Why ingraining growth triggers into your product can lead to supersized growth at half the time and half the price.
What do products like Calendly, Zoom and Canva have in common?
They seemingly became viral overnight.
Suddenly, everyone is sharing Calendly links that auto schedule Zoom meetings. Or beautiful, sleek posters and social media banners are showing up thanks to the beautiful magic of Canva.
Product Led Growth turns the product itself into the sales and acquisition engine. Every user brings another through shared links and free invites. Couple that with a genuinely delightful product that solves a user problem then its off the moon!
Here are some key steps involved in implementing Product Led Growth
1. Acquire: Get users into the product e.g through freemiums, free trials or referrals. They sign up and create an account or activate their trial accounts. For example, Calendly executed this excellently by getting all users to be a by-default ambassador.
2. Adopt: The users/trial users fully onboard and become paying customers. Sticky features and driving regular usage make this phase successful. Canva pulled this off by making design so easy and delightful for regular users that they wanted to keep using it.
3. Retain: Users renew their subscriptions as they continue to realise value from the product. The overall user experience is seamless and intuitive. Zoom implemented this by being the default choice for video conferencing that kept users paying for it every month.
4. Expand: Users either upgrade to a higher-tier version of the product or drive additional revenue in other ways. It puts my product at the center of our revenue growth strategy. Zoom and Calendly both managed to do this by adding more features within different tiers that serviced different customers with varying needs.
How to make a Product-Led-Growth Plan:
1. Define what metrics you'll use to measure success which includes
Deciding on what areas you'll focus on to improve the metric; and
Determining how you'll track each metric.
2. Understand how you will close the value gap which is the difference between the perceived value of the product and the what your product can ACTUALLY deliver. How?
See where your users are acting as planned and where they’re not getting the full value from your product
Notice in what ways your users are not fully understanding what your product can actually deliver.
3. Identify what you'll need to keep users engaged. For example:
Provide contextual and relevant content to users to promote additional and continued value.
In-app engagements that connect with your customers right within your product.
4. Game plan on how you'll continually measure, learn and iterate on your product experience.
Create plans centered on real user data and feedback
A/B test different in-app strategies to best engage with users’ changing needs.
How to Implement a Free Trial Strategy in Product-Led Growth:
Reduce friction when signing up; do not require payment information
Showcase a digital onboarding guide from day 1; demonstrate core basic functionality to drive quick wins for the user
Allow users to access all areas of the product in order to make it as sticky as possible, as quickly as possible.
Allow time to deploy product. 30 days is a good measure, but 7-14 days work as well depending on the type of product it is.
Free trials measure interests and improve sales outcomes by leveraging product-qualified leads who have demonstrated purchasing intent.
How to assess Value-Gaps from your product to supercharge Product-Led-Growth:
We want to ensure users derive as much value as possible from our product. Here’s some questions that can help with that:
Where are users coming from and where do they use the product most?
How often are they using our product daily/weekly/monthly?
Once they’re in our product, what’s their typical user pathway?
What features are getting the most use/time?
What features are being overlooked?
Are there points where users are dropping off (logging out, going back to the dashboard, etc)
Does usage vary by user persona?
Net Recurring Revenue and Customer Retention in Product-Led-Growth:
NRR (Net Recurring Revenue) is the percentage of revenue retained from existing customers within a specific period, including expanded revenue, downgrades and cancellations.
Formula for calculating NRR is:
[Total Revenue (including expansion) - Churn (cancellations and Downgrades)] divide by Total Revenues
How to Improve Retention:
1. Nurture user journeys through in-app engagements. Why?
They personalise the product experience while providing a prescribed action path leading to adoption
They can build longer-term retention through adoption of more complex features after onboarding
They could be applied to new releases, to point out feature enhancements or simply drive awareness of new tools.
2. Proactively communicate to users. Re-engaging and retaining inactive users can be done through triggered communications. You can send timely messages such as:
Email reminders that guide inactive users back to the product if inactive for a specific amount of time
A pop-up message that anticipates a user’s next steps based on a previous action
Well-timed ‘pro-tips’ that expand on initial value realisation.
3. Providing deeper self-service knowledge to users who have adopted the basic features. A self-service help center bot powered by a searchable wiki can guide continued engagement in a scalable way.
Help bots are:
Key resources for complex products
Can serve as a buffer to support questions or tickets with FAQs.
Helpful to centralise info that improve user experience.
4. Long-term retention requires leveraging roadmaps. This is done by analysing and incorporating user sentiment and data to inform roadmaps and make appropriate engineering resource allocations that focus on key customer needs.
How to Prioritise a Retention Plan to Drive Product Revenue:
Focus on highlighting one feature at a time and avoid bombarding users with multiple in-app guides.
Determine which features (especially low-usage ones) that are most critical to driving revenue through retention.
Features tied to retention are typically sticky features, and provide the most value to your customers.
Only once users have successfully adopted the feature you’ve chosen to promote should additional features be promoted.
If low-adoption persists, iterate on your first solution before shifting to address another feature.
How to Maximize Customer Lifetime Value
1. Expand revenue from existing customers
Measure, learn and iterate on all the processes already in place such as product features, onboarding guides, customer surveys and data analysis to improve the overall business.
Specifically, experiment with new features or UX tweaks and see if changes move the needle.
Drive existing users to increase their spend by upgrading to higher tiers or adding new paid features to their packages.
Expose users to more features that are paid or come with a higher costs (i.e higher tier) to maximize on CLV.
💡 One of the main barriers to customer growth and expansion is that users may leave due to lack of product adoption. Before focusing on maximizing user value, make sure adoption rates of your core features are strong.
Expanding Customer Lifetime Value could look like:
Continuously iterating and releasing product enhancements to address usability and growth challenges.
Adding new paywall features that upsell current customers
Identifying when customer actions might lead to opportunities for larger accounts (for example: adding more users could mean their company is growing and they need to upgrade their subscription package)
Identifying referral opportunities as users change roles and companies
2. Capturing new revenue opportunities:
This usually means capturing new types of users or market segments.
To do this well, create a dedicated process to turn insights into action steps and development tasks on your product roadmap. Expansion should be powered by how much users are consuming your product.
New product capabilities allow you to attract new user segments and iterate on friction points that will reduce drop-offs.
Once you leverage your existing paying users and build for new potential users, the potential for sustained growth becomes exponential.
Key Product-Led-Growth Take-aways:
Define your cross-functional metrics and tie these to key performance indicators
Close the value gap for users to realize your product’s full potential
Keep users engaged through sticky features and new value, and ultimately generate renewals
Measure, learn, and continually iterate on your product to grow revenue