SaaS companies—and even businesses outside of the tech industry—have turned their attention to becoming “product-led” companies.
This means that instead of relying on sales, marketing, or customer support to engage customers and scale, engagement and growth is built directly into product features and usage.
This philosophy for building a product and shaping a company is helping household names like Facebook, Amazon, and Netflix grow at unprecedented rates.
So where does that leave your company? Even though most companies today agree that being product-led is important, advice for creating these workflows is usually targeted at start-ups who are starting from zero. But if your company is already established in more traditional workflows that emphasize sales rather than product, it's not too late to change.
In fact, there are three areas where traditional companies can make important adjustments that will help them pivot to become a more product-led company:
- Internal workflows
Let's dig deeper into the changes in these three spaces that will help traditional companies create new product-led priorities so they can compete in 2018 and beyond.
Pricing should make it easy to start using your product
SaaS sales used to mean negotiating the right plan. Now, it's just about increasing access to the product.
In the old world of selling B2B software, the buyer was usually the someone in a customer's C-suite. That meant that the sales team was a SaaS company's main force of distribution—they would have to interface directly with the CIO, have several meetings and calls where they explained the use and benefits of the product, and potentially create a bespoke pricing and usage plan for that specific customer.
Now, not so.
In the product-led world, the users—the people who are actually logging in and working in your product every day—have more buying power than ever. Software isn't pushed down onto a team from the C-suite, it's pushed upwards from one user to the rest of the team. End-users are the new keepers of distribution and sales power.
This means that in this new world, a product-led team wins by getting their product in the user's hands as quickly and easily as possible. Then the people who will be using your product every day can see for themselves how great it is. Usually, you'll have to offer something for free.
If you're already deeply entrenched in enterprise sales, you don't have to suddenly stop charging for your product or change your entire pricing structure. There are simple ways where you can add access points to your products. Here are two ways to build quicker and easier product access into your existing workflow to gently make the pivot to product-led:
Offer a freemium version of your current product
It's okay if you don't want to give your core product away for free, especially if you've spent a long time figuring out the best way to monetize your customers. Instead, you can offer users a simplified version of your product that shows them what the value is, but doesn't give away all of the functionality.
Dialpad, a unified cloud communications tool, has done this really well. They retroactively created a free version of their fully-functional IP-based business phone system that they call UberConference. It lets users try out the concept of reimagining legacy telecom products, but doesn't include all of the functionality of their flagship product.
Craig Walker, CEO of Dialpad, said that this has been a really useful entry point.
“We felt that if we could do a free product without having it cost us a ton of money, we could use that to upsell to our premium product... It would give us a nice kind of runway of happy users that we could then sell into and try to upsell them on additional stuff.”
Adding a freemium product doesn't need to be a big burden on the company or a require a restructuring of the main product's pricing plan. And that free entrance point will drastically increase the number of users who can try the product for themselves, which puts the power of distribution and sale back in the hands of the users.
Create a strong upsell strategy
Once you have your free entrance point, you need a strong upsell strategy to move users from the freemium product to your current, core product. The best way to do this is to make sure that your paid product has something that builds on the value of the free product and is essential to big or growing teams.
Dropbox, the champion of the freemium model, has done this expertly. The file hosting service provides a free plan that lets users store and synch files in the cloud, which easily shows the value of the tool. However, if users want more robust features, they have to upgrade to the paid product.
This is a great upsell strategy because features like mobile offline folders, full-text search, or increased storage aren't necessary for a user to see the value of using Dropbox. However, they are incredibly useful as you use the product more and more. This one-two punch of offering a freemium product and then carefully choosing the upsell proposition creates a natural opportunity for monetization, while keeping the focus on the product and what the user needs from it.
Messaging should speak to what your user wants
SaaS companies that are more sales-led know how to speak to the top of the food chain. The problem with this in the product-led world is that priorities of the C-suite aren't necessarily the same as those of the end-user.
When selling to high-level execs, your sales team may prioritize features like security, compliance, and advanced user permission options. But your users aren't going to care about these things.
That's not to say that these features aren't very important to their work within your product. They're still essential. But they're no longer the selling points. Now that there is a new buying audience there are different motivations, and your team has to adjust how you pitch your product accordingly.
Luckily, this new messaging can actually be much simpler. When a user is trying out your product, they're really just asking themselves one question: “Does this make my life easier?”
If you can understand what problem your product is solving for your users, you can make your messaging pitch-perfect. As a more established company, you actually have an advantage over younger companies in this way. You've had more time to build up a customer base of loyal users—and see others churn. You probably have a better idea of your ideal user profile.
Now you just have to use that customer data and feedback in a constructive way. Here are two ways to adjust your messaging to users by leveraging the resources you already have:
Learn how users are talking about your product
You already have a solid base of customers who have thoughts and opinions about your product. To tap into this valuable trove of feedback, send out a user-survey with open-ended questions. You can mine these open-ended answers for specific words and phrases to use in your marketing and website copy.
SaaS entrepreneur Hiten Shah conducted this type of open-ended user research for Slack and was able to see exactly what language people used to talk about the product. This gives direct insight into what is valuable to them.
You can create the same type of survey simply and easily with a tool like Typeform, and then use a free word cloud tool to organize the qualitative answers you collect. The right words to use to connect with your users will literally jump out to you.
Reword your message around one clear selling point
Once you know what words to use, you can reframe your selling point into a concise and pithy statement that potential users can immediately digest.
For example, consider this pitch on the homepage of Concur, the enterprise expense reporting software, in 2004:
“Today, companies all over the world are saving millions in operating costs and recapturing millions in vendor discounts. How? By taking control of expenses with proven solutions from Concur.”
That's great—if the decision-maker is worried about operating costs and vendor discounts. But the person who's actually using the software to fill out the expense reports probably isn't focusing on those things day to day.
Compare that to the simple, clear message of the expense software, Expensify: “Expense reports that don't suck!”
People at work want to spend less of their day scanning receipts and submitting forms—so Expensify zeroes in on acknowledging that those activities suck, and quickly explaining their product removes that hassle by automating the process.
And Expensify's founder, David Barrett, says this messaging directed at users has been one of their key methods for growth: “Working from the bottom up is exactly how we landed one of our largest customers [Yahoo!]”
Workflows need decentralized decision-making
More traditional software companies operated like monarchies. Product-led teams have to disperse and decentralize decision-making.
In the older, more traditional style of running a software company, a few people at the top make all of the decisions about everything, including product development. That may have worked when a strong pitch drove company growth—after all, the decision to buy was made by someone who would never actually use the product itself. Product development could be a little bit more detached.
But now that the user's experience with the product can make or break the sale, team members closer to the end-users need more of a voice. Product development has to be informed by user experiences and feedback. This is the only way you'll be able to answer questions like:
- What new feature would increase user engagement?
- What is currently confusing users about the product?
- What functionality of the product would users be most sad to lose?
That means your team has to have the right structures in place to channel this important information. This doesn't have to mean a total restructuring of your team. Depending on how flexible your team structure is, you can make small changes to infuse new and important voices into decision-making, or you can move towards a more radical restructuring.
Here are two ways that more traditional companies can begin to make changes that give people closer to the product and the users more of a voice:
Give customer support members seats at engineering meetings
Although engineering and customer support don't typically work together, their roles are completely complementary: one team builds a product that users will love, and the other helps customers use that product well. It makes sense that there should be collaboration and direct communication between these two teams.
The customer messaging platform Intercom has an excellent model for how this can be done. They have customer support members or managers who attend engineering meetings and standups. They feel that this brings the customer's perspective to a team that critically needs this feedback.
Specifically, one engineering manager and one product engineer cited these benefits:
- Better product knowledge on the engineering team.
- Issues solved faster.
- More impactful work on the road map.
This is a small change that can have a huge effect. To get this started, all you have to do is invite one or two customer support members to start attending weekly engineering standups and go from there.
Create diversified mini-teams within your company
An excellent way to decentralize decision-making is to create autonomous units within your team that can make decisions without bottlenecks. These different units can have different priorities, such as customer acquisition, retention, or upgrade.
Yellow Pages, a public company that is over 100 years old and has over 2,900 employees, has championed this team structure to help pivot from a print directory to a digital, product-led company. For example, the team is now organized into units called “squads” that operate in parallel.
Each has a product owner who is in charge of defining analytics requirements, a growth hacker, and quality assurance. They have centralized management but make decisions independently. Because of this structure, the Yellow Pages team has been able to roll out product updates every 2-4 weeks, instead of every quarter like they used to.
Changes to internal structure and workflow can be daunting at first, but they're ultimately the most important changes to make.The way you structure your company to make important decisions will shape the future of your company for five, ten, and twenty years. Embracing a structure that enables product-led mentalities is an investment in your long-term growth.
Pivot to product-led to invest in your future
A product-led philosophy is more than just a passing fad. That's because the entire way that users interact with products is evolving, and their expectations from products are changing. Companies have to step up and provide these engaging product experiences to stay competitive.
Lucky, more traditional product teams can pivot. There are important changes that you can start making within your company right away that will help you communicate with users more directly and build a more engaging product. It's time to dive in.