August 18, 2024 | Read Online
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The missing element in customer success for many SaaS companies is an all-in commitment to product design and usability, self-service, onboarding, and monetization. CEOs and execs would benefit from taking a page out of the “product-led growth” playbook.
Let’s go deeper, but first, a word from our friends at Totango + Catalyst..
It’s frustrating when the CEO asks you to take responsibility for revenue without the necessary tools to be successful.
Customer Success leaders ought to have technology designed from the ground up to fit their needs.
We created a checklist to help you navigate the shift toward Customer-led Growth and evaluate CLG platforms.
You might think product-led growth (PLG) is about acquiring and retaining your smallest customers with self-serve motions.
But you’d be wrong.
In its purest form, PLG is a set of self-service sales and success motions.
But the first principles of PLG align very closely with a modern ethos of give-to-get, simplicity, and efficiency. They are as follows:
PLG originated in the realm of B2C and social media. The ability to acquire users, activate and engage them, and eventually monetize them has led to some of the largest platforms on the planet, e.g., Facebook, Instagram, WhatsApp, X, Snapchat.
The trend also appears in other consumer and prosumer software experiences. In recent years, Canva (design), Calendly (scheduling), and Dropbox (file sharing) have become household names. In addition to serving consumer markets, these products also cater to teams and have incorporated corporate expansion tactics into their go-to-market strategies.
In their purest forms, PLG and sales-led growth (SLG) stand in stark contrast to one another.
In SLG, the customer’s product journey—from sales evaluation through onboarding, ongoing engagement, renewal, and expansion—humans assist every step of the way. Demos… implementation kickoff calls… live phone / email support, renewal negotiation, etc. All facilitated by humans which is not necessarily bad. High touch can be good for customer experience and drive higher average contract values[1]. But a human-dependent customer journey carries with it the burden of ongoing enablement costs and surveillance for consistency issues.
The reality is that companies that take a thoughtful approach to blending PLG and SLG are more likely to thrive in the long run vs. those who focus exclusively on one or the other.
The most successful SaaS companies of the future will leverage advances in user interaction design, artificial intelligence, and open source software to create and competitive advantages that scale both sales and customer success.
Some call this Product-led Sales. I prefer to call it Product-led Customer Success.
There are four pillars of product-led growth that apply in various degrees to product-led sales and success:
Product-led acquisition tactics include trials, reverse trials, and freemium offers. More advanced versions feature viral loops for generating awareness and additional user signups. Think about those branded Calendly meeting booking pages, or the ability to invite other team members to collaborate in Notion.
Not all products are suited for viral acquisition, and not all apps can be installed by B2B users without IT involvement. But it's worthwhile for teams to spend time understanding customers deeply enough to know for sure. There may be elements of your product that are suited for a product-led acquisition motion.
Product-led activation begins with intuitive design. Any product with an interactive user experience should be crafted as such, however, more often, they are not. Especially those designed for B2B.
Design isn’t ”fluff.” It’s about reducing customer effort, and we know from The Effortless Experience (Dixon, Toman, & Delisi) that the less effort required the higher customer loyalty is likely to be:
“The Key to Mitigating Disloyalty Is Reducing Customer Effort”
- Matt Dixon, The Effortless Experience
But activation goes well beyond design. It’s about onboarding users and leading them to their first valuable interaction, i.e., completing a key task, collaborating with a peer, or gaining a valuable insight from a process. These are measurable moments that matter.
The holy grail of customer success is to demonstrate value. However, many customer success teams are stuck trying to do this through emails, slide presentations, and live meetings. How should the product demonstrate value directly to its stakeholders? PLG engagement tactics draw users back into the product time and again, and regularly communicate value regularly to both users and non-user stakeholders alike.
As an executive customer success leader, one of my favorite products has always been Zendesk. Even though I’ve never been a day-to-day user of the product, Zendesk always sends me a carefully-crafted executive summary of my support team’s performance statistics including a benchmark comparing our team to 15 others who were in a similar industry and size category.
I used to meet with my head of support each month to review their proactive email. How about that for engineering value demonstration and engagement?
B2B SaaS companies aren’t charities[3]. You have to lead with value, and eventually sell, retain, and expand software fees to stay in business and grow. If you can find ways to lead with product value, you have much better chance of upgrading customers to paid, upgrading individual users to team usage, and upgrading product tiers as usage becomes more sophisticated.
***
Even if you don’t really need self-serve features to survive, what if every part of your product was designed to stand alone without human intervention? How much better would it be for customers, and how much more efficient would it be for your team?
Product-led Customer Success brings together product, engineering, marketing, sales, and customer success teams into true growth-focused go-to-market teams. Its principles are THE operating model behind modern go to market and customer success.
PLG is not at odds with sales-led growth and customer success. It‘s the completion of the vision.
🤘
[1] The commonly-accepted ceiling on PLG product pricing is about $10k.
[2] Sometimes I have nightmares about “conference room pilots.” Weeks-long, scripted software demos for enterprise customers. The product and its enablement resources weren’t intuitive enough to stand on their own in an evaluation, so we had to hand-hold prospects through every moment of the evaluation 🤮. Life’s too short.
[3] Although there were many SaaS companies who operated this way over the past decade thanks to free money and willing, VC benefactors.
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