A Product Manager’s Guide to Growth
Drive growth metrics, not just core product value, as a PM with a product-led-growth mindset.
TLDR: Measurably improve user experience, NPS and life-time-value. Benefit from word-of-mouth referrals, decrease in cost-per-acquisition and increase in marginal profit per user.
- The mindset for a product manager to adopt in order to drive growth in users and revenue
- A graphic to explain the relationship between product and growth
- A 10-point checklist of how a PM can drive growth
- FAQ: Frequently anticipated questions
Mindset: Leverage the product as a go-to-market strategy. Product managers can focus on driving core product value or growth, or both.
10 point how-to checklist on Product-Led-Growth (PLG):
- Understand how your product grows: Build a growth model & ID the levers (low input : high output). Find the constraints — what’s blocker in the pipe, that if improved, will have a large flow on effect?
- Goal setting and deadlines: Start with specific OKRs (objectives, key results), create a deadline & align a cross-functional team.
- Parallel goals: Simultaneously test micro and macro goals. Have a weekly goal that’s easily achievable (80% confidence rate), a monthly goal that’s achievable (50% confidence rate) and annual stretch goals (< 30% confidence). E.g. improve activation rate by 1%/week, improve retention by 5%/month, double monthly recurring revenue within 12 months. Think of it as a pipeline of opportunities of different value, probability and maturity.
- Implement a data & visualisation stack: E.g Use Segment (a customer data infrastructure tool)to store data, Amplitude (a product analytics tool) to implement the right event tags and easily visualise behaviour, Tableau to build predictive graphs and a metrics dashboard (or Google Sheets Forecast tool for a free regression analysis).
- Improve your feedback loop: Increase the quality, speed and comprehensiveness of relevant user data in order to make faster and better decisions. Automate NPS score reports, Customer success/support metrics, qualitative user research interview takeaways into a live public feed (e.g. via a Slack channel). Make and justify decisions based on data, not highest-earner or loudest voice.
- Rigorous scientific experimentation process: Observe user data &make a hypothesis (e.g. We’ve observed that newly acquired are not using the product after initial install. Our hypothesis is that if we create a 1–to-many, self-service knowledge base, this will improve the week 1 retention rate by 10%), ideate and prioritise tests based on expected value and maturity time to value, coordinate the tests with a cross-functional team via public documents (experiment hypothesis and forecast, experiment pipeline and tracker, product requirement document).
- Forecast, decision and results analysis: Improve future decision making by conducting a post-mortem on experiment results. E.g Our forecast was off — why was that and how can we improve future forecasting? The results came back better than expected — why was that and how can we allocate resources more efficiently in the future to grow faster? As growth-oriented PMs, we’re deploying capital (financial and human) in order to maximise opportunity with minimum risk. Efficiently allocate capital.
- Leverage the concept of product-qualified-leads (PQL): Sales and marketing have the concept of SQL or MQL — i.e this customer is ready to buy or to be messaged. PQLs are ready to experience more value — whether that be converting from freemium to paid, or lite user to power user. Identify the leading indicators of when a user is ready to experience more value, e.g they’ve submitted x number of forms from Typeform, or y number of surveys from Survey Monkey.
- Understand value creation to value capture ratio and leverage pricing as a growth tactic: Segment initially charged $1200/year, but realised they were creating $500k+ in value for a certain segment of customers. They pitched their next prospect at $120k/year, were haggled down to $12k/year and finally agreed on $18k/year. The new client perceived that as a bargain.
- Communicate cross-functionally: Learn how to communicate with developers (e.g. understand the ramifications on software architecture), marketing (e.g help out with copy and messaging for new features), data scientists (e.g understand statistical significance of experiments and which cohorts to drive), execs (e.g justify decisions based on expected value and communicate quickly and visually), designers (e.g explain a feature with user tasks or a wire-frame) and align a team towards a common goal.
Frequently anticipated questions
So what? Why do I need to know this?
The faster growing unicorns leverage product led growth. Think Slack, Typeform, Dropbox, Atlassian.
How is this different from marketing?
Marketing utilises messaging and often paid ads to increase leads. PLG leverages the product itself to grow metrics across the growth funnel.
Marketing generally has an increasing marginal cost/$ of profit. PLG generally has a decreasing marginal cost/$ of profit. I.e. Each additional user costs less to acquire. In addition, PLG has a broader remit than acquisition — the outcomes are to improve the customer experience, retention and life-time value.
When can we apply PLG?
Product-led growth is more effective after your product has reach product/market fit. There’s limited benefit to growing a product no-one wants .
However, many companies are designed from scratch to leverage PLG tactics. Think Typeform embedding virality from the beginning. Atlassian products were designed to grow without a traditional sales function.
Choose a strategy for your product based on product maturity and customer context. Think of a sliding continuum from high touch sales led growth→ no touch product-led growth and think — ‘what interaction & experience would the customer prefer?’
What products can we apply this to?
See the companies currently applying PLG:
Does PLG apply only to bottoms up B2C products or to top down B2B products (e.g. usage and decision making starts from the bottom of the organisation or from the top) as well?
Both. For example, Slack is a B2C product that grows from bottom-up whereas Deputy is a B2B product that grows top-down.
How can I sell/communicate this idea to my exec team?
Product-focused and ex-startup founders generally understand the exponential benefit of a product-led go-to-market strategy.
How does PLG compliment/conflict with other go-to-market tactics? E.g. Sales?
The goal here is to improve the distribution channel/persona fit. How would your users prefer to buy? Cater for your main personas. E.g. Harry the Head of IT would rather speak to a technical sales person whereas Marge from Marketing may prefer to research, test for free and upgrade all online.
Where can I do further research?
Feel free to leave a comment! All truths accepted.