My Summer with PLG

The timing of my MBA summer internship in product strategy at a Series A company — just a couple months after COVID — could not have been more perfect.

PLG was just gaining steam during my first year in business school, but I was fascinated by the concept after experiencing first-hand the decline of cold outreach-to-meeting completion rates (see Product is Eating Sales). I had a hunch that traditional GTM strategies were in need of a disruption.

As the pandemic hit, and uncertainty swept enterprise buying cycles, a combination of layoff worries and WFH boredom significantly jacked up SDR activity between March and June 2020.

With decision-makers suddenly flooded with way more calls and emails than before, and with higher priorities to focus on (i.e. how do I keep my company alive) they simply sent everything to spam. This resulted in a steep decline of response/meeting rates.

The decline in meeting rates, combined with the economic climate necessitating cash preservation to extend runway, resulted in companies looking at cost-cutting measures AND embracing innovative GTM strategies with significantly better unit economics. Like PLG.

PLG was no longer just a VP of Product’s pet project, it became a strategic initiative at the C-Suite.

So when I pitched my idea of analyzing the GTM function and recommending areas to infuse PLG principles as a capstone project, the executive team quickly signed off on it.

Findings

At the conclusion of my summer-long project I was a bit surprised. I came into the analysis assuming PLG would be the silver bullet that would all but replace traditional GTM motions in B2B tech. Not the case.

There were areas, like enhancing integrations with widely adopted platforms (like Datadog or Salesforce) so users could extract value from our solution without logging into our systems. Also, bundling the products with services more effectively to increase user adoption was helpful in getting deals over the finish line. But there was no earth-shattering principle that suggested eliminating a sales team and going all in on building a product optimized for PLG.

Even the target user for our product (Director of DevOps, someone who decidedly does not like to talk to sales people, or people in general) appreciated the conversations they had during the pre-sales process to help them realize the full value themselves, and sell it to economic buyers internally. i.e. deals probably would not have gotten done without those sales conversations.

We ran a number of experiments to see if a self-serve model, freemium tier, and credit-card purchase would work, but the results were not great. A lot of that was probably due to the fact that we were a cybersecurity company, and providing sensitive information or integrating into their data infrastructure took time and trust — human interaction required.

In effect, a few PLG principles were important to incorporate, as they increased user-adoption and time-to-value once the user was already using the product (either during a trial or as a paying customer), but the principles focused on growing the top-of-the-funnel or accelerating customer conversion without human interaction didn’t do much.

Conclusion

PLG is decidedly not the silver bullet that will propel GTM engines in B2B tech moving forward. Rightsizing it to your unique business operations and market, while balancing investment into sales and marketing, is.

The question then becomes, especially if you are an early-stage company with limited runway, how do I figure out how to allocate the right amount of investment to the 3 functions (sales, marketing, product) that determine optimal growth? Especially in this current environment?

Will explore in a future article…

Some articles will be first-person, and some will be just general thoughts on industry trends. Feel free to reach out with feedback, thoughts, etc… nate@bluebirdanalytics.co