How did product-led growth, PLG, help us grow to $50M ARR (Part-1)

Everyone has been talking about Product Led Growth (PLG) lately. Is this something new? Is it just something only early-stage startups are doing? Does it work? Where do you start?

My journey with PLG started long before the current trend. PLG helped us grow the business’s revenue to $50m ARR. PLG works.

On Part-1, I’m sharing the user acquisition techniques that we used. On Part-2, I’m sharing the product onboarding, PQL vs MQL, and the aha moment. On Part-3, I’m sharing the sales and operations efforts around PLG. The posts include actual data and charts that we created over time.

The buyer or user persona, who should you go after first?

In general, when you create a product and sell it in a market, you are going after the buyer persona (the budget owner that has the decision power and authority to sign the purchase order) and the user persona (the actual user of your product, the person that logs-in and use it). In some cases, the buyer and the user persona are the same individuals (a common scenario in small businesses), in other cases (mostly in mid-size and large businesses) it is a different person.

In the traditional sales process, you go after the buyer persona, as this is where the money is. You are trying to demonstrate to the buyer the great value and ROI of your product to justify the purchase. This is a long and expensive process. Buyer personas are busy and are constantly being targeted by deep-pocket brands. They are loaded with sales inquiries from almost every software company around. To stand out in this noise, you will probably need to spend a big marketing budget to get the attention of the buyer persona and then go through a long process of product evaluation.

As there are more user personas than buyers, and as the buyer persona will eventually ask the user to evaluate the product and confirm its value and ROI, why not start with the user persona that is cheaper and faster to reach?

As a CEO, I recall when my team came and asked to purchase a product after they had already experimented and evaluated it, as well as having a few people in the team already using it. For me, as the buyer persona, it was an easy decision to make vs. the alternative option where I needed to learn about the product and its value to decide if it was good for my team to use.

PLG starts by marketing your product and its value to the user persona, not the buyer persona.

Here is a very similar message coming from CEOs all across LinkedIn

Where to start?

As we need to go after the user persona, get their attention, drive them to register and use the product, and most importantly, find a value quickly (‘aha moment’), your product-marketing team has an important role in this process. Before you rush to create a demand-generation team and spend your budget on acquiring traffic to your product registration page, you should do some work and experiments with your product-marketing team. At this stage, your product-marketing team’s vital role is to market the product’s value to the user persona.

Translating product features and workflows into value messages isn’t an easy task. It requires research and understanding of the value these user personas are looking for. It also requires an understanding of the product and its features and workflows, as well as an assessment of value messages used by your competitors. Finding the right message that links the expected value and the product requires experiments with multiple ideas. You will rarely find it on your first try. This is an essential step in the process that many startups forget or skip.

Before you create your demand-generation operation and hire sales teams, start experimenting with value messages to learn what gets traction with the user persona.

As this step is iterative, you will constantly need to improve your messages (having your product roadmap, competitors, and market dynamics) to hold a few options that user personas engage with before you start ramping your demand generation efforts.

You should A/B test the messages across the user acquisition journey — either organic or paid — website, Ads, social content, emails, etc.

It is important to note that the product value messages for this purpose should be tailored towards the value the user persona is interested in, and the value your product can deliver to that user quickly after logging in. Messages like “we save you xx time” or “ we increase your ROI by x%” are probably not the ones you should use; instead, try to go after value messages related to measurable outcomes that can be achieved quickly, for example, as a result of an audit, scan, discovery, review, or analytics.

Here is an example of what we learned from our experiment. Although our product could deliver multiple values to the user persona, the ones that got traction were only two — social listening and Instagram analytics. These were visuals describing unstructured social media data on charts (a structured presentation of data). As you can find on the chart, the value was significantly higher than the other product values we had.

As these two value messages resonated so well with our user personas and also helped us to identify purchase intent, we achieved the following results:

● Increase of 220% in product sign-up compared to the last six months

● User converted x4 better to Sales Opportunity and x2 better to Won

● 30% saving on Ad Spend

Here is the inflection point of our sign-up acquisitions since we nailed the value message for our user personas. You will also see it in your experiments, you cannot miss it.

The primary metric you should track to learn if your product value messages are working is the engagement rate with the content across the user’s journey. At this stage, do not worry much about the product itself. Try to learn if the product messages are driving user persona engagement towards using the product.

If you managed to get around 3% of your website visitors (either paid or organic) to register/subscribe for your product, you have a good start; 5% would be an excellent start.

This number indicates that users understand the product value and have expectations that they are interested in exploring. Please note that the 3% is about web traffic to registration. It is not about your Ad CTR, product onboarding rate, or conversion rate to paid customers. Typically, organic traffic will have a better conversion rate, although it is harder to scale over time.

Over the years, one of the most successful techniques I used to acquire user personas was to provide a free scanning/analysis/ benchmark tool that can give value instantly. This technique worked for me in both the Cyber security (vulnerability and data scanner) and MarTech (social media page analysis, competitive benchmark) industries. The output of these tools was also the starting point of a sales conversation.

Here is how you can do it

Start with a product-marketing person skilled in turning product features and workflow into value messages. These messages should be used on your web pages, emails, and landing pages. This content will help to convert web traffic into product registrations. However, it will not help much in acquiring the traffic (either organically or paid). As this is a critical role in this operation, you better have an internal resource than depend on external help from an advisor.

As you may know, acquiring traffic to your website can be paid or organic. Paid activities (advertisements, sponsorships, syndication, etc.) and organic activities (SEO, social media, press, referrals, etc.).

The benefit of paid ones is that you can start and stop them immediately. However, they are expensive and may not bring the quality of user personas that you would expect. The organic ones take a longer time to get traction but carry a much better quality of users. Having that, you need to find the right balance to achieve the goal.

At this stage, you can leverage external Ad agencies and content-marketing consultants. You should provide them with a brief about the product, its values to the user, the audience you are after, a profile of the user persona, the competitive landscape, main keywords and phrases used in your industry, but most importantly, the value message that your product can demonstrate to the user persona quickly after login. As you nail the value messages and get good traction, you better have an internal demand-generation and content-marketing team.

By this stage, you should understand the product value messages that drive user engagement with your product.

On Part-2, I will share my experience about the best ways to get the user persona into the product and demonstrate a quick value. The aha moment.