PLG Tactics

How To Set Up a PLG Motion From Scratch and Measure Success

Why engaging with your users early on is critical, plus tips for understanding who you should be talking to and how to build a more cohesive PLG strategy.

David Ly Khim

August 4, 2022
·
 min read

Getting people into your product is one challenge. Deciding when (and where) a person should reach out to them once they’ve made it inside is an entirely different challenge. Contrary to popular belief, human interaction is a necessary part of product-led growth (PLG), especially when you’re still building out a frictionless self-service flow. You can’t jump straight to a self-service flow without first learning directly from your product users.

I’ve spent the last seven-plus years at the intersection between product and marketing, helping companies such as HubSpot and People.ai build their PLG motions. Below I’ll go through why engaging with your users early on is critical, plus tips for understanding who you should be talking to and how to build a more cohesive PLG strategy.  

Never underestimate the value of human interaction in PLG 

The biggest mistake people make early on in building a company is not talking to their users enough. If you’re an early-stage PLG company, or still sharpening your PLG motions, talking to customers is still your fastest path to success. 

Offering new users the option to talk to someone during onboarding is always a good idea. These interactions are opportunities to understand how you can make the self-service experience even better and eventually reduce the need for human intervention. 

There is usually something you can learn from users regardless of the level of product usage they demonstrate. It’s a matter of who should reach out. For example, if they’re not using the product much, it’s an opportunity for a product manager to reach out to understand why. You may uncover useful feedback to improve the product experience or improve your messaging and positioning.

If they’re using the product a lot and frequently, it could be an opportunity for sales to reach out and learn more about what else they’re interested in, or for product to learn why the product resonated so strongly.

This type of feedback will help your product and marketing teams improve the self-service functionalities as you aim to build a frictionless customer flow. 

Knowing which users make sense to talk to…and which ones to leave alone 

It goes without saying that some parts of the business require more human effort than others. As your business scales and you acquire more users and customers, you need to evolve your criteria of who you want to speak to based on your company goals.

Once you’re getting 3X more monthly sign-ups as you previously did, it’s challenging to take calls with every single user. At this point, you’ll need to be more clear in what you hope to learn about your users then systematically qualify which users to reach out to and how.

For example, if you want specific feedback on a new feature, only reach out to people who’ve demonstrated they tried the feature. If you want to improve onboarding, then you might only reach out to new users within the first 7 days of signing up.

If you want to improve retention, you might have criteria that the user must have used the product for at least 4 weeks straight to understand why they stuck around. On the flip side, you might also want to look at users who stopped using the product after 1 week and understand why they stopped using the product. These specific guardrails will help you maintain focus and strategically reach out to the right users.

Once you’ve generated a consistent volume of new users and have a strong understanding of how to improve your onboarding and retention, you can productize and automate parts of onboarding, segment users based on usage behaviors, and even begin to automate parts of the sales follow up and upsell motion.

Generating product qualified leads

All that information helps you automate and streamline PQL generation. You’ll be able to tell what type of users are a better fit for your product and paid offers using product usage data.

That will allow marketing to update forms to collect the appropriate information from new sign-ups and then create a strong product fit segment. Some qualifications might include job titles, company size, or current tool stack.

If a user doesn’t meet the criteria for direct sales outreach, they might receive an automated onboarding experience. If they do meet the criteria that deems them a strong fit, then you may have your sales team reach out to provide support and a white glove experience. Sales can then focus on qualified users.

If you don’t already have a large volume of data to make those correlations, the alternative is to start identifying patterns that signal high intent or interest in your product (even through machine learning). For example, how often do they log in; is they’re user count growing; have they utilized certain critical integrations, activity spikes or lulls – all of this informs what type of conversation sales should have with the user.

Three common PLG pitfalls (and how to overcome them)

A lot of PLG companies struggle to align their self-service and top-down funnels. Managing multiple selling motions and how the sales process and behavior should differ is difficult. Here are three of the biggest pitfalls I see PLG companies stumble over and how to avoid them. 

  1. Not having a clear owner of the PLS strategy. Prior to PLG coming along, sales and marketing always worked closely and usually product and marketing did as well. There was also always a clear division of responsibilities between the sales and customer success teams. All of this is now blurred and being redefined with a PLS motion. It’s critical that sales, marketing, and product are bought in on implementing a PLS motion and work hand and hand to ensure a smooth user experience and happy customer. Even more so, the role of sales and customer success is one in the same. It’s now about the consultative sale which is helping the user realize value until they’re ready to buy more. But with all this interaction and cross-collaboration, there still needs to be a single point person responsible for driving PLS processes and strategies forward, otherwise you’ll encounter the age-old finger pointing.  
  1. Not having the right buy-in. Success with any new selling motion hinges on buy-in from the sales organization, and primarily sales leadership. It’s a challenge to ask an entire sales team – and humans in general – to change their behaviors. But it is critical that sales is bought in to the idea of product-led sales, or perhaps even leading the charge. The mistake I’ve seen is product or marketing teams trying to force a PLS motion onto a sales team who already has a playbook that works and has no interest in trying something new because hey, they’re already meeting quota and doing fine. For a PLS motion to succeed, the Sales team needs to believe that a PLS motion can grow their pipeline. For example, they probably will wonder why they should waste time on people signing up for a free product with no intentions to pay. This is often because the people pushing the PLS strategy are not properly communicating the value and potential impact of the strategy. If sales isn’t bought in, then it’s on the marketing and product teams to create case studies of real free-users who turned enterprise customers to prove that the strategy delivers pipe.
  2. Not measuring the right success metrics. Another critical piece to making PLS work is measuring the right success metrics. For example, free sign-ups are great but they won’t grow the business. They’re a means to an end. You need to go beyond sign-up and think about activated users and free-to-paid conversion. The goal of PLS is to use the product to qualify users for sales. The way to qualify users is to help them see value in the product and continue using it. Those users are the ones that will typically fall into the “strong product fit” bucket and will likely be the ones who are more likely to convert into a paying customer. You might notice that I don’t mention paying customers or revenue as the metric. Those will come as you grow and scale. In the early stages you need active, retained users. Have sales reach out to those users and see how much easier it is to sell. 

The bottom line? If you’re early into your PLG journey, don’t immediately jump to automation and self-service. Talk to your users. You’ll uncover points of friction faster and develop hypotheses to improve those self-service capabilities. Not to mention, you’ll avoid the risks of following your own assumptions down a rabbit hole. Likewise, if your sales team doesn’t see the value yet, help them see the value by generating product qualified leads for them.

While it might take longer to turn those users into high paying customers, using the product to qualify users is ultimately more efficient. To be successful, Sales needs to pursue all routes to market—and PLS is another route to take, now let’s prove it.

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PLG Tactics

How To Set Up a PLG Motion From Scratch and Measure Success

David Ly Khim
|
Growth Leader
|
Formerly @ People.ai, dbt Labs, and HubSpot

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August 4, 2022
ReadTime

Getting people into your product is one challenge. Deciding when (and where) a person should reach out to them once they’ve made it inside is an entirely different challenge. Contrary to popular belief, human interaction is a necessary part of product-led growth (PLG), especially when you’re still building out a frictionless self-service flow. You can’t jump straight to a self-service flow without first learning directly from your product users.

I’ve spent the last seven-plus years at the intersection between product and marketing, helping companies such as HubSpot and People.ai build their PLG motions. Below I’ll go through why engaging with your users early on is critical, plus tips for understanding who you should be talking to and how to build a more cohesive PLG strategy.  

Never underestimate the value of human interaction in PLG 

The biggest mistake people make early on in building a company is not talking to their users enough. If you’re an early-stage PLG company, or still sharpening your PLG motions, talking to customers is still your fastest path to success. 

Offering new users the option to talk to someone during onboarding is always a good idea. These interactions are opportunities to understand how you can make the self-service experience even better and eventually reduce the need for human intervention. 

There is usually something you can learn from users regardless of the level of product usage they demonstrate. It’s a matter of who should reach out. For example, if they’re not using the product much, it’s an opportunity for a product manager to reach out to understand why. You may uncover useful feedback to improve the product experience or improve your messaging and positioning.

If they’re using the product a lot and frequently, it could be an opportunity for sales to reach out and learn more about what else they’re interested in, or for product to learn why the product resonated so strongly.

This type of feedback will help your product and marketing teams improve the self-service functionalities as you aim to build a frictionless customer flow. 

Knowing which users make sense to talk to…and which ones to leave alone 

It goes without saying that some parts of the business require more human effort than others. As your business scales and you acquire more users and customers, you need to evolve your criteria of who you want to speak to based on your company goals.

Once you’re getting 3X more monthly sign-ups as you previously did, it’s challenging to take calls with every single user. At this point, you’ll need to be more clear in what you hope to learn about your users then systematically qualify which users to reach out to and how.

For example, if you want specific feedback on a new feature, only reach out to people who’ve demonstrated they tried the feature. If you want to improve onboarding, then you might only reach out to new users within the first 7 days of signing up.

If you want to improve retention, you might have criteria that the user must have used the product for at least 4 weeks straight to understand why they stuck around. On the flip side, you might also want to look at users who stopped using the product after 1 week and understand why they stopped using the product. These specific guardrails will help you maintain focus and strategically reach out to the right users.

Once you’ve generated a consistent volume of new users and have a strong understanding of how to improve your onboarding and retention, you can productize and automate parts of onboarding, segment users based on usage behaviors, and even begin to automate parts of the sales follow up and upsell motion.

Generating product qualified leads

All that information helps you automate and streamline PQL generation. You’ll be able to tell what type of users are a better fit for your product and paid offers using product usage data.

That will allow marketing to update forms to collect the appropriate information from new sign-ups and then create a strong product fit segment. Some qualifications might include job titles, company size, or current tool stack.

If a user doesn’t meet the criteria for direct sales outreach, they might receive an automated onboarding experience. If they do meet the criteria that deems them a strong fit, then you may have your sales team reach out to provide support and a white glove experience. Sales can then focus on qualified users.

If you don’t already have a large volume of data to make those correlations, the alternative is to start identifying patterns that signal high intent or interest in your product (even through machine learning). For example, how often do they log in; is they’re user count growing; have they utilized certain critical integrations, activity spikes or lulls – all of this informs what type of conversation sales should have with the user.

Three common PLG pitfalls (and how to overcome them)

A lot of PLG companies struggle to align their self-service and top-down funnels. Managing multiple selling motions and how the sales process and behavior should differ is difficult. Here are three of the biggest pitfalls I see PLG companies stumble over and how to avoid them. 

  1. Not having a clear owner of the PLS strategy. Prior to PLG coming along, sales and marketing always worked closely and usually product and marketing did as well. There was also always a clear division of responsibilities between the sales and customer success teams. All of this is now blurred and being redefined with a PLS motion. It’s critical that sales, marketing, and product are bought in on implementing a PLS motion and work hand and hand to ensure a smooth user experience and happy customer. Even more so, the role of sales and customer success is one in the same. It’s now about the consultative sale which is helping the user realize value until they’re ready to buy more. But with all this interaction and cross-collaboration, there still needs to be a single point person responsible for driving PLS processes and strategies forward, otherwise you’ll encounter the age-old finger pointing.  
  1. Not having the right buy-in. Success with any new selling motion hinges on buy-in from the sales organization, and primarily sales leadership. It’s a challenge to ask an entire sales team – and humans in general – to change their behaviors. But it is critical that sales is bought in to the idea of product-led sales, or perhaps even leading the charge. The mistake I’ve seen is product or marketing teams trying to force a PLS motion onto a sales team who already has a playbook that works and has no interest in trying something new because hey, they’re already meeting quota and doing fine. For a PLS motion to succeed, the Sales team needs to believe that a PLS motion can grow their pipeline. For example, they probably will wonder why they should waste time on people signing up for a free product with no intentions to pay. This is often because the people pushing the PLS strategy are not properly communicating the value and potential impact of the strategy. If sales isn’t bought in, then it’s on the marketing and product teams to create case studies of real free-users who turned enterprise customers to prove that the strategy delivers pipe.
  2. Not measuring the right success metrics. Another critical piece to making PLS work is measuring the right success metrics. For example, free sign-ups are great but they won’t grow the business. They’re a means to an end. You need to go beyond sign-up and think about activated users and free-to-paid conversion. The goal of PLS is to use the product to qualify users for sales. The way to qualify users is to help them see value in the product and continue using it. Those users are the ones that will typically fall into the “strong product fit” bucket and will likely be the ones who are more likely to convert into a paying customer. You might notice that I don’t mention paying customers or revenue as the metric. Those will come as you grow and scale. In the early stages you need active, retained users. Have sales reach out to those users and see how much easier it is to sell. 

The bottom line? If you’re early into your PLG journey, don’t immediately jump to automation and self-service. Talk to your users. You’ll uncover points of friction faster and develop hypotheses to improve those self-service capabilities. Not to mention, you’ll avoid the risks of following your own assumptions down a rabbit hole. Likewise, if your sales team doesn’t see the value yet, help them see the value by generating product qualified leads for them.

While it might take longer to turn those users into high paying customers, using the product to qualify users is ultimately more efficient. To be successful, Sales needs to pursue all routes to market—and PLS is another route to take, now let’s prove it.