What we cover on Episode 45
On this episode of the GrowthTLDR, we talk to Wesley Bush, founder of Productled.com and a big advocate of product-led growth.
We have a fun discussion on:
- We attempt to define what product-led growth is
- We talk about why some companies who have a free-trial are still not taking a product-led approach.
- We cover the three stages of growth within a company - the chaos phase, the centralization phase, and the democratization phase.
Time Stamped Notes
[3:00] We talk about Wes's experience launching an online summit all about product-led growth.
[5:20] What do we mean by product-led growth? It's trying before you buy. It's something that's existed forever in B2C and has taken a little time to become standard practice in B2B. Most companies will tend to implement a hybrid model where they provide both the option to try the product before buying, but can also talk to a salesperson if they want.
[6:20] A crucial part of implementing a product-led model is the ability to onboard users onto the critical elements of the product.
[7:40] Free helps to widen the funnel for your product. It's an excellent go-to-market in a competitive space because offering something for free is a way of disrupting the existing incumbents in that space.
[11:20] Choosing between a freemium and free trial model isn't an easy choice. There are a couple of things to consider:
a. Time to value: How long does it take someone to extract value from your product. For example, Evernote figured out their free users generally upgraded after 6 months. It would be hard to implement a free trial for that length of time.
b. Market Strategy: Are you trying to take a dominant approach to growing your business and aggressively targeting the lion's share e.g., Spotify, Dropbox. For companies with that approach, freemium can work great.
c. Your Audience: Who are your audience? Will they be able to onboard themselves onto the value of your product.
[15:30] An experiment Wes ran resulted in a client Snappa increasing their MRR by 20%. It's a straightforward change that most SaaS companies could make easily. Listen to find out more :)
[20:30] Wes thinks a lot of companies who offer a free trial are operating a sales-led model because the free trial is viewed as another type of lead and no one is helping those users to get set up on the product.
[22:25] The upgrade rates for free trials tend to be higher than freemium, but the retention rate tends to be worse. That's because when someone upgrades via freemium they've convinced themselves it's the right product and they're less likely to churn.
[25:10] One of the common differences between product-led and sales-led companies is treated as more of an afterthought at a sales-led company. They don't think as deeply about how the product can drive acquisition and retention. They don't bake product into every part of the business.
[28:00] There are three distinct phases of growth in scale-ups.
a. The Chaos Phase: Cross-functional team joins forces to move the needle on a particular metric. The chaos phase creates a lot of friction among teams. Something good happens, worth continuing.
b. The Centralized Phase: Centralize growth into a single team and staff them to make an impact.
c. The Democratizing Phase: The growth team creates tools and processes to democratize growth across product teams who think more deeply about things like user onboarding and upgrade paths.
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