The Three Mantras of Product-Led B2B Fintech
In December last year I published a primer on product-led growth as an emerging strategy for B2B fintechs (link here and also below). This article digs a little deeper to discuss the three key mantras underpinning the strategy.
Build for the user
If you want to be a product-led startup, you have to build your product with the end-user in mind. Not a group of users, the individual user. This point might appear obvious, but it is not. Understanding it is crucial, though, and has far-reaching strategic implications for your startup.
Most B2B fintechs today still build products for teams, departments or companies. Some have legitimate reasons for that approach, e.g. when a product needs to be deeply integrated into the client’s IT landscape or there is a regulatory element that necessitates more complex contracts.
Others, however, do not. An example: I recently met a founder building a data product for Debt Capital Markets (DCM). His product was ideally suited for a product-led approach: it solved an individual user pain-point, was delivered through a browser-based dashboard and hence required no client-side IT integration, and could have easily been layered into a freemium platform.
The founder, however, had a good pre-existing network of senior bankers within the industry and tried to convert these contacts into clients. But when we spoke, he bemoaned the long sales cycles involved and started to realize that a Global Head of DCM might have different priorities to a junior banker in his team, who would ultimately be the user of the platform. He failed to create the necessary urgency at senior level to get the product into the hands of the juniors.
By contrast, product-led companies would market the platform to the junior bankers directly and let them sign up for a free basic product that already provides value to them. As soon as a critical mass of junior bankers has signed up within a bank, the startup would try to interest the Global Head of DCM in buying an enterprise license that unlocks premium features.
Reduce friction
Seeing is believing. And as such, you should get your product into the hands of as many potential users as you can. The key is to make signup and onboarding as convenient and frictionless as humanly possible.
Your ultimate goal should be a lossless funnel from prospect to user, with the fewest possible steps and obstacles along the way. If prospects are interested in your product, do not make them “book a demo” or “get in touch” to qualify their interest. Let them sign up and self-onboard within mere seconds and see the power of your platform for themselves.
If you are developer-centric, give them a well documented API sandbox to play around with. If you are business-user centric, guide them through your platform. Optimize for a quick “aha moment”, where the power of your product immediately becomes apparent. Aim for a rapid Time To Value to increase user satisfaction and stickiness.
A few weeks ago I spoke to a founder of a developer-centric platform in the digital assets space. Without realizing it, she had adopted many product-led growth tactics: she directed marketing towards the end-users, had a well documented sandbox in place, and a tiered monetization model.
However, for some reason she installed a huge adoption roadblock: a “get in touch” button that triggered a call with a sales rep. When I asked her about this she said she did not want to lose control of her platform. She wanted to know who was accessing her API and why. Eventually, she granted access to all those she spoke with and believed this to be a lossless funnel. What she did not track, however, were all the leads she lost from developers that did not want to jump through the sales hoop in the first place.
Monetize activity
Actual activity always trumps theoretical interest.
The beauty of a well executed product-led strategy is that you replace the guesswork of a sales-led approach with actual evidence delivered by a product-led approach.
Sales organizations have to create leads and then spend time moving them through various qualification stages. Prospects are moved from “marketing qualified leads” (MQLs) to “sales qualified leads” (SQLs) through a demo to a pilot deployment. Only then do they get to collect actual usage data. Before that, it is all theoretical and hypothetical.
Product-led organizations on the other hand start with actual individual usage data and through that get to create a “product-qualified lead” (PQL). Using this hard evidence, sales reps can upsell the individual user into a premium tier, or even approach larger organizations with a critical mass of users and sell them an enterprise license.
However, I have met many founders that feel uncomfortable with this approach. They confuse it for a laissez-faire / “build it and they will come” approach. Instead, these founders want to be out there, hustling the big leads, working their way towards sizable multi-year contracts.
A sales-led approach is certainly a tried and tested means to building a company. It has a clear playbook and experienced sales personnel are available for hire. A product-led approach breaks with that pattern to chart a different course forward. For the right product, it can lead to explosive growth and global distribution, as previously seen with the likes of Zoom, Stripe or Slack.
Product-led growth is an emerging strategy that has far-ranging strategic implications for those implementing it. I believe that many products within B2B fintech lend themselves to this strategy, which in many respects can be superior to a sales-led approach.
You can read my primer on the topic here:
