Product-led GTM Overview

What are the three GTM Motion Archetypes?

For what kind of companies is creating a PLG motion a good idea? How do you know which GTM archetype is right for you?

Align your approach with customer buying preferences – the first rule of any go-to-market strategy is to align with how your customers prefer to buy. If customers prefer self-service, forcing a salesperson on them can be counterproductive. Conversely, if customers need assistance to purchase and deploy software, a self-service-only approach may not be ideal. 

The unit economics must make sense for your chosen go-to-market strategy –  for instance, product-led growth (PLG) typically has a low annual contract value (ACV), which means you can’t afford to invest heavily in customer acquisition. If your ACV is around $15,000, and some customers are comfortable with self-service, you can save on acquisition costs by enabling a self-service acquisition and activation path. However, if a customer fits your ideal customer profile (ICP) and shows promising usage patterns, it might be worth investing in a sales assist.

If you can make your product self-service, you should – if forced to choose, starting with PLG can be beneficial. A quick way to determine if PLG is right for you is to look at your competitors. If any of them are making self-service work, you should study their approach and learn from it. Even if they seem to be a smaller player, don’t underestimate them. They may have found a way around the challenges you’re facing, and their lower cost of acquisition could give them a competitive advantage. 

What is the PLG Bowtie? Why is it impactful? 

The PLG bowtie moves product adoption and first impact before customer commitment – in the PLG model, adoption and even the first impact are moved to a point before any commitment is made. This means that customers can experience products before deciding whether to spend money on them. This has worked incredibly well for products like Canva, Figma, Zoom, DocuSign, and Dropbox.

What are the different models for converting and monetizing users in a PLG motion? 

Allow customers to experience the product before purchase – the major shift in the product-led growth (PLG) model is allowing customers to experience the product before they make a purchase. This is a significant departure from traditional models where customers sign a contract before they can onboard, adopt, and expand.

Setting it Up

What kind of mindset does your organization need to have if you want to set up a PLG motion? 

Your PLG approach needs to be grounded in the principle of generosity and ease of use – access to the product is moved ahead of any commitment. This is not just a demo, but a genuine effort to help customers solve a problem.

What are the different ways you can start incorporating PLG into your organization’s GTM? 

The easiest path is self-service renewals – this is the fastest way to incorporate Product-led GTM (PLGTM) into your revenue efforts in a small way. Set up a pathway for users to renew their contracts within the product itself. 

Consider creating a self-service path for expansion – the next easiest place to start with PLGTM is expansion. If customers already have a contract and the product, but need more seats, servers, or locations, consider creating a self-service path for expansion. 

Consider starting with product-led marketing – another strategy is to create an interactive demo or a sidecar product that gives potential customers a taste of what the main product can do. This can be an effective way to attract new users and eventually convert them into paying customers.

Freemium or Free Trials are the hardest PLG strategy to implement – these strategies require careful planning and execution to ensure users experience value with the product and choose to become paying customers on their own timing or after the trial period ends. 

What kind of product instrumentation do you need to set up a PLG motion in your platform? 

PLG products should provide key information about how the product is being used – key events are tagged such that when they are triggered, a log is created. Product managers analyze these logs to understand which features are being accessed and how often. This information is referred to as “signal.”

Key product functionalities include: 

• Named users – ensure each license matches a unique human user to understand the experiences of each user. This allows you to create personalized flows and place users into cohorts. Have a unique identifier for each license that matches with a human. This prevents the license from being passed around and ensures that each user’s journey can be tracked individually.
• Tracking first impact – the most debated yet crucial aspect of product instrumentation is identifying the ‘first impact.’ This is the moment when a new user achieves something significant with the product for the first time. It’s important to know how long it takes for a user to reach this first impact and set a threshold for it. Once a significant percentage of new users is reliably achieving first impact within this threshold, it’s safe to invest in acquiring more customers. In broad terms and for most products, within 24 hours, you want 70% to achieve first impact.  Your threshold will vary based on product and market.
• Product marketing functionalities – an interactive demo or a sidecar product can help you engage potential customers and get users familiar with your company and tool. This experience should be instrumented to gauge engagement and score leads for future marketing or sales touches.
• Analytics tied to the Bowtie Model – use analytics to instrument the bowtie model, which can provide insights into your customer’s journey. It’s important to track how long it takes for a customer to achieve first impact. Ideally, 70% of your customers should achieve this within 24 hours.
• Growth loops – these are mechanisms that encourage users to share the product with colleagues, thereby bringing more users into the product. This can be achieved by encouraging users to share their projects, ask for feedback, or publish reports. This is an advanced level of instrumentation to be built after mastering the basics.
• Trial account provisioning – allow customers to access trial accounts, start to use the tool, and then shepherd them toward full customers.
• Transaction processing – consider replacing employee-sent invoices with transaction processing built into the product.
• Configuration – ensure users can configure their product to the desired degree without interacting with sales.

Conversion strategies – for users on free trials or freemium versions, it’s important to have strategies in place to encourage them to convert to full-paid versions. This can involve setting specific events and timeframes for achieving certain milestones, and then experimenting with different strategies to achieve these goals. Once a successful strategy is identified, it can be scaled up to attract more paying customers.

How are the prerequisites different if you’re looking to apply a PLG motion to an acquisition?

It can be easier to acquire an existing PLG strategy than to build one from scratch – especially if the acquiring company operates on an enterprise level, while the acquired company operates on a PLG level in the same space. Some key considerations: 

• Avoid killing the magic of the acquired PLG strategy – one common mistake is to buy an easy-to-use product and then plug it into a human-powered go-to-market motion. This can disrupt the ease of use, discovery, and onboarding of the product, and can negatively impact your unit economics.
• Leverage the acquired PLG strategy at the core company – this can help the acquiring company learn from the acquired company’s PLG motion and start applying it to their own operations.

What should you consider if you’re retrofitting a PLG strategy into an existing account-based sales strategy?

Retrofitting PLG can be a strategic move to protect market position and expand customer base – most growth stage companies didn’t start as PLG, but it can be a strategic move to retrofit it into an existing business model. This involves building a self-service acquisition, activation, monetization, retention and expansion engine for the SMB market. 

First, identify the Ideal Customer Profile (ICP) for the self-service version – companies need to go back to the drawing board and identify the ICP for the self-service version of their product. This involves understanding the persona and the job to be done for the self-service version. The goal is to rediscover a product-market fit in a different market.

Then, build a minimum viable product (MVP) for the self-service customers – it should have fewer features, be easier to use, and have less focus on integrating into enterprise systems. It should also be less expensive and have less optionality. This allows smaller businesses to buy and use the product, thereby expanding the company’s market reach.

Address the risk of cannibalization of current customers – introducing a cheaper, self-service version of a product can potentially cannibalize the sales of the more expensive, enterprise version. This risk can be mitigated in two ways: 

• Target a completely different market and limit the features of the self-service version 
• Strategic packaging and pricing that differentiates the two offerings

Manage internal conversations, because sales will get nervous – introducing a self-service version can cause concerns within the sales team, particularly if it is priced significantly lower than the enterprise version. It’s important to have open conversations with the sales team, explaining the strategic reasons for introducing the self-service version, and how it can actually benefit the sales process in the long run.

Optimization

How can you use data and analytics to improve your PLG strategy?

Ensure you’ve properly instrumented the funnel – establish named users, instrument the funnel, and track users as they make their way through to first impact and then to expansion. This can be achieved using simple tools like Google Analytics, Pendo, Lattice, or Amplitude. Once the funnel is instrumented, it becomes easy to identify where users are getting stuck, which in turn helps in directing the growth team’s efforts.

Leverage cohort analytics to group and better understand your users – cohort analytics is a powerful tool for understanding user behavior and improving retention. It involves grouping users based on shared characteristics and tracking their behavior over time. This can provide valuable insights into how different groups of users interact with the product and where improvements can be made.

70% of users should reach first impact within 24 hours – this is a good rule of thumb for getting users to see value from the tool quickly and enter the self-service “happy path” to becoming a valuable customer. 

How can you boost retention in a PLG motion?

Offer renewal workflows in the product – this is the easiest place to start. If customers already have the product and a contract, consider creating a self-service path for renewal. This could be as simple as a one-click button for another year of service. 

Personalize your retention efforts based on usage and Cohort – monitor product usage and retention rates among different cohorts of users. This data can provide valuable insights into how well the product is meeting users’ needs and where improvements can be made. CSMs should be proactively thinking about the product’s utilization and impact, to ensure customers get the most out of the product and see the value it provides.

Focus on usage as a predictor of retention – the most reliable predictor of retention is not contract expiration date or the number of assigned licenses, but usage. If end users are consistently using your product and achieving impact with it, they are likely to renew. Remember, no one wants to renew a product that didn’t provide any impact because it was never used. 

Automate the renewal process – the transaction required for renewal can be built into the product. This way, customer success managers (CSMs) can focus on utilization and impact, rather than transactions. When CSMs only show up 90 days before the renewal date, it’s clear they’re just trying to protect their renewal. Instead, let the product handle the renewal process and allow CSMs to work on improving usage and the overall health of the product.

Avoid wasting time on surefire renewals – if CSMs are spending time on customers who are sure to renew, they’re wasting resources that could be better spent elsewhere. Instead of running a renewal forecast like a sales forecast, let the product handle the surefire renewals and allow CSMs to focus on customers who might be at risk.

Facilitate self-service expansion – more often than not, a conversation might be necessary when a customer is in a position to expand. However, providing a self-service option can save time and resources. If a customer wants to add a few new servers or seats, they should be able to do so without requiring human intervention. This way, CSMs can focus on more significant expansions and other tasks that require their expertise.

How can you boost account expansion in a PLG motion? How do you encourage trial users to convert to paid plans?

Consider creating a self-service path for expansion – the next easiest place to start with PLG is expansion. If customers already have a contract and the product, but need more seats, servers, or locations, consider creating a self-service path for expansion. 

Free Trials are the hardest PLG strategy to implement – the free trial strategy requires careful planning and execution to ensure that users see the value in the product and choose to become paying customers after the trial period ends. 

Product-Led Sales

What needs to be in place to implement a Product-led Sales (PLS) strategy?

If you want to build product-led sales, you need to first create a self-service happy path – then, you need to develop a strategy for cherry-picking opportunities from that self-service path to accelerate via sales assistance.

Sales assist can help a PLG company move up market – as you move up market, you may need to introduce a sales assist approach. This could involve incorporating tiered access to:

• Product functionality
• Reporting
• Management features
• Integrations with other platforms. 

You need to have an Average Contract Value (ACV) that supports your go-to-market motion – complex products often require a complex sales cycle, which means higher costs. If your product is complex and you’re trying to sell it for a low price, you may struggle to cover your costs and make a profit. 

How does sales decide which prospects/customers to interact with in a PLS strategy?

Sales needs to look out for users that demonstrate the right characteristics – if a customer demonstrates the below, they can be moved from the self-service path to a more personalized journey. This could involve helping them activate or expand their usage: 

• Fit – if a user from a high-value domain (like ge.com) is active in the product, that’s a signal for the sales team to engage. 
• Readiness – usage patterns can indicate a user’s readiness to upgrade. For example, if a user has shared the product with several colleagues, that’s a strong signal of readiness.
• Potential for revenue – you need to ensure that your juice will be worth the squeeze.

In PLS, the salesperson role is to understand users and build a narrative for buyers – they need to talk to individual users, even those without decision-making authority, to understand why and how they’re using the product. They then use this information to build a narrative about the product’s impact, which they can present to decision-makers in the organization. This approach allows the salesperson to run a traditional enterprise sales cycle, but with a business case based on actual usage data rather than speculation.

How does the sales funnel differ in a product-led sales strategy?

The PLS funnel includes a journey from Product Qualified Accounts (PQA) to SQL – if a customer is part of your Ideal Customer Profile (ICP) and shows usage patterns that indicate potential for growth, they can be moved along the funnel.

Org Design

How should marketing and product/engineering work together within a “growth team” in a PLG strategy? 

The growth team becomes the backbone of business expansion – the Growth Team is an autonomous unit that focuses on growth objectives. They’re crucial for executing product-led renewals, expansions, marketing, and sales. The team’s unique structure allows it to focus on growth objectives without being hindered by the traditional silo structure of most companies. While siloed structures are necessary for scaling, they can hinder the execution of growth strategies like product-led onboarding. 

Growth Teams are usually small, consisting of five to seven members – this small size (and their diversity of skills) allows the team to be agile, enabling it to quickly launch experiments, interpret data, and make necessary adjustments. When an experiment starts showing positive results, the team can then focus on improving it further. It includes members from different disciplines including: 

• Engineering
• Marketing
• Product Management

Growth Teams can be assigned specific PLG initiatives – depending on the company’s stage, they might work on product-led onboarding, renewals, expansion, marketing, sales, or acquisition. As a company grows, it may have multiple growth teams focusing on different products or areas of the business.

Conclusion

What are the most important things to get right?

Have empathy and generosity with the buyer – the key to building a PLG strategy starts with having the right mindset. 

Instrument your product to track the time to first impact – ensure that you are able to report on user activities, group them into cohorts, and create customized journeys for them.