PLG Tactics

4 tips for building a dedicated growth function

Growth is often best structured as a self-contained unit with expertise across the entire GTM engine—marketing, product, and customer success.

Jordan Woods

November 1, 2022
·
 min read

I define the activation point for my career as the exact moment I stumbled into Product-Led Growth (PLG), which happened nearly a decade ago. I was working for an ad-supported media company that built a tool to better manage the display ads on its website. When the tool took off among others in the industry, my role quickly pivoted to figuring out how to monetize our product—aha!

I was hooked, leaving the world of media to lead strategic growth efforts for FullStory, Cypress.io, and Interviewing.io. Today, I help startups and founders develop their GTM strategies and scale for growth. Read on for four tips you can use to build an effective growth function within your own organization.

Tip #1: Don’t turn growth into another silo

I define growth as being two sides of the same coin: functional and organizational. On one side is the functional definition, which is the practice of taking a product to market and figuring out how to acquire users. Likewise, this can be applied down the funnel as an expansion strategy for penetrating existing accounts. On the other side, however, is where controversy lies. Because when it comes to the great debate over where Growth sits within the organization—”It’s in Marketing!” “No, it belongs to Product”—people sharpen their pitchforks for the conversation. 

But the reality is that neither approach translates to an optimal growth function. At my previous companies, Growth traditionally rolled into Marketing. Truth be told, it just never quite worked. I always felt like a fish out of water, so to speak. And, yet, the same would hold true had I reported into Product instead. Because while we all want to think these two organizations are joined at the hip, it’s seldom the case. Product teams do one thing; Marketing does another. Regardless of which team Growth falls under, both inevitability make it into another organizational silo.

I tell folks to think about the growth function as a common thread that weaves across all parts of their organization. Equal parts multidisciplinary and cross-functional, I think it’s often best structured as a self-contained unit with expertise across the entire growth engine—marketing, product, and customer success.

Tip #2: Product-user fit won’t guarantee product-market fit

Remember: Product-user fit always comes before product-market fit. While you can achieve product-user fit without product-market fit, the inverse is never true and a lot of companies never end up achieving product-market fit. To put this into context, think about product-market fit like supply and demand: Do you have so much demand for your product that things are breaking internally? If so, you don’t have a demand problem—you have a supply problem. In other words, you don’t have enough resources to scale to demand. This is product-market fit.

For most companies, the opposite is true. They have engineers and teams to Build The Things, but lack people who want them. This is precisely why product-user fit will always come first, and it’ll never guarantee that product-market fit follows. I’ve worked on products and in organizations where we couldn’t find a way to expand beyond a single use case, no matter how strong it was. Consequently, we never ended up achieving product-market fit. 

Tip #3: Invest in the growth function after achieving product-user fit

Revenue is a misleading indicator for whether you’ve achieved product-user fit—you’d be surprised how much revenue can be generated without it. For example, I worked at a company with a single customer who paid $200,000/year despite them not even having an established process for using the product. Internally, we pointed to this single data point as proof we'd achieved product-user fit. In reality, the usage of our product never found traction in the organization—we had simply stumbled into a high-value contract. So, it’s entirely possible to pull in $1M ARR without product-user fit as long as your contracts are large enough.

That said, generating revenue doesn’t mean you should immediately build a Growth team. Here, I recommend holding off on investing in a growth function until you’ve achieved true product-user fit. To do this, you must be able to validate and define these four areas:

  1. The specific problem you’re solving
  2. The specific person you’re solving it for
  3. The specific company they belong to
  4. That your approach to solving it is what people actually want

Once you can check the box on all four of these—using clear definitions and proof points—you can focus on growth. Until then, however, you’re still in validation mode and it’s too early for a dedicated growth team. That’s certainly not to say a growth mindset shouldn’t be a critical part of your product strategy—it should! You just don’t need a dedicated function until you’re actually ready to scale.

Tip #4: Accelerate time to activation by tracking micro-conversions

When it comes to PLG metrics, look no further than activation—the aha! moment when a user recognizes the value they gain from a product. While activation is your North Star, don’t overlook other conversion points along the funnel. These micro-conversions are critical leading indicators along the path to activation, monetization, and other critical milestones. These types of granular insights can help you connect points A and B in the funnel to paint a more accurate picture of user behavior.

For example, I once worked on a product that experienced a massive drop-off between the signup event and the registration or "email confirmation" event. We soon learned that the tiny bit of friction in our signup process—i.e. asking people to check their email to confirm their signup—triggered a massive drop-off in our signup → registered rate . This one insight led us to build social login via LinkedIn, Gmail, and others into the signup experience. As a result, Registered Users shot up nearly overnight. 

Monitoring different steps across the funnel, getting as granular as possible, will help you better understand your different audiences and their behavioral trends. Uncovering these kinds of micro-conversions give you deeper insight into buyer profiles so you can accelerate their activation throughout the funnel.

Ready to see a product-led sales motion in action?
Turn your self-serve funnel into a revenue engine.
Get a demo
PRODUCT UPDATES

Product Updates: November 2022

Check out these latest releases and events. Calixa Automation Platform, Multi-Level Filtering, and more.

Joanna Huang

December 7, 2022
·
 min read
Advice for Sales

Combining top-down sales with a bottom-up PLG motion

Thomas Schiavone

December 1, 2022
·
 min read
NEW FEATURE

Uncover PQLs with Multi-Level Filtering

Find your best opportunities with a unified view across users, accounts and companies.

Joanna Huang

November 30, 2022
·
 min read
PLG Tactics

4 tips for building a dedicated growth function

Jordan Woods
|
Growth Advisor
|
Formerly @ FullStory, Cypress.io, and interviewing.io

Never miss a thing!
Subscribe for
more content.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
November 1, 2022
ReadTime

I define the activation point for my career as the exact moment I stumbled into Product-Led Growth (PLG), which happened nearly a decade ago. I was working for an ad-supported media company that built a tool to better manage the display ads on its website. When the tool took off among others in the industry, my role quickly pivoted to figuring out how to monetize our product—aha!

I was hooked, leaving the world of media to lead strategic growth efforts for FullStory, Cypress.io, and Interviewing.io. Today, I help startups and founders develop their GTM strategies and scale for growth. Read on for four tips you can use to build an effective growth function within your own organization.

Tip #1: Don’t turn growth into another silo

I define growth as being two sides of the same coin: functional and organizational. On one side is the functional definition, which is the practice of taking a product to market and figuring out how to acquire users. Likewise, this can be applied down the funnel as an expansion strategy for penetrating existing accounts. On the other side, however, is where controversy lies. Because when it comes to the great debate over where Growth sits within the organization—”It’s in Marketing!” “No, it belongs to Product”—people sharpen their pitchforks for the conversation. 

But the reality is that neither approach translates to an optimal growth function. At my previous companies, Growth traditionally rolled into Marketing. Truth be told, it just never quite worked. I always felt like a fish out of water, so to speak. And, yet, the same would hold true had I reported into Product instead. Because while we all want to think these two organizations are joined at the hip, it’s seldom the case. Product teams do one thing; Marketing does another. Regardless of which team Growth falls under, both inevitability make it into another organizational silo.

I tell folks to think about the growth function as a common thread that weaves across all parts of their organization. Equal parts multidisciplinary and cross-functional, I think it’s often best structured as a self-contained unit with expertise across the entire growth engine—marketing, product, and customer success.

Tip #2: Product-user fit won’t guarantee product-market fit

Remember: Product-user fit always comes before product-market fit. While you can achieve product-user fit without product-market fit, the inverse is never true and a lot of companies never end up achieving product-market fit. To put this into context, think about product-market fit like supply and demand: Do you have so much demand for your product that things are breaking internally? If so, you don’t have a demand problem—you have a supply problem. In other words, you don’t have enough resources to scale to demand. This is product-market fit.

For most companies, the opposite is true. They have engineers and teams to Build The Things, but lack people who want them. This is precisely why product-user fit will always come first, and it’ll never guarantee that product-market fit follows. I’ve worked on products and in organizations where we couldn’t find a way to expand beyond a single use case, no matter how strong it was. Consequently, we never ended up achieving product-market fit. 

Tip #3: Invest in the growth function after achieving product-user fit

Revenue is a misleading indicator for whether you’ve achieved product-user fit—you’d be surprised how much revenue can be generated without it. For example, I worked at a company with a single customer who paid $200,000/year despite them not even having an established process for using the product. Internally, we pointed to this single data point as proof we'd achieved product-user fit. In reality, the usage of our product never found traction in the organization—we had simply stumbled into a high-value contract. So, it’s entirely possible to pull in $1M ARR without product-user fit as long as your contracts are large enough.

That said, generating revenue doesn’t mean you should immediately build a Growth team. Here, I recommend holding off on investing in a growth function until you’ve achieved true product-user fit. To do this, you must be able to validate and define these four areas:

  1. The specific problem you’re solving
  2. The specific person you’re solving it for
  3. The specific company they belong to
  4. That your approach to solving it is what people actually want

Once you can check the box on all four of these—using clear definitions and proof points—you can focus on growth. Until then, however, you’re still in validation mode and it’s too early for a dedicated growth team. That’s certainly not to say a growth mindset shouldn’t be a critical part of your product strategy—it should! You just don’t need a dedicated function until you’re actually ready to scale.

Tip #4: Accelerate time to activation by tracking micro-conversions

When it comes to PLG metrics, look no further than activation—the aha! moment when a user recognizes the value they gain from a product. While activation is your North Star, don’t overlook other conversion points along the funnel. These micro-conversions are critical leading indicators along the path to activation, monetization, and other critical milestones. These types of granular insights can help you connect points A and B in the funnel to paint a more accurate picture of user behavior.

For example, I once worked on a product that experienced a massive drop-off between the signup event and the registration or "email confirmation" event. We soon learned that the tiny bit of friction in our signup process—i.e. asking people to check their email to confirm their signup—triggered a massive drop-off in our signup → registered rate . This one insight led us to build social login via LinkedIn, Gmail, and others into the signup experience. As a result, Registered Users shot up nearly overnight. 

Monitoring different steps across the funnel, getting as granular as possible, will help you better understand your different audiences and their behavioral trends. Uncovering these kinds of micro-conversions give you deeper insight into buyer profiles so you can accelerate their activation throughout the funnel.