The ultimate guide to adding a PLG motion | Hila Qu (Reforge, GitLab)

Name: The ultimate guide to adding a PLG motion | Hila Qu (Reforge, GitLab)
Uploaded: 2023-04-02T12:00:10.000Z
Duration: 3 h 6 min 23 s

Introduction

The host introduces the podcast and the guest, Helix Yu. They discuss the importance of product-led growth and what listeners can expect from the episode.

Introducing Helix Yu

Lenny introduces Helix Yu as his guest for the episode.

Lenny mentions that Helix has two posts in his top 25 most read posts of all time.

Importance of Product-Led Growth

The host explains that product-led growth is fundamentally data-led growth.

Giving away a free product can help with broader reach and understanding usage behavior of free users.

Episode Overview

The episode is packed with advice on how to start and optimize your product-led growth motion.

Listeners can expect discussions on common pitfalls, recommended tools, auditing existing funnels, improving activation and retention, and foundational overviews of product-like growth.

Sponsorship Messages

Two sponsorship messages are presented by Amplitude and Miro.

Amplitude Sponsorship Message

Lenny presents Amplitude as a tool to unlock the power of your product analytics stack.

Listeners are encouraged to visit amplitude.com to get started for free.

Miro Sponsorship Message

Lenny presents Miro as an online collaborative whiteboard designed specifically for teams.

Listeners are encouraged to visit miro.com/Lenny to leave suggestions for future guests.

Product-Led Growth

Helix Yu discusses product-led growth and provides insights on how to add a product-led growth motion.

What is Product-Led Growth?

Helix explains that product-led growth is about using the product as the main vehicle for acquiring, activating, and retaining customers.

He emphasizes the importance of understanding user behavior and data analysis in product-led growth.

Adding a Product-Led Growth Motion

Helix recommends starting with a small team focused on product-led growth.

He suggests auditing your existing funnel to identify areas for improvement.

Helix shares his favorite tools for implementing a product-led growth motion.

Improving Activation and Retention

Helix provides insights on how to improve activation and retention in a product-led growth strategy.

Improving Activation

Helix recommends simplifying the activation process by reducing friction points.

He suggests using progressive profiling to gather information from users over time.

Improving Retention

Helix emphasizes the importance of providing value to users through features that solve their problems.

He suggests using behavioral triggers to encourage users to engage with your product.

Core Concepts of Product-Led Growth

Helix provides an overview of core concepts associated with product-led growth.

User Onboarding

User onboarding is critical for successful adoption of your product.

Helix recommends using a modular approach to onboarding, focusing on the most important features first.

User Activation

User activation is about getting users to take the desired action in your product.

Helix suggests using behavioral triggers and nudges to encourage user activation.

User Retention

User retention is about keeping users engaged with your product over time.

Helix recommends providing value through features that solve user problems.

Conclusion

The host concludes the episode and thanks the guest for sharing his insights on product-led growth.

Episode Recap

Lenny recaps the key takeaways from the episode, including discussions on product-led growth, improving activation and retention, and core concepts associated with it.

Thank You Message

Lenny thanks Helix for sharing his insights and expertise on product-led growth.

Product-Led Growth and Sales-Led Strategies

In this section, the speaker discusses how startups can benefit from both product-led growth (PLG) and sales-led strategies.

PLG and Sales-Led Strategies

Startups can have both a PLG motion and a sales team to target big customers.

PLG is perfect for broadening reach, while sales motion is ideal for targeting specific customers.

Eventually, every company will need both PLG and sales-led strategies.

Competitors in traditional B2B software industries will add PLG if they haven't already done so.

Most companies that are product-led eventually add sales teams.

What is Product-Led Growth?

In this section, the speaker explains what product-led growth is and why it's becoming more popular.

Definition of Product-Led Growth

Product-led growth refers to products that are developed to allow end-users to try before buying.

The term became popular because traditionally, B2B software relied on sales teams as the main motion.

More companies are capturing the trend of allowing end-users to try before buying.

Attributes of a Product-Led Growth Strategy

In this section, the speaker describes some common elements of a product-led growth strategy.

Elements of a Product-Led Growth Strategy

A self-service component is one attribute of a product-led growth strategy.

Zoom is an example of a product that uses a product-led growth strategy.

Key Properties of Product-Led Growth

The speaker discusses the importance of having a low barrier to entry for PLG products and how they should have a free version or trial.

Low Barrier to Entry

PLG products should have a low barrier to entry.

They should offer a free version or trial.

Users shouldn't need approval from their boss to use it.

Self-service checkout flow is important for better versions.

Common Pitfalls in Adding Product-Led Growth Motion

The speaker talks about common pitfalls when adding product-led growth motion, including not having a low barrier to entry, not committing enough time and resources, and lacking expertise in data analysis.

Lack of Low Barrier to Entry

Many companies don't have a free product or trial as an entry point.

Some companies only have "book demo" CTAs on their website.

Not Committing Enough Time and Resources

Companies need to commit at least one or two years to building out the entire PLG process.

Sales teams may need convincing that this is worth doing.

Lacking Expertise in Data Analysis

Companies need usage data from free users for PLG success.

Understanding usage behavior is key for higher conversion rates and retention rates.

Without expertise in data analysis, giving away a free product is pointless.

Importance of Data Foundation and Expertise in Designing User Journey

The speaker emphasizes the importance of having expertise in data analysis and designing user journeys when implementing PLG motion.

Need for Data Foundation

Companies must understand how to analyze usage data from free users.

Usage data helps identify which features correlate with higher conversion and retention rates.

Importance of Expertise in Designing User Journey

The user journey for PLG is different from the sales user journey.

Companies may need to hire someone with expertise in PLG or find an advisor.

Red Flags for Product-Led Growth

In this section, the speaker discusses three red flags that companies should be aware of when implementing product-led growth (PLG).

Red Flags for PLG

The first red flag is assuming that launching a free trial or a free version of an existing product will automatically lead to conversions and qualified leads. Companies need to think about the entire process, including how to activate users and design upgrade paths.

The second red flag is not having a dedicated team for PLG. Assigning one person to handle it can result in coordination issues with other stakeholders such as sales, marketing, and product teams.

The third red flag is doing PLG just because it's trendy without considering whether it's a good fit for their business. Companies need to have a relatively low complexity product that doesn't require much customization and has a short time-to-value.

Is PLG Suitable for Every Company?

In this section, the speaker discusses whether every company should implement PLG.

Spectrum of Suitability

While not every company may be suitable for PLG, most B2B software falls somewhere in the middle of the spectrum between extreme examples like defense contractors and companies like Salesforce who are pioneers in SaaS and do self-service portals well.

To determine if your company is suitable for PLG, you need to have a vehicle such as an open-source product or interactive demo that allows users to see value quickly. Additionally, you need to give users a warm start by helping them get started with your product.

Key Considerations for Successful PLG

In this section, the speaker discusses key considerations for successful PLG.

Considerations for Successful PLG

The first consideration is having a vehicle such as an open-source product or interactive demo that allows users to see value quickly.

The second consideration is giving users a warm start by helping them get started with your product.

The third consideration is designing upgrade paths and working with other stakeholders such as sales, marketing, and product teams.

The fourth consideration is having a dedicated team for PLG.

Key Components of Product-Led Growth

In this section, the speaker discusses the key components of product-led growth.

Components of Product-Led Growth

To add a product-led growth component, there needs to be something free and self-serve that users can start using on their own.

There needs to be a quick time to value for users.

A self-service checkout experience is necessary.

A data foundation is crucial to understand user behavior and guide them along the journey towards conversion.

First Steps in Adding Product-Led Growth

In this section, the speaker discusses the first steps in adding product-led growth.

First Steps in Adding Product-Led Growth

Founders and leaders should understand what a PLG funnel is and how it differs from an SLG funnel.

The biggest difference between SLG and PLG is that traditionally, B2B sales funnels require marketing teams to work on top-of-funnel leads, while PLG funnels are more similar to B2C funnels where users sign up for a free version or trial.

Leading Indicators for Success in PLG vs Sales Funnel

In this section, the speaker discusses the leading indicators for success in product-led growth (PLG) versus traditional sales funnel. They explain how usage becomes important in PLG and how it can lead to potential conversion paths.

Two Potential Conversion Paths

The first potential conversion path is when a product is not expensive and fits within most companies' budgets. Some companies may use their credit card to buy the product, which eliminates the need for a sales team.

The second potential conversion path is when the product usage is high, and the customer fits into your ideal customer profile. This type of customer requires more attention from your sales or customer success team to understand their situation better.

Product Qualified Lead (PQL)

PQL stands for Product Qualified Lead. It refers to leads that have used your product and are more likely to convert into paying customers.

To establish a successful PLG funnel, you need to understand these two funnels and think about what steps along that funnel you need to establish for your user to convert.

Examples of Sales Funnel vs Product-Led Growth

In this section, the speaker provides an example of GitLab's sales funnel and how they implemented PLG.

GitLab's Sales Funnel

GitLab has an enterprise sales team from the beginning but also started as an open-source project.

Their marketing team brings visitors to their website who sign up for free trials or accounts. They then have a lead nurturing process to surface which leads are good for their sales team.

Their sales team works on closing these leads, and they become revenue.

GitLab's Product-Led Growth Funnel

An individual user may sign up for a free account and use GitLab for personal projects.

If this user's employer wants to look into other solutions, the user may recommend GitLab. The employer then goes to the website and signs up for an account.

Mapping Out the Funnel

In this section, the speaker discusses how to map out a funnel and identify areas for optimization.

Proof of Concept

The entire company is already using it or part of their process.

Users try different features and find it to be a great tool that can support their workflow.

Users believe they should be able to get ROI from the product.

Identifying Starting Points

Pick a starting point where you want to focus first to drive maximum impact.

Finding leverage is key in growth. Identify areas with relatively small investment that can give you the biggest results.

Conduct a full funnel audit as an end-user and identify areas for improvement.

Aha Moments

Getting users to their "aha" moment is crucial for success.

Many users drop off due to confusion during checkout or when trying to use the product for the first time.

Simplify checkout forms and provide clear guidance on how to use the product.

Product-Led Growth Strategy

In this section, the speaker discusses how companies can implement a product-led growth strategy.

What is Product-Led Growth?

Product-led growth (PLG) is a go-to-market strategy that relies on product usage as its primary driver of customer acquisition, conversion, and expansion.

PLG focuses on delivering value through your product experience rather than relying solely on sales or marketing efforts.

Benefits of PLG

PLG helps companies create better products by focusing on user feedback and data-driven insights.

It allows companies to scale more efficiently by reducing customer acquisition costs and increasing retention rates.

PLG also helps companies build a loyal customer base that can become advocates for the product.

Implementing PLG

To implement PLG, companies need to focus on delivering value through their product experience.

Companies should prioritize user feedback and data-driven insights to improve the product.

They should also create a seamless user experience that guides users towards their "aha" moment and encourages them to share the product with others.

Understanding the Aha Moment

In this section, the speaker discusses how Facebook used the concept of an "aha moment" to define its core value and how other companies can identify their own aha moments.

Defining the Aha Moment

The "aha moment" is when a user realizes the value of a product or service.

For B2B software products, the aha moment is often when users see that a workflow can be supported by the product, it can save them time or money, or it can help them make more money.

GitLab's aha moment milestone was two users using two features in 14 days.

Identifying Your Company's Aha Moment

Companies should analyze data to determine what actions or behaviors indicate that users are getting value from their product.

Correlation analysis can be used to compare high-value actions with average actions to determine potential aha moments.

Launching experiments to encourage more users to take high-value actions can help determine if those actions lead to higher conversion and retention rates.

Setting Activation Milestones

In this section, the speaker talks about setting activation milestones and improving them.

Auditing a Product

The speaker summarizes the audit process for a product.

The speaker lists what they look for when auditing a product, including excitement to try it, ease of use, reaching the "aha" moment, and ability to buy.

The speaker also looks at initial emails from the company and asks for data on user behavior.

Identifying Opportunities

The speaker discusses how they identify opportunities based on user experience and data.

They suggest that activation and conversion are common starting places for improvement.

Improving Activation

The speaker advises companies to do an audit themselves by imagining they are a B2C user trying to buy their own product.

If activation is the biggest opportunity, companies should find the right "aha" moment metric as the first step and design a product experience to help more people get there.

The speaker suggests removing friction in the process and giving users a warm start with simple templates or tools.

Improving Conversion

If conversion is the biggest opportunity, companies should focus on improving checkout flow by reducing friction and localizing payment solutions.

Product-Led Growth: Acquisition, Activation, Conversion, and Retention

In this section, the speaker discusses the four buckets of opportunity for product-led growth (PLG): acquisition, activation, conversion, and retention. They also provide examples of companies that have done well in each bucket.

Buckets of Opportunity for PLG

The four buckets of opportunity for PLG are acquisition (top of funnel), activation (helping users see value more quickly), conversion (helping users buy more efficiently), and retention (keeping users around longer).

Activation is a common starting place for most B2B software because B2B software is not designed to get users to use it quickly. Miro is an example of a company that does an awesome job with activation.

Conversion is always worth investing in testing more because it's revenue. Companies should make their conversion process as easy as possible for consumers.

PQL Picoa is a more complicated path that requires some reasonable user numbers before investing too much time into it.

Where to Start

Founders or product teams need to decide which bucket they want to focus on first when trying to add product-led growth.

Activation is usually a good place to start if you don't know where to begin.

However, founders should invest in acquisition if their product has a collaboration use case like Airtable or Figma.

Examples

Activation

Miro does an excellent job with activation by asking limited questions and providing templates so that users can start using the product within five minutes.

Conversion

Companies like Lululemon and Amazon have made their conversion process as easy as possible for consumers.

Acquisition

All the best PLG companies, such as Miro, do an excellent job with acquisition.

Product-Led Growth: Activations and Retention Expansion

In this section, the speaker discusses product-led growth and focuses on activations as a key area to focus on. They also touch on retention expansion and how it is part of retention.

Activations

Activations are where you want to focus in order to get people to your value quicker.

Onboarding is often one of the biggest levers for attention and moving retention.

To build a habit in usage patterns, think about how to build those habit features or collaboration features into your workflow already into the product.

Use loops to reinforce habits by sending emails if users take certain actions.

Retention Expansion

Retention is a messy part of the funnel that happens over a long period of time.

There are three buckets of product-led extension: upgrading to a higher tier, buying more seats or licenses, and consuming more add-ons.

Understand data and usage patterns in order to trigger conversations at the right moment with the right person.

Similar tactics used for activation conversion can be applied in expansion because it's almost a combination of getting people to use a feature, try that feature, convert them, and leave gold bricks that they have to resist not following.

Impactful Launches

The speaker did not provide an example but mentioned that retention is its own conversation.

Improving Retention and Driving Adoption

In this section, the speaker talks about how they improved retention by identifying features that users could quickly take value from. They also discuss how they drove adoption of higher frequency use cases.

Identifying Features for Improved Retention

Conducted experiments in activation to identify features that users could quickly take value from.

Found that a feature called recurring investment had a high correlation with retention.

Added more use cases with higher frequency, such as IRA accounts and spending accounts, to improve retention.

Driving Adoption of Higher Frequency Use Cases

Added higher frequency use cases to drive adoption and improve retention.

Conducted experiments on how to drive more adoption of retirement accounts.

Data and Infrastructure for Product-Led Growth

In this section, the speaker discusses the importance of data infrastructure for product-led growth and recommends some tools for B2B companies.

Importance of Data Infrastructure

Two big buckets: product usage data and customer 360 database.

Need to connect product usage data with marketing campaigns, CRM, sales force, etc., to have a 360 picture of customers.

Recommended Tools for B2B Companies

Need a data collection tool (e.g. Segment), a product analytics tool (e.g. Amplitude), and an experimentation tool (e.g. Optimizely).

Need a life cycle marketing tool (e.g. HubSpot or similar).

Building a Data-Driven B2B Growth Engine

In this section, the speaker discusses the importance of data and infrastructure in building a successful B2B growth engine.

Key Infrastructure Tools for Acquisition, Activation, and Conversion

The speaker recommends starting with data 2 experimentation to lifecycle marketing as key infrastructure tools.

For acquisition, it is important to have a data enrichment tool like ZoomInfo or Clearbit to understand both the person and their company.

For activation, tools like Appcues or Userlane can help build customized onboarding flows quickly without requiring engineering resources.

For conversion, product-led growth (PLG) sales tools like Endgame or PQL/PQA conversion paths can be effective.

Importance of Investing in Data Collection and Usage

The speaker emphasizes that investing in data collection and usage is critical for B2B companies looking to grow.

Companies should invest time, money, team resources, and tools into understanding their customers' needs through data collection and usage.

This investment can power not only PLG motion but also entire product teams and customer success teams.

Getting Started with Product Analytics

The first step towards building a successful B2B growth engine is implementing product analytics.

Companies should start by auditing their data instrumentation situation to identify gaps in tracking key actions correctly before plugging into a product analytics tool like Segment or Particle.

Tips for Implementing Product Analytics Correctly

To make product analytics useful, companies need to ensure they are collecting accurate data by doing proper instrumentation and reformatting if necessary.

There are many resources available online such as blogs or courses that can help companies understand if they are implementing product analytics correctly.

How to Establish a Data Dictionary

In this section, the speaker discusses the importance of establishing a data dictionary and how it can help identify gaps in data instrumentation.

Importance of a Data Dictionary

A data dictionary is essential for ensuring that everyone on the team has a shared understanding of key actions and their definitions.

It helps identify gaps in data instrumentation by comparing key actions with available data.

The speaker recommends creating a data dictionary early on to ensure success.

Crystal Wajia's Post on Analytics Efforts

The speaker references Crystal Wajia's post on why most analytics efforts fail, which emphasizes the importance of setting up events for success.

Importance of Having a Data Warehouse and ETL Tooling

In this section, the speaker emphasizes the importance of having a data warehouse and ETL tooling in place as soon as possible to handle increasing amounts of user data.

Starting Without a Data Warehouse

Some early-stage companies may start without a dedicated data warehouse or ETL solution, relying solely on product analytics tools like Google Analytics or Amplitude.

However, as soon as they begin collecting more user data, it becomes necessary to invest in these tools.

Best Practices for Setting Up a Data Warehouse

AWS Redshift is one commonly used option for setting up a data warehouse.

There are also startups offering similar solutions.

Regardless of which solution is chosen, investing in proper tooling is crucial for handling large amounts of user data.

Building Your Team for Product-Led Growth

In this section, the speaker discusses how companies typically build their teams when investing in product-led growth (PLG).

Starting the Initial Team

Companies typically start by hiring a head of growth or a lead growth PM with some experience in PLG.

They then build a core growth squad consisting of engineering, design, and data team members to support the PM.

Cross-Functional Tiger Teams

Another option is to start with a cross-functional tiger team that includes members from different departments.

This approach is less common but can be useful for testing out new ideas before committing full-time resources.

Evolution of the Team

As companies grow and become more serious about PLG, they may dedicate more resources to their growth teams.

The core growth squad may expand to include additional team members or split into multiple teams focused on different areas.

Building a PLG Org

In this section, the speaker discusses how to build a product-led growth (PLG) organization.

Initial Team and Focus Area

The initial team should have a head of growth, core growth PM, and engineer.

The focus area should be on activation and conversion.

If the focus area is on PQL, it may require a tiger team to work with the growth PM.

Giving Resources and Early Wins

It's important to give the initial team resources and support.

Look for early wins in whichever focus area you choose.

PLG Org Design

Once there are some early wins, it's time to expand and formalize the PLG org.

Think about counterparts in product, sales, and marketing organizations.

Head of gross product reports to product work. Head of gross marketing reports to marketing. Head of product that sells report to sales.

Metrics for Managing Funnel

PLG metrics are different from SLG metrics.

Top-of-funnel is more about high-quality signups that meet certain quality bars.

Head of gross product focuses on usage activation activated teams as a common metric. Number of PQLS is another metric.

Head of product LED sales focuses on converting those PQLS into revenue.

Functions for MVP PLG Team

The most important function is having a growth PM to lead the team.

A data analyst is also necessary for the initial hire.

Hiring a Growth PM

In this section, the speaker discusses hiring a growth product manager (PM) and whether to hire internally or externally.

Hiring a Growth PM

A designer may not be dedicated in the early days, but an engineer needs to provide user research support.

It is recommended to find someone internally who wants to do growth, such as a PM or analyst. If there is no one internally with that knowledge or interest, then look outside.

The head of growth at one company used to be the head of investor relations. He was very analytical and could socialize resources within the company to launch experiments in product and marketing.

Map the initial growth PM hire to your starting point. For example, if activation is the biggest focus area, try to find a gross PM with that experience. If conversion or acquisition is the focus area, try to find someone without experience.

Recommended Books and Movies

In this section, the speaker recommends books and movies.

Recommended Books

"The Almanac of Naval" by Naval Ravikant

Talks about finding leverage through writing, code, capital, and time.

"How Women Rise" by Sally Helgesen

Provides insights on how women can overcome obstacles in their careers.

A book in Chinese that helps with email campaigns and experiments.

Recommended Movie

"The Wandering Earth 2," a sci-fi movie from China by Liu Cixin.

Interview Questions for Growth PMs

In this section, the speaker discusses interview questions for growth PMs.

Interview Questions

What is the experiment you launched that had unexpected results, and what did you do after that?

Look for candidates who have launched many experiments and can explain why their results were unexpected.

Candidates should also be able to describe how they faced failure or unexpected results.

Adding Success Metrics to Product Development Process

In this section, the guest talks about how she added a section in the ticket stack for PMs to write success metrics ahead of time and which growth level it is contributing to.

Adding Success Metrics

Added a section in the ticket stack for PMs to write success metrics ahead of time.

Forced PMs to think deeply about why they are doing something by writing down the success metric and which growth level it is contributing to.

Favorite Children's Book

In this section, the guest talks about her favorite children's book called "Someday" and what it's about.

"Someday"

The guest's favorite children's book is called "Someday".

The book talks about how our children grow up and become taller and stronger than us but will remember us.

North Star Metric as a Growth Concept

In this section, the guest talks about her favorite growth concept, the North Star metric, and how it can be applied beyond just growth.

North Star Metric

The North Star metric is valuable not only for growth but also for personal goals.

It forces people to think long-term and consider their own values as well as society standards.

The guest can be found on LinkedIn by searching Gila Q-U. She is happy to have calls with founders and leaders who are looking for a growth advisor.

Conclusion

The podcast episode features Gila Kurtz discussing various topics such as adding success metrics to the product development process, her favorite children's book, and the North Star metric as a growth concept. The guest provides valuable insights on how these concepts can be applied beyond just business growth.