🔥 AI’s unknown superpower
New data shows a major change in sales cycles.
Morning!
Here’s what you missed in PLG in the last 2 weeks👇
🚀 The ultimate guide to a PLG motion
😨 One major change to your sales cycle
🎯 How to craft the right PLG message
🤖 AI can solve your reps’ #1 problem
🏢 How PLG companies should build enterprise pipeline
Scroll to the end for 🎁 Cheat sheets & templates, 📊 New data, 🎧 Podcasts, 📺 Videos and 🔥 Hot conversations.
🚀 The ultimate guide to adding a PLG motion
Lenny Rachinstky just released his full interview with Hila Qu (Reforge, GitLab). She lays out 5 steps to introducing PLG to your organization. Below are the takeaways.
Source: Lenny’sNewsletter
1. Map your funnel: If you don’t have a PLG funnel today, draw a potential funnel out on a whiteboard. Imagine how a potential customer would travel through that journey, and how your product and teams might need to change to support it. List your ideal customer segments, what funnel metrics you should track, how you will drive growth, and which teams would be involved.
2. Pick a starting point: Choose an initial focus area for your PLG efforts between acquisition (number of users), activation (new user usage), or conversion (ARR). Within each of these areas, you can drill down and prioritize low-hanging fruit. You will boost your organization’s confidence in PLG by choosing the starting point with the highest ROI first.
3. Anticipate the most common pitfalls: You need a good reason and strong conviction to launch a PLG motion, because the investment is not trivial. If you are layering PLG on top of SLG, expect some resistance from internal teams and workflows. If you are starting net-new with PLG (like Kissmetrics did), your main challenge will be a lack of foundation and expertise. And make sure you have a vehicle for PLG, either a free trial or free version. If not, the first step is to build one.
4. Set up a PLG infrastructure: On the back end, you need an infra layer (warehouses, ETL, CDP). On the front end, adopt tools to support your PLG teams (like a Product-Led Sales platform). Once you have the critical PLG infrastructure, leverage specialized tools in specific focus areas (CRMs, payments, user onboarding, data enrichment, etc).
5. Build your PLG team: You need a dedicated team to work on PLG. But instead of building out a full organization, start small with a growth product team or a cross-functional tiger team. Then, once PLG is proven to be a good fit, invest more. Heads of growth most commonly report to product leaders, but sometimes they may roll up into sales/GTM organizations to better align incentives and KPIs.
😨 One major change to your sales cycle
The typical startup saw a 24% increase in sales cycle in 2023. New data from Tomasz Tunguz highlights an important shift and why it benefits PLG. Key takeaways below ⤵️
Source: 2023 GTM survey
60-day sales cycles are now 75 days.
One-third of enterprise sales cycles take 50% or longer than last year to complete. Usage-based companies have suffered greater increases than seat-based companies: 29% vs 21%.
As stated in Battery’s recent state of software spend report (summary in cheatsheets below), CXOs are slowing down hiring and approval rates, and 64% of them are not willing to buy from startups in 2023.
🔑 takeaway: You need to create more pipeline to make up for longer sales cycles and flattening close rates. PLG is a great way to open up your top-of-funnel, minimize economic downsides and optimize market upside.
46% of companies say they buy more than 20% of their software self-serve. A good PLS motion can bridge the gap between free users and your pipeline.
🎯 How to craft the perfect PLG message
Good messaging is about meeting the customer where they are and maximizing their value. Robert Kaminski teaches how based on where users are in your funnel ⤵️
Source: Robert Kaminski
Using Calendly as an example, he explains that there are six types of messages to consider when targeting sales:
Awareness messages: Start with the problem and use case to qualify that they have the problem you solve and earn time for them to consider your product.
Acquisition messages: Lead with capabilities to convince them to give your free product a try. Highlight your most compelling capability that aligns with the problem.
Activation messages: Be a guide for your new user and focus on a single workflow that addresses the use case.
Habit messages: Show the user how impactful repeated use is for them and provide metrics to back up the benefits.
Expansion messages: Connect supporting situations and use cases to the habits they have already developed to start expanding their use towards premium features.
Monetization messages: Deliver value first and focus on maximizing their value instead of your revenue.
🔑 takeaway: Good messaging - PLG or not - is about meeting the customer where they are and maximizing their value.
🤖 AI solves reps’ #1 problem - trusting a score
Manual lead scoring sucks. Most reps don’t trust or use them. AI is changing the game (that’s how ClickUp’s team is prioritizing leads 🤫).
Source: Calixa.io
AI lead scoring is a process that uses machine learning algorithms to sort and prioritize accounts. It finds correlations and hidden patterns between your historical data (firmographics, product usage, marketing signals, etc) and sales outcomes (close rate, revenue, churn rate).
Reps, imagine if you could do the following 👇
1. Focus on only the hottest leads: AI scoring identifies leads with the best revenue potential and can flag leads that aren’t worthwhile, although seem great on the surface.
2. Actually understand what scores are made of: Factors influencing a score (PQL signals) help reps understand factors that make up the score so they can craft the perfect outbound message/cadence.
3. Know it’s always improving for you: AI-based scores get better as you give it feedback and as new data comes in.
This way, you can focus on what you do best: understand, engage, & help customers.
🏢 How PLG companies should build enterprise pipeline
Assumptions are made that enterprise-size revenue doesn’t come from PLG. This is far from the truth. But few people attempt it, and even fewer do it well. Kyle Poyar interviewed Chris Walker from Refine Labs. He lays out how.
Source: Growth Unhinged
Kyle’s biggest takeaways for PLG teams looking to capture enterprise revenue:
PLG teams need to create enterprise demand all while sustaining their bottom-up, product-led marketing.
Digital attribution tools don’t properly measure newer channels, which leaves marketers blind to what actually creates enterprise demand.
Set up a hybrid attribution model that gives you visibility into both demand creation as well as demand capture.
Enterprise marketing teams should focus on pipeline creation from a defined set of accounts.
PLG marketing teams should focus on either activated or paying users, not just all signups.
🎁 Cheat sheets & templates
What CXOs need to know regarding software spending
Sequoia Capital’s new market map
The beginners’ guide to engagement on LinkedIn
Framework for creating a B2B demand gen engine
📊 New Data
Summary of the Battery’s state of software spend report
Take 3 min to answer the PLS survey
🎧 and 📺
(Vlog) Marketers: Stop doing manual lead scores.
(Vlog) Unsolicited customer feedback.
(Webinar) How to find expansion opportunities in your existing users.
(Podcast) The ultimate guide to adding a PLG motion
(Podcast) Cultivating a growth practice