Is Product-Led Growth Right for Your Company? These five questions will help you decide if a product-led strategy is right for your business.
By Matt Tucker •
Opinions expressed by Entrepreneur contributors are their own.
Adaptation to challenging circumstances is a natural state of being for startup founders. My most recent challenge specifically lay in my company's go-to-market (GTM) strategy.
The goals management software market had become saturated, our competitors were raising large amounts of capital, building huge sales teams and spending millions — literally — of marketing dollars. We recognized that we couldn't beat our competitors at their own game. Something needed to change.
Perhaps you can relate?
Building a growth engine around a viral, accessible product — product-led growth — is becoming more popular in the tech world. It felt like the right time for us to seriously consider a product-led model. For others that may be at this juncture and considering product-led growth, here's how we framed our analysis.
1. Is the product meant to be engaged with frequently or occasionally?
Product-led growth is the best fit for solutions that are meant to be used frequently or lend themselves to becoming habit-forming. For example, we discovered that new users who complete a Reflection, one of our main features, are 92% likely to do it again. This data point validated that if we could get new users to at least complete one major step in the first two weeks, retention was more organically inherent.
Related: How to Create a Home-Based Business Without a Product or Service
2. Do you have a simple (and safe) way for users to try before they buy?
If you answered yes to the first question, you'll earn bonus points if your product is also easily integrated into a user's day-to-day workflow. Prioritize things like single-sign-on or magic links to minimize the hassle of activation and integration. It might not be the sexiest priority for your road map, but it matters. Since implementing magic links, successful signup completions have increased nearly 30%.
Keep in mind it's a huge privilege for a user to try a new tool and give intimate access, so it's just as important to consider the security features needed to make users feel safe as they experiment.
3. Do users have a way to self-educate?
According to research, software buyers prefer to self-educate rather than learn about a product from a sales rep. And a product's recurring value has direct ties to the time it takes for a user to troubleshoot issues or navigate onboarding autonomously.
We had a basic framework for self-education in place, but a huge part of our new approach was to continually improve our onboarding journey. By providing a simple, user-friendly way for people to learn how to use the app and understand best practices, new users could try Koan on their schedule. Through improved messaging, support resources and video clips intended to support users taking positive first steps within the product, we have driven higher engagement and in turn, broader sharing. 25% of engaged viewers invited a teammate within the first 14 days.
4. Are you leveraging feedback from power users to inform your product roadmap?
After we re-evaluated our target customer profile by analyzing the "first 30-days usage data," we realized the need to shift from selling to large organizations with a top-down approach. Our most loyal ambassadors were the team leads themselves that tried it almost immediately after signup, and after finding success, spread the product organically throughout the rest of the organization. In light of this, we planned features and updates that prioritized the power users and teams versus the executives that held the most expensive contracts with us.
Related: 8 Steps for the Perfect Product Launch
5. How should success be measured?
While adoption rates were important, usage data became our holy grail after the switch. We also assigned more aggressive goals to our organic acquisition channels (which complemented the limited reach of our non-existent sales team as well.)
Another paired metric to consider is satisfaction ratings across the board. Historically, our loyal users could be counted on to report positive NPS scores. But, as we expanded our bottom-up approach, what did the majority of our first-time users think? Front-line user experience now mattered most and the success metrics needed to reflect that.
So how is it going?
We've officially shifted to product-led just over six months ago, and we're seeing positive traction across the board. At the top of the funnel, we've more than doubled organic traffic and conversion rates, and seen an increase in active organizations up 82% year-over-year, as well as weekly active and weekly engaged users. Satisfaction is up in line with engagement as well — especially among first-time users. Our NPS feedback scores across our Free and Pro tiers have grown positively by 300% since shifting our approach.
With our new adoption model, we're meeting our customers right where and when they need us. Our software is meant to help teams work smarter, not harder. Our GTM strategy finally reflects this.
Does your GTM strategy reflect your company's mission?
