their very own, not getting on dozens of gross sales calls with software program suppliers.
Honesty is the very best coverage
An enormous advantage of PLG is it’s unimaginable to misinform your self about what your shoppers need. We began with two big enterprise prospects even earlier than we had a product. It took us months to know that they didn’t actually have a burning want for what we had been promoting — they simply appreciated working with us and being revolutionary.
With PLG, the truth that their response is unmediated makes it 100% sincere and in-your-face suggestions, each step of the way in which. There’s a saying that startups ought to optimize not for development, however for studying. If that’s true, there is no such thing as a higher trainer than your no-touch analytics metrics.
PLG prospects are the very best
Since we did do PLG and outbound gross sales in parallel for some time, we do nonetheless have some sales-won prospects. Whereas I like every one in all them, every of our PLG prospects is a “higher” buyer — extra engaged, sooner to shut, requires much less assist, offers higher suggestions, and is usually extra dedicated to the success of the product.
It is likely to be counter-intuitive, however I’ve discovered that PLG truly drives extra conversations with prospects. Being extremely engaged, they hold in shut contact, electronic mail usually and are normally not shy about getting on a fast Zoom name. They care a lot about our product as a result of it solves a deeper ache than it does for our sales-won prospects, and so it’s essential for them to tell us about each subject or thought they’ve to enhance their work.
PLG permits for very low Price-Per-Acquisition
As PLG is low-touch, the one prices of acquiring a consumer are the advertising spend and technical prices (that are normally very low).
This allowed us to cost our product at about one-tenth of the value of our rivals — opening up markets that couldn’t afford a product like ours earlier than, in addition to giving us a bonus with these bigger accounts. That’s an enormous aggressive benefit, particularly in case you’re the primary to supply a self-service product in an in any other case sales-driven market.
Simple to scale
If and when your PLG takes off, scaling it will be a lot simpler than scaling a sales-led product. In spite of everything, they’ll want to rent and prepare extra salespeople; extra buyer success and assist; extra builders to be answerable for platform customization.
And also you? All you’ll want is to crank your advertising as much as 11, sit again, and luxuriate in. Nicely, perhaps you’ll have to do a number of extra issues, however you catch my drift.
PLG is enjoyable
Founding a startup is not only science, not simply chilly evaluation and execution. Startups have hearts, they usually share DNA with the founders. For those who’re captivated with product (as I’m) — you’ll need to construct a fantastic product that folks love. For those who’re extra salesy and prefer to deal with these big-ass enterprise offers that take 15 conferences to shut, you’ll would possibly choose to go the SLG route, and that’s completely high-quality.
I’d positively not advocate doing PLG with no sturdy product supervisor and UX designer. It’s a must to get your product to be superb, and that’s an enormous ask even from the very best of skills.
But when product runs in your veins, there’s nothing like the sensation you’ll get if you watch a consumer log in to strive your product, immediately will get what you meant, get that ah-ha feeling, after which comes again many times.
