Learn strategies to successfully execute product-led growth at your startup.
The success of your PLG strategy will depend on the degree of commitment and the number of stakeholders needed to try your product.
There are now more than 30 publicly-traded enterprise software companies with product-led growth strategies. (Quick note: they all have enterprise sales teams with significant sales and marketing budgets.) While these companies have some self-service product experience in common (freemium/free trial), the details of how they execute their PLG strategy differ wildly depending on the degree of commitment needed to try the product and the number of stakeholders involved in making the purchase decision.
In the past several years of working with product-led companies, and building a PLG motion at Amplitude, I’ve come to think of product-led growth in 3 different “modes”:
Before we dive into the three modes of product-led growth, let’s talk about the two vectors that influence these modes of product-led growth: commitment and stakeholders.
Commitment can add up in several forms, but these two are the aspects that matter most to product-led growth:
If you’re like me and prefer quantifying everything, here’s a simple scale of 1–3 for commitment:
1 = low investment, low risk
2 = low investment, high risk or high investment, low risk
3 = high investment, high risk
Slack is a great example of a low-commitment product where, in theory, no new time is taken up for anyone to try — essentially, email time shifts to Slack. The cost of using Slack for a small team is very low and at worst, a company’s customers/businesses are never exposed or affected in any way. However, Hubspot would be a high-commitment product where implementation requires new time, the price point would not be insignificant, and the wrong choice could affect company growth.
Reputation and security risks are also becoming significant inputs into commitment. For example, if your product trial requires the customer to share user data (examples: Amplitude and Segment), even a quick, low-effort trial needs high commitment.
You could argue that all software in a company has multiple stakeholders, but a good sales executive will tell you that decision-making stakeholders are the most critical class of USERs and BUYERs. Many software purchases have a single functional decision-maker, even though the adoption can span multiple teams or the entire company.
Webflow is a great example of a single-stakeholder purchase decision. While a company’s website matters to every team, the head of marketing is often the single-function decision-maker for choosing to use Webflow. Their decision involves input from multiple experts, including content, design, engineering, and agencies, but is owned by a single function.
Based on where your product falls on the commitment and stakeholder PLG matrix, your company needs to use different PLG tactics to succeed. Here’s a snapshot of the principles underlying common product-led growth strategies.
The benefit of operating in the low commitment/stakeholder quadrant is that it’s very easy for your customers to start trials. However, this also implies that you have a very limited amount of attention from them, hence your product must work well and fast.
In a fast-working product, the USER is the BUYER and can do a short, free trial to decide that this product does in fact solve their problems. Many companies successfully use checklists during onboarding to get the USER to their “aha” moment. This often lends itself to a great credit-card or credit-based checkout experience for a paid plan. Calendly and Docusign are good examples of fast-working products. They might have network effects but don’t need them to deliver value immediately.
Having multiple stakeholders can be both good and bad. While building the product to serve multiple users’ needs can be challenging, your activated accounts can be stickier with better organic retention and upsell drivers.
In a habit-forming product, many USERs need to change their default behavior for the BUYERs to make a purchasing decision. In fact, the product might deliver little value before many people adopt it, making a focus on driving referrals and invitations paramount. The nudges for behavior change need to be built into the product and available with an always-free tier to give teams time to adapt. Nextdoor, Zoom, Slack, and Dropbox are good examples of habit-forming products.
Requiring high commitment from your customer in a trial can make it hard for a company to get initial traction. However, if you can radically unblock a company’s key executive to pursue new avenues of growth, your early visionary champions can help you build a completely new category of software.
In a paradigm-shifting product, the ROI of embracing your product must be more than 10x and easy to quantify for executives. Great ways to get the initial commitment to try include creating sandboxes that your customers can experience upfront or leveraging a trial to offer instant visibility into what used to be a black box. Webflow, Shopify, and Amplitude are great examples of this.
In the next article, we’ll dig into the specific tactics you can use to create a great self-service product experience for each of the three PLG modes. If you are interested in understanding how iconic companies such as Snyk, Nextdoor, and Webflow executed successful PLG motions, check out our PLG masterclass episode of the Startup Field Guide Podcast.