In case you missed it, our CEO, Mike, wrote about Natural Rate of Growth in his weekly newsletter last week. In short, OpenView Labs recently featured a new SaaS metric…
How We Used Product Qualified Leads to Get Started with Product-Led Growth
Why Product-Led Growth? According to OpenView Labs, Product-Led Growth is “a go-to-market strategy where the product is central to how these companies acquire, convert, expand and retain users. This allows companies to forgo spending large…
Why Product-Led Growth?
According to OpenView Labs, Product-Led Growth is “a go-to-market strategy where the product is central to how these companies acquire, convert, expand and retain users. This allows companies to forgo spending large sums on traditional marketing and sales activities. Instead, they rely on the products themselves to supply a pipeline of satisfied users to convert to paying customers.”
Implementing a Product-Led Growth strategy offers companies unique financial and operating advantages that allow quick scalability, economic efficiency, and ultimately more efficient growth. Dropbox is a great example of a company that does this well. They generate double the revenue of their closest competitor, but spend a lower share of that revenue on sales and marketing. This can largely be attributed to their product-led growth strategy.
At Visible, we’ve centered our growth around our product for a few years now and were able to implement the strategy on our business side by using Product Qualified Leads.
What are Product Qualified Leads?
If you’ve built a great product, chances are your culture—knowingly or not—is centered around putting the product first. As Liz Cain of OpenView puts it, “You live to serve your customer, to make a product that delights and excites… You don’t want your company aligned around a boiler room, ‘always be closing’ sales culture.”
At Visible, we started to implement a product-led approach with our sales and marketing efforts by using Product Qualified Leads. Product Qualified Leads are prospects using some version of your current product who take some sort of qualifying action. Typically this happens during a trial or freemium experience.
The exact definition of a PQL will vary greatly from product to product. For example, Slack knows a customer is more likely to close when they hit 2,000+ messages. We have our own product actions we keep our eye on. Outside of standard demographic and sales information, we use a point system to weigh the following product actions:
- Connect a data source
- Create a chart
- Invite other users
- Create an Update
We know once someone on a trial sends an Update, they are more likely to become a paying customer, so we weigh that above all other actions. This leads us to take an “Update centered” approach to our product and messaging during a user trial.
Once someone on a trial has reached a point threshold based on our product criteria, we’ll change their status and try to move them toward conversion. For example, they’ve connected a data source and created a chart, now how do we get them to distribute that chart using Updates?
The PQL framework has continued to be fluid for us since we’ve implemented it roughly 2 years ago. Testing and iterating the approach is crucial and something we continue to do. Not only has a PQL approach led to more efficient growth, but also to improvements in the product, sales, marketing, and customer success aspects of our business.
While product-led growth might not be for every business, there are learnings that can translate across all businesses. Using PQLs is a great way to start and evaluate what your users and customers truly value about your product. Ready to learn more about product-led growth? Check out the 2018 SaaS Expansion Benchmarks report we created in partnership with OpenView Labs.