The team at OpenView Venture Partners knows quite a bit about product-led growth. In fact, they originally coined the term back in 2016. At last month’s Pendomonium event, Blake Barlett, one of the partners at OpenView, took the stage to discuss this topic and how companies can embrace the PLG mindset. He delivered his talk to a standing-room-only crowd of product and customer success professionals, sharing the history of product adoption and how the process has changed over the past three decades.
How Did Your Company Get …
Blake asked those in the audience who had worked in tech for a while to think back to the 90s. Your company wants to start using a new software product. How does this tool move from “need” to “purchase” to “use?”
At that time, any SaaS purchase needed to wind its way through a labyrinth of bureaucracy and red tape. The final arbiter of whether to move forward with the solution was the CIO, who based his or her decision on things like IT compatibility rather than user-friendliness.
Contrast this cumbersome process to the way teams adopt new software today. Blake asked the crowd, “How did your company get Slack?” Well, first someone downloaded it. Then, she tried it out and liked it. So she decided to share it with her team, thinking that they’d find value in it as well. And in fact, they did. Within a few weeks, the whole department was using it. Soon, the entire organization was full of Slack aficionados.
Today’s software adoption process is bottom-up rather than top-down. The end user, not an executive or IT manager, is the one who determines the benefits and usability of a particular tool. More and more companies are recognizing this change and tailoring their offerings accordingly. Think about Dropbox or Zoom. Their paths to organizational adoption started the same way – -with the end user.
What Brought About This Change?
According to Blake, several different factors are responsible for this major overhaul in the way software products make their way into an organization. The first one he mentioned was the evolution of cloud technology. Companies don’t need to host software onsite on their own servers anymore. Today’s connected cloud environment has democratized the software environment, making it easier for smaller organizations (and even individuals) to use SaaS solutions.
Another reason for the rise of the “end-user era,” as Blake referred to it, is the drastic decrease in software prices that we’ve seen over the past three decades. In the 90s, software products could cost hundreds of thousands of dollars. In the 00s, that number decreased to tens of thousands. Today, the cost of your latest software tool could be as low as zero.
Finally, the software world has undergone a buyer evolution. During the 90s, the average decision-maker when it came to software was the CIO. That role doesn’t even exist anymore. In the 00s, executives were responsible for deciding which software to purchase, since it typically came with a hefty price tag.
And now, the “buyer” of the typical tech solution is the person who actually uses it.
What This Means for Product
According to Blake, this evolution is showing no signs of slowing down. And it’s the reason why product-led growth has seen such a rise in popularity and attention. Software distribution has to keep pace with this change in buyer persona. During the 90s, the model of sales-led growth served software companies well. In the 00s, marketing-led growth focused on reaching executives with budget authority. For the end-user era, product-led growth is the answer.
How Do I “PLG?”
If you want to embrace the mindset of product-led growth, Blake recommended keeping two rules in mind:
- Build for end users
- Deliver to end users
Building for end users doesn’t just mean having an intuitive user experience. Nowadays, good design is table stakes. Really, creating a product aimed at end users means recognizing and addressing their particular pain points. What annoys them? Unlike an executive, who might approach purchasing a new software product in the context of, “Will this give me ROI?” the end user thinks, “Will this make my life easier?” These day-to-day irritations are opportunities for reaching and providing value to the end-user buyer persona.
When delivering to end users, Blake said to do everything in your power to “take humans out of your funnel.” What does that mean? It means don’t make them deal with calls from sales reps or sit through formal, guided demos. The more automation and self-service you can introduce into their buyer journey, the better.
To get the end user’s attention, you need to show value immediately. If you have a freemium model, make sure that users see value BEFORE they hit your paywall. Otherwise, they’ll never convert to paying customers.
The Future Is Product-Led
Product-led companies are seeing impressive returns in today’s end-user-focused software market. In fact, there’s recently been a “product-led IPO wave” of sorts. If your organization has been toying with the idea of making product-led growth your dominant strategy, now is the time. If nothing else, this mindset can encourage your team to think about the people actually using your product and how to make their experience efficient, valuable, and delightful.