🎯 Is PLG going down?
Why PLG being less profitable doesn't matter and other topics you can't miss in PLG.
Good morning and welcome to our first edition of High Intent! This newsletter will curate the most relevant & actionable PLG content that you can apply to your business today.
Read till the end for cheatsheets 🎁 and the best PLG joke I’ve ever heard.
Let’s get to it 👇
PLG World
PLG companies are less profitable in the post-COVID era
Source: Tomtunguz.com
Turns out product-led companies are less profitable than sales-led companies right now. Should it scare us? Not at all. Huge kudos to
for an in-depth analysis of the data. A few of his thoughts:PLG companies spend more than other companies when it comes to R&D. Most of those returns haven’t had time to pay off yet. CROs will look more closely at spend in 2023 onwards.
Borrowing costs have rarely been lower than during the pandemic. Software companies often operate at losses to compensate for higher growth rates. As interest rates rise, overspending will flatten.
Sales-led companies have revenue that’s protected by long contracts, whereas customers of PLG companies have more opportunities to churn. It may perhaps be that sales-led companies have simply delayed revenue losses.
Ken Rudin has another hypothesis worth mentioning: The graph above doesn’t take into account sales-led companies transitioning to PLG as their main GTM model during the pandemic. Doing so requires time and revenue delays.
Sales
Sales reps need to chill
Source: elenaverna.com
Ever signed up for a product and got bombarded by sales qualifying emails 5 minutes later? Sales reps, we know you’re hungry, but don’t waste your time on great users who are bad leads. 😒
One of the most interesting PLG topics tackled by Elena Verna last week was the need to identify lead types to prioritize who sales reach out to. Here’s the gist of it:
PQL: User who qualified for a sales touch because of product usage and buyer persona.
PQA: Account qualified to become a sales opportunity based on product usage (volume, velocity, buying signals) and firmographic data (size, location, industry).
The sales plays you run should vary based on whether you have a PQA, PQL or both.
⭐ [PQA + PQL]: Close the account, easy sell.
🕵️ [PQA, no PQL]: Find a buyer to sell to.
🤗 [no PQA, PQL]: Assist enterprise accounts until they qualify.
Going even further in complexity, Calixa recently introduced a matrix to guide sales efforts based on HOW your PQAs or PQLs use your product.
Source: Calixa.io
Lots of buying signals + high product usage: Focus sales efforts on uncovering what’s blocking your prospect from becoming a paid customer. Engage decision-makers.
No buying signals + high product usage: Focus sales efforts on pitching the added value of paid tiers. Leverage case studies and build an ROI simulation.
Lots of buying signals + low product usage: Educate your prospect about how to become successful in the product. Share best practices, templates, etc.
No buying signals + low product usage: Nurture users through automated campaigns and in-app experiences. Sales teams shouldn’t spend time on these leads.
Inside the Org
No one really owns PLG, right?
Source: Leah’s ProductTea
Wes Bush recently told our team that one of the most frequently asked questions he gets is: who should own PLG in my organization?
Leah Tharin provides a comprehensive framework to approach the question. Section 1 of her framework reintroduces entry-level concepts of PLG. It’s in parts 2-4 that Leah goes deeper into what’s needed to make PLG work internally.
Part 2 - What does growth look like in action: Product journeys can be summarized in 3 key steps: Acquisition, Retention and Monetization (diluted version or pirate metrics). Growth teams, unlike marketing, product or sales, influence all 3 of them. This requires cross-functional roles within the growth team, like “Growth Marketer” or “Product Growth”.
Part 3 - Her take on organizational structure for growth is very creative. She makes a comparison (using Conway’s law), between microservice-style coding and team structure, explaining that the output of your product team will resemble its composition. And that Dunbar’s theory shows that small pods (4-15) of people within a tribe produce exceptional output. In setting that team, she thinks about outcomes and facilitators rather than owners and features. This allows for a smoother org scale beyond the early stages of a startup. Using “Pods” make it more efficient to set up cross-functional teams, which are often inherent to PLG, as she shows on the graph featured above 👆.
Part 4 - A common mistake made by inexperienced teams is to have growth folks report to either marketing solely or product, creating siloes. But the best piece of insight here is Leah’s breakdown of Reforge Growth Competency Model: Communication & Influence, Growth Execution, Growth Strategy and Customer Knowledge.
I personally think Customer Knowledge is underrated and overlooked. Since growth overlaps core functions of your user journey, spending time interviewing customers and analyzing how they engage with your product, marketing content, etc. is an undervalued skill.
Growth
Are you faking PLG? 5 steps from the person who did it at GitLab
Source: Lenny’s Newsletter
Most people want to be like Slack but don’t know where to start. In the spirit of this newsletter’s mantra (less opinion, more solutions), Hila proposes an in-depth guide to implementing a PLG motion, no matter the size of your company. Gitlab had 1M users when she transitioned to PLG.
1- Map your funnel - 🔑 Takeaway: 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. For companies that have a mix of PLG and SLG, there’s a benefit in prioritizing one growth funnel and later layering on the other.
PLG to SLG: Canva, Slack.
SLG to PLG: Hubspot, Gitlab.
2 - Pick a starting point - 🔑 Takeaway: Where is your biggest point of failure? acquisition, activation or conversion? Don’t try to perfect all of them as you implement a PLG motion. Look at low-hanging fruits, like the need to implement a self-serve conversion flow if you don’t have one, or monetizing PQLs if no one seems to convert on their own.
3 - Anticipate pitfalls - 🔑 Takeaway: Hila is so on point here. Look out for; a lack of commitment & investment from leaders in your org, not having a product flow ready to support PLG, lacking a decent data foundation, no PLG expertise in-house and finally resistance from existing teams. Read the guide for solutions!
Parts 4 -5 are coming up, so that’s how far we’ll go for this week…
Marketing
ChatGPT’s sliding into everyone’s feeds
Source: Giphy
Assuming that you’re not living under a rock, you’ve heard of ChatGPT. Seems to be the only content inspiration people have right now.
The hype, however, is real. Rob Lennon has reached 6M views since he shared advanced GPT prompts to use for marketing. Here are (some) of his examples and how they can be applied to PLG.
Rob:
Ask ChatGPT to simulate an expert (customer, co-host, or talented expert). Have a conversation with it, or ask it to generate content as if it were that specific persona. Ryan Reynolds + MintMobile example here.
PLG:
Feed ChatGPT information about your ideal user persona (previous conversations, reviews) and ask it to generate copy for your product onboarding and in-app prompts.
Rob:
Feed ChatGPT your writing. Ask it to help create a style guide for future outputs.
PLG:
Feed ChatGPT your product-led sales emails. Ask it to help you find new angles to get PQAs or PQLs attention so you can start a sales conversation.
Rob:
Use ChatGPT to write different formats and vary its output (Outline, Mind Map, Bullet points, etc).
PLG:
Use ChatGPT to convert your self-serve help documents into new formats so that you reduce unnecessary support tickets from free users.
💡 Cheat sheets, templates & frameworks
Calculate the impact of PQLs on your sales reps’ quota.
A practical cheat sheet for building a PQL engine.
100 viral hooks to supercharge growth.
🎧 & 📺
No time to sit down and read? Podcasts and videos you don’t want to miss:
🎧 How a $4B Business Makes The Transition From Sales-Led to Product-Led. Easily one of the most relevant topics for 2023.
📺 Value-based selling explained by Snowflake’s CRO. Snowflake isn’t product-led but value-based selling is key to product-led sales, especially in a tough economic environment.
📺 Output over outcome win in execution, by Guillaume Moubeche, CEO of Lemlist.
🎧 How to Turn Signups Into Revenue by ProductLed.
🔥 Hot Conversations
Kevin Chiu’s breakdown of ICONIQ’s recent 54-page research on 92 of the world’s strongest SaaS.
PLG explained to a 5-year-old by Drew Teller.
Slack vs Teams is misleading.
Coming up in PLG
Webinar: Upsell and expansion playbooks for PLG, by Calixa.
Webinar: User onboarding best practices, by Userpilot.
PLG pricing report by PeerSignal.
Before I leave you alone, I HAVE to s/o Emilia Korczynska’s recent PLG joke:
I have a Product-Led Growth joke, but you need to talk to sales to hear it 😂
Aaaaaaaaaand that’s all for today! Love it? Hated it? Share some feedback with me at fm@calixa.io or ping your friends and colleagues about it 💛
✌️, Fred.