Self Help

Product-Led Growth How to Build a Product That Sells Itself - Wes Bush

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Matheus Puppe

· 21 min read



  • Product-Led Growth is a methodology for building products that effectively sell themselves through their own merits and value proposition, rather than relying primarily on sales and marketing.

  • It focuses on designing products that provide ongoing value to customers and drive self-serve usage, which leads to organic growth through word-of-mouth, recommendations, and repeat/expanded use over time.

  • By making the product the central vehicle for acquisition and growth, companies can grow in a more sustainable way with lower customer acquisition costs compared to traditional sales-led approaches.

  • Many experts argue Product-Led Growth will become the norm for modern SaaS and software companies, as customers now expect to try products before buying. It’s a more customer-centric and viral growth model.

  • The book provides guidance on how to implement the Product-Led Growth methodology through aspects like product design, pricing, customer onboarding and experience, marketing alignment, and organizational culture. The goal is to make the product the primary driver of growth.

So in summary, the book presents Product-Led Growth as a sustainable alternative to sales-led approaches, focusing on building products that sell themselves through great user experience and ongoing customer value.

  • The passages discuss the rising importance of Product-Led Growth as a SaaS business strategy.

  • Product-Led Growth relies on using the product as the main way to acquire, activate, and retain customers rather than traditional sales and marketing approaches.

  • Three “tidal waves” are coming that make Product-Led Growth more important:

    1. Customer acquisition costs are rising while willingness to pay is decreasing, making it more expensive to grow startups.

    2. Buyers now prefer to self-educate through freely exploring products rather than engaging with sales reps.

    3. Product experiences have become an essential part of the buying process, as exemplified by companies like Netflix that require little human interaction.

  • To avoid the potentially disastrous consequences of these tidal waves, companies need to embrace Product-Led Growth by focusing on providing easy, frictionless product experiences for buyers to evaluate on their own terms rather than relying primarily on sales and marketing.

In summary, the passages argue that Product-Led Growth has become increasingly important for SaaS companies to adopt in order to effectively acquire, activate, and retain customers in the current business environment.

Here are the key points about choosing a go-to-market strategy for a SaaS business:

  • Traditional sales-led strategies are at risk due to tidal waves of change like increasing customer expectations, platformization, and globalization.

  • A product-led strategy puts the business in a stronger, safer position to survive these changes by allowing users to self-educate and reduce customer acquisition costs.

  • While sales-led strategies can work for high lifetime value customers, niche markets, or new categories, they typically have high customer acquisition costs, leaky acqusition models, and prioritize sales over product development.

  • Many successful SaaS companies like Hubspot have shifted to a product-led model where all teams leverage the product to achieve goals like marketing, sales, and customer success.

  • Implementing a true product-led growth strategy is difficult but can help dominate the market by creating a seamless customer experience and faster time to value for users.

So in summary, it recommends adopting a product-led go-to-market strategy to weather ongoing disruptions, by empowering self-service and focusing the whole business around optimizing the product experience. Sales-led can work in some cases but is high risk long-term.

  • The company needs to shift from a sales-led to a product-led growth strategy where the focus is on making their product successful for users rather than leading with sales.

  • Product-led growth can provide significant rewards like a dominant growth engine from a wider top of funnel and ability to scale globally rapidly with low customer acquisition costs (CAC).

  • Lower CAC comes from faster sales cycles as users can onboard themselves, high revenue per employee as less handholding is needed, and a better user experience as the product is designed for self-onboarding.

  • The company should choose between a free trial, freemium, or demo model using a MOAT framework that examines the market strategy, ocean conditions, audience, and time to value.

  • A dominant growth strategy works well with freemium to take market share through low costs and quick user value. Differentiated growth uses free trials/demos to win niches, while disruptive growth thrives on freemium to attract over-served users with a simpler product.

So in summary, the company is advised to shift to a product-led growth strategy and use the MOAT framework to determine if free trial, freemium, or demo model best fits their specific market conditions and goals. Product-led growth can provide significant scalability and cost advantages over sales-led approaches.

  • A top-down selling strategy targets executives and key decision makers. It is used for large enterprise sales that involve deploying the product across the entire organization. This leads to higher contract values (ACV) but longer and more complex sales cycles.

  • A bottom-up selling strategy allows individual users to adopt the product first before it spreads throughout the organization. It is well-suited for simple, easy to use products with quick time-to-value. Companies like Slack have found success with this model.

  • A top-down strategy pairs well with a sales-led go-to-market model, while a bottom-up strategy works best with a product-led model using free trials/freemium.

  • Deciding factors include your target customer size, complexity of product/sales cycle, and whether you want to lead with individual users or executives. A top-down strategy focuses on executives while bottom-up targets individual adopters before expanding usage.

  • Both have pros - top-down results in larger deals but longer sales cycles, while bottom-up spreads usage organically but with smaller initial deals. The appropriate strategy depends on your unique product and market factors.

  • Top-down and bottom-up selling are different strategies to acquire customers. Top-down targets key decision-makers and executives, while bottom-up targets individual users.

  • Top-down selling can boost recurring revenue fast through large enterprise contracts. It also benefits from selling additional services and training. Customer churn is typically lower in the enterprise segment. However, it has disadvantages like poor revenue distribution if one large customer leaves, high customer acquisition costs (CAC), and long sales cycles.

  • Bottom-up selling uses the product itself to acquire customers. It has advantages like wider top-of-funnel reach through free trials, lower CAC, more predictable sales, revenue diversity from many smaller customers, and ability to scale globally fast. Disadvantages include smaller contract sizes, potential for many non-paying customers, and requiring significant optimization of the free trial process.

  • The selling strategy should align with the product and business model. Freemium and bottom-up selling align well since it lets users adopt the product themselves. A free trial can work with top-down selling if there is proper onboarding, support and incentives to convert trials to paid customers.

  • Choosing a strategy depends on factors like who can easily use and experience the product’s value, and the average contract value needed to justify sales resources. Overall customer acquisition and demonstrating value quickly are important for either strategy.

  • To have a successful product-led business, the product needs to deliver value quickly when new users first try it, otherwise most users will not return after signing up. Around 40-60% of new users never come back after initially signing up.

  • Users can be categorized into four types based on their motivation and difficulty using the product: Mission Impossible, Rookie, Veteran, and Spoiled. The goal is to optimize for Spoiled Users who have high motivation and find the product easy to use.

  • To improve time-to-value and increase the number of Spoiled Users, companies can strengthen user motivation through better marketing, and simplify onboarding and setup processes to reduce unnecessary steps.

  • When choosing a product-led growth model, consider how motivated users are when signing up, how easy the product is for the target audience to use, and if users can experience the core value without assistance. This will help determine if a free trial, freemium, or hybrid model is best.

  • It’s important to understand the real value and outcome your product provides for users in order to successfully communicate that value to users and deliver on it. This lays the foundation for building a sustainable product-led business.

  • Product-led companies should understand the three main outcomes that motivate customers to purchase a product: functional outcome, emotional outcome, and social outcome.

  • Functional outcome is what the product does. Emotional outcome is how customers want to feel using the product. Social outcome is how customers want to be perceived using the product.

  • Value metrics are important measurements for product-led companies to align their pricing and metrics with actual customer value. Good value metrics are easy for customers to understand, aligned with customer value, and scale with increased usage.

  • Common mistakes are using “per user” pricing, which may not reflect the true value customers receive. A better approach is to tie pricing to core usage metrics like messages sent, videos uploaded, revenue generated through the product, etc.

  • Finding the right value metric through customer research and analytics is key to pricing successfully and reducing churn in a product-led model.

  • Pricing is often ignored in companies because it touches on many different parts of the business like marketing, sales and product, so no one fully owns it.

  • It’s important to identify the value metric for your product, which measures how users are achieving meaningful outcomes. This helps shape pricing strategy.

  • Use both subjective analysis and data-driven approaches to determine potential value metrics and validate them. Look for patterns among best and worst customers.

  • Communicate your value clearly through the pricing page. It should be simple for users to understand which plan is right for them. Consider addressing objections directly on the page.

  • Don’t create a free plan that gives away too much without incentive to upgrade. But also don’t limit the free tier too much or it will be hard for users to see value.

  • Don’t make it too easy for paying customers to downgrade to the free plan by including key features for free. Consider how many paying customers may be at risk and if acquiring new free users is worth that potential loss.

  • The passage discusses different pricing strategies for SaaS businesses - best judgement pricing, cost-plus pricing, competitor-based pricing, and value-based pricing.

  • It argues that value-based pricing is the most effective approach, as it bases price on the value the product provides to customers rather than costs or competitors’ prices.

  • Two methods are described for determining price through value-based pricing: an economic value analysis and market/customer research.

  • An economic value analysis estimates the functional, emotional, and social value a product provides customers. Functional value includes things like time/cost savings, while emotional value relates to feelings like peace of mind.

  • Market/customer research involves directly talking to customers to understand their willingness to pay. This is considered more accurate than an economic analysis alone.

  • Overall the passage advocates determining price through value-based pricing informed by understanding the specific value a product provides customers both functionally and emotionally.

Here is a summary of the key points from the EO at GetUplift27:

  • Social outcomes refer to how customers want to be perceived by others when using a product. Products can help customers look like a “badass” and enhance their status.

  • The 10x rule suggests pricing a product so that customers get at least 10x the value they pay. This justifies higher prices.

  • The Van Westendorp price sensitivity model uses surveys to determine an acceptable price range. It asks what price is too expensive, expensive, a bargain, and too cheap.

  • The intersection of too expensive/not expensive is the point of marginal expensiveness (PME). Below the point of marginal cheapness (PMC) and above the PME is the acceptable price range.

  • A pricing page should show the value metric, willingness to pay for different packages based on market research, valued features for each package, and demographic information.

  • Features are divided into leaders (in all packages), fillers (nice to haves), and bundle killers (may turn customers off a package).

In summary, it provides guidance on determining an appropriate pricing strategy and price range using customer surveys and pricing models, and recommendations for effectively communicating pricing on the website.

  • Companies often overpromise the capabilities and benefits of their product or service, leading to disappointment when users experience it. This is known as a “value gap”.

  • Three common sources of value gap are:

  1. Ability debt - When the product doesn’t enable users to achieve their desired outcomes easily due to friction or lack of features.
  2. Not understanding user needs - Not knowing the main problems or goals users are trying to solve for with the product.
  3. Over promising capabilities - Exaggerating how fast results can be achieved or what the solution can do.
  • To reduce value gaps, companies should focus on minimizing friction, highlighting quick wins, understanding user goals, and accurately communicating capabilities. Things like unnecessary onboarding steps or missing key features contribute to ability debt.

  • Convincing internal teams like product, sales, and management to adopt a product-led approach and optimize for the user experience is also important to successfully deliver on promised value. Reducing value gaps improves conversion, retention, and trust in the brand.

  • Launching a free trial model requires convincing internal stakeholders like the CTO and VP of Sales who may see it as taking resources away from other priorities like product development and revenue goals.

  • The easiest way to launch a free trial is to change the call-to-action from “Request a Demo” to “Request a Free Trial” and adjust messaging accordingly. This can be done in under 24 hours.

  • When people sign up, have introductory meetings to qualify them, see how they use the product, identify key outcomes they want to achieve, and watch where they struggle. Take notes to improve the product and onboarding.

  • Follow up by focusing on helping users achieve key outcomes, noting problem areas to fix, and streamlining the onboarding process by removing unnecessary steps.

  • The most common mistake new product-led businesses make is failing to update and optimize their product-led model over time. They need to appoint a team to take ownership and continuously improve it. A small “tiger team” with representatives from key functions is recommended for leading this effort.

  • Develop an ongoing optimization process called the “Triple A sprint” to continuously improve the product-led model. It focuses on rapidly identifying problems, building solutions, and measuring impact over 1-month sprints.

  • The three phases of the Triple A sprint are:

    1. Analyze - Track key metrics like signups, upgrades, ARR, churn to identify areas for improvement
    2. Ask - Determine goals, identify the top levers (churn, ARPU, customers) to pull, and brainstorm potential inputs to test
    3. Act - Implement the highest impact, high confidence inputs to address problems identified in the analysis phase
  • Applying this process each month can significantly grow revenue. For example, some companies increased ARR from $500K to $1M in under 12 months.

  • The main outputs to track are signups, upgrades, ARPU, churn, ARR, MRR. Churn and ARPU improvements often have the biggest impact on growth.

  • An input log and ICE prioritization method can be used to systematically evaluate and select the top ideas to test each sprint. The goal is to rapidly improve the product-led model through ongoing optimization.

Here is a summary of the key points about using the Bowling Alley Framework to improve onboarding and turn users into customers:

  • The framework aims to guide users down a “straight line” path to experiencing the product’s value as quickly as possible, like bumpers in bowling help keep the ball on the lane.

  • Developing a clear “straight line” onboarding path is important to streamline the process and remove unnecessary steps that could delay users reaching the promised outcomes.

  • To create the straight line, map out all the current onboarding steps, screenshot each one, then label them green (essential), yellow (optional), or red (non-essential) to identify areas for streamlining.

  • The goal is to analyze where friction exists in the process and refine it to efficiently guide users to experiencing the value or promised outcomes of the product as their first impression.

  • Product “bumpers” and conversational “bumpers” can further help guide users if they start to veer off course during onboarding and ensure they complete the straight line path.

  • Following this framework aims to maximize the number of users that experience the product’s value during onboarding and are thus more likely to convert to paying customers. Process refinement is key to reducing pain points for new users.

  • Product bumpers are features within the product itself that guide users and help them achieve meaningful value, like onboarding steps.

  • Common product bumpers include welcome messages, product tours, progress bars, checklists, onboarding tooltips, and empty states.

  • Welcome messages personally greet new users and restate the value proposition.

  • Product tours eliminate distractions and only show the 3-5 most important initial steps through a “focus mode”. They increase the likelihood users make the right choices.

  • Progress bars indicate progress and motivate users by making long-term goals seem achievable through shorter-term milestones. They come in various formats.

  • Both product and conversational bumpers are needed to educate users and bring them back into the application to eventually upgrade their account. Product bumpers are most critical to help users adopt the product.

The key message is that product bumpers like tours, bars and messages are important guided to help users achieve value from the product and complete important onboarding steps efficiently.

  • Onboarding involves using progress bars, checklists, tooltips, empty states, and emails to guide new users through the setup and onboarding process.

  • Effective progress bars start with a substantial percentage already filled to make users feel like they’ve made progress.

  • Checklists break big tasks into smaller, achievable steps and motivate completion by employing the “endowed progress effect” and Zeigarnik effect. Partly pre-filling checklists can further increase motivation.

  • Tooltips should guide users towards experiencing meaningful value, not just clicking buttons aimlessly.

  • Empty states clearly show users the next steps they need to take upon first login, like connecting accounts.

  • Onboarding emails educate users, encourage usage, notify of new features, and bring users back into the app between key activities. The nine most common onboarding email types are outlined.

The key is using these various onboarding techniques together in a coordinated way to smoothly guide new users through account setup and their initial experiences with the product or service. The goal is moving users towards self-sufficient usage and derivation of value from the product.

  • Welcome emails should introduce the product, train users to open emails, and set expectations for future communication. They should include a clear call to action.

  • Usage-tip emails nudge users to take helpful actions in the product to experience value. They direct users to specific pages or articles.

  • Sales-touch emails are sent after users achieve value. They frame upgrades as success meetings and invite inactive users to demos.

  • Case study emails address common objections by sharing customer success stories and conflicts resolved by the product.

  • Better-life emails communicate product benefits without stories. They focus on how the product improves lives functionally and emotionally.

The overall theme is using different types of emails at strategic points - welcome, usage tips after onboarding, sales touches after value, case studies to address objections, and better-life emails to showcase benefits - to guide users through the funnel and encourage upgrades or continued use. Tone, timing, and addressing user needs and goals are emphasized.

  • Better-life emails showcase the benefits of the product to encourage users to upgrade from a trial or free version. They should emphasize the functional, emotional and social outcomes or benefits.

  • Expiry-warning emails remind users before their trial expires and are important if the trial requires a credit card upfront. They should be sent at least 3 days before expiry and clearly explain what happens next.

  • Customer-welcome emails are sent immediately after a user upgrades to reassure them and reinforce the benefits.

  • Post-trial surveys are important to understand why users did not convert so the product can be improved. They should ask for feedback in a quick and easy way.

  • Effective emails provide clear calls to action, emphasize the value proposition, make transitions seamless, and ensure users know where to get help. The goal is higher conversion rates by addressing user needs and concerns at each stage.

  • Post-trial survey emails can be used to improve conversion rates by triggering different actions or communication based on user feedback. For example, following up with a customer success call if the user said the product was too complex.

  • The goal is to provide a more personalized experience for each user based on where they are in their journey. Standard one-size-fits-all onboarding emails may not be relevant or helpful for all users.

  • Smart signals like signup, quick wins, desired outcomes, customer status can be used to enroll users in different conversational bumper tracks.

  • Track 1 focuses on helping users achieve a quick win. Track 2 guides them to their desired outcome. Track 3 aims to convert them to paying customers.

  • Each track uses trigger-based usage tip or reminder emails to move users along the intended user journey or straight line. Not all emails need to be sent if users progress independently.

  • It’s important to avoid trying to monetize too quickly and instead lay the proper foundation through Tracks 1-2 before focusing on conversions in Track 3.

  • The approach personalizes the experience and improves likelihood of conversions by only communicating what is actually relevant to each individual user.

  • Focus on upgrading users to paying customers in a way that matches your average lifetime value (LTV) to avoid an unprofitable business model. Remove upgraded users from marketing tracks.

  • Conversational bumpers like email, SMS or ads can remind past users of the product value and bring them back in a non-salesy way. The goal is to make these bumpers unnecessary by creating a great product people return to naturally.

  • Understand your average revenue per user (ARPU) to optimize growth strategies like marketing channels and targeting the right customer fit. Improving ARPU focuses on capital-efficient growth through existing customers versus quantity alone.

  • Strategies to increase ARPU include using value metrics in pricing, reducing pricing tiers, raising prices annually, providing an ideal journey for high-value leads, and upselling/cross-selling additional products.

  • Reducing churn is key to exponentially growing the business by retaining more good-fit, high-value customers over time. Churn is the “silent killer” that requires early tackling to avoid working just to maintain status quo.

  • Churn, or customer cancellations/non-renewals, is a major risk for SaaS businesses. Even a small reduction in churn of 5% can significantly increase profits.

  • It’s important to measure churn in multiple ways - customer churn (number of lost customers), revenue churn (dollar value of lost revenue), and activity churn (users at risk of churning due to lack of activity).

  • Customer churn is calculated as the number of customers lost divided by total customers. Revenue churn looks at dollar value lost divided by total revenue.

  • Activity churn tracks user engagement behaviors like logins, content uploads, etc. over time to identify users at risk of churning.

  • Calculating activity churn involves defining engagement metrics, tracking those metrics, weighting their importance, scoring users’ engagement levels, and normalizing the scores for analysis across teams.

  • Focusing only on industry average churn rates can create confusion - it’s better to focus on continual internal improvements and competing with your past self. Reducing churn by even small amounts can significantly boost profits.

  • Companies need to normalize user engagement scores so they are easily understood. This involves things like winsorizing raw scores and applying an exponential function to represent score differences effectively.

  • Once scores are normalized, they can be used in several actionable ways like ranking users and accounts, calculating an overall product engagement score, and comparing different user populations.

  • Engagement scores should be correlated with other business metrics like sales, retention, growth, lifetime value etc. to forecast business progress.

  • Measuring user activity/engagement can help identify churn before it happens, unlike metrics like customer or revenue churn which look retrospectively.

  • Techniques to reduce churn include onboarding users well, removing product friction to improve usability, sending usage review emails, creating churn prevention campaigns, improving the cancellation process, investing in customer success, fixing pricing models, and tackling delinquent churn from expired payment methods.

  • Truly great companies are built to be product-led through approaches like allowing users to try the product first before payment, designing for virality and word-of-mouth marketing, and focusing on the user experience above all else.

  • The passage discusses the trend of companies adopting a product-led growth (PLG) model instead of traditional sales-led approaches.

  • With PLG, customers can try the product first before engaging with sales. This is more appealing to buyers who don’t want to jump through hoops to evaluate software.

  • Successful tech companies like Google, Uber and Slack have used PLG by making their products easy to try with self-service options. This has changed B2B selling.

  • The passage advises companies to embrace PLG by aligning their business model around using the product as the main way to acquire, activate and retain customers. It says history has shown the “how” of selling is as important as the “what”.

  • Companies risk disruption if they don’t adopt a product-led approach and instead rely solely on sales teams closing every deal. The buyer now has more control in the buying process.

So in summary, the passage discusses the shift towards product-led growth strategies in business and tech, where companies focus on using their product itself to acquire customers instead of traditional sales-led approaches.

Here are brief summaries of some of the sources:

  • WOLF, T. (n.d.) - Discusses how to leverage emotions to grow conversions through emotional targeting.

  • Murphy, L. (n.d.) - Explains the “10x rule” for SaaS pricing strategy and setting price 10 times higher than costs.

  • QuestionPro. (2012) - Describes how to use the Van Westendorp price sensitivity meter to set pricing.

  • Poyar, K. (2017) - Covers how to price a SaaS product from early stages through IPO.

  • Wesley Bush, m. s. (n.d.) - How to grow a SaaS company faster through product-led growth strategy.

  • Gorgias. (2019) - Lessons on closing first 1000 customers based solely on data.

  • Doerr, J. (2018) - Measures what matters using OKRs at Google, Bono, and Gates Foundation.

  • Orston, R. (2018) - What SaaS businesses need to know about user adoption.

  • Mackin, Al - Discusses benefits of showing progress to users.

  • HUANG, Y. Z.-C. (n.d.) - How endowed vs earned progress affects motivation.

  • Remaining sources touch on topics like conversion optimization, reducing churn, pricing strategies, go-to-market strategies, and metrics like customer lifetime value.

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About Matheus Puppe