Four PLG Tactics to Grow Faster
January 12, 2023
If you’re a subscriber to my Growth Unhinged Substack, you might have seen the introduction of a new segment I’m calling “The Gist.” There are so many stories and growth tactics that are worth learning about—but sometimes we just need the why and the how. With The Gist, we bring you a leader in the startup space who has pioneered these tactics and ultimately, increased key metrics for their company like activation, conversion, or monetization.
Here’s a roundup of the growth tactics we’ve been excited about over the last two months.
1. In-product experiments
The gist: Four quick and simple in-product experiments that could increase your free-to-paid conversion by 50% or more.
Why are they worth trying?
Much like first impressions, the first-day user experience is when you have a tiny window to do your best and show users what your product can offer. In fact, it can be the most critical part of the user journey.
Drop-off rates after the first day can be surprisingly high. At the average SaaS company 40-60%+ of new users never return to the product on a second day. If a user does see value on their first day, they’re far more likely to become a paid customer and share your product with others compared to if they don’t.
The four experiments
Priya Bhatia is a product growth leader at 7shifts, a team management platform for restaurants. 7shifts counts nearly a million restaurant pros and over 35,000 restaurants as customers, has 350 team members, and might be the top (only?) PLG company HQ-ed in Saskatoon, Saskatchewan.
Here are four in-product experiments from 2022 that 7shifts tried and collectively improved conversion by >50% and expansion revenue by 40%!
- Removing demo mode. 7shifts removed an option to start with a demo mode and forced users to DIY from the get-go. It improved activation and conversion by double digit percentages, and had the benefit of requiring almost no engineering work on their end.
- Improving a getting started checklist. The company adjusted the ‘getting started’ experience by making customers take one simple action at a time with a clear CTA. The changes improved completion rates for said checklist and increased conversion.
- Moving setup moments to an onboarding wizard. Restaurants have similar roles across their businesses, and setting up employee roles is crucial for operations. Priya simplified this process by moving it to an onboarding wizard that pre-populated common roles and departments at restaurants. The additional step did not distract and ultimately improved conversion rates.
- Adding an in-app trial of a higher tier plan. Not dissimilar to the usage-based paywall mentioned earlier, 7shifts offered customers the opportunity to start a 14-day trial of a higher-tier plan. It became a tried and true method of converting users in addition to increasing monthly revenue.
2. On-demand interactive product demos
The gist: Introduce an on-demand interactive product demo to turn high-value website visitors into customers.
Why should you consider it?
Here’s the evidence, according to Kevan Lee, the SVP of marketing at Oyster. The startup grew rapidly in less than two years to coveted unicorn status. And some of that success can be traced back to their experimental on-demand product demo.
Oyster tracks on-demand demo leads through to closed-won revenue and compares the cohort against higher touch acquisition channels. Kevan told me, “Still early days but encouraging results!”
More encouragingly, you don’t need to run a PLG company to try it out.
What else do you need to know?
Software companies are seeing the benefits of embracing PLG, but they might just not be ready to make the move. So this is where the on-demand product demo steps in. It’s an immersive, self-guided product experience that you can:
- embed on your website or inside of your app, and
- give prospects the opportunity to go from visitors to product-qualified leads (we’ve written extensively about PQLs in the past).
These PQLs tend to be more ready to buy compared to folks who follow a traditional “request a demo” path. That adds value to your prospects, accelerates buying cycles, and allows you to be more efficient with scarce go-to-market resources.
3. Usage paywalls
The gist: Add a usage paywall to your free and/or entry-level paid plans to boost conversion.
Why should you care?
It’s giving users just a taste of premium features—which drives engagement, stickiness, and habit formation—while having a reason to pay more over time. It’s a way to capture the benefits of usage-based pricing, even if you aren’t ready to go all the way to a pure usage-based model.
There’s evidence that usage paywalls are really effective at drawing in revenue for PLG companies. Some examples include:
- Zoom’s 40-minute meeting duration limit for free users
- Miro’s limit of three editable boards in its free plan
- Slack’s 90-day limit of searchable messages in its free plan
Let’s go a little deeper
Usage-based paywalls are also a fantastic way to accelerate expansion among your heavy-use customers. There are two main strategic considerations when picking your usage paywall:
- What’s the right usage metric? (Keep in mind that there can be more than one.)
- Where should I draw the line?
Lauryn Isford, head of growth at Airtable, recommends starting with the 80/20 rule when designing a usage-based paywall (she elaborated on this rule in an interview last June). The paywall should impact 20% of engaged users, while 80% should be fine with the plan they have.
4. Smart trials
The gist: Consider a smart trial, i.e., pairing smart automation with a human sales touch, to drive free-to-paid conversion at scale.
Why should you try it?
PLG companies are always looking to improve on how to deliver value before they capture it. The startup Coefficient takes an unconventional approach with their smart trial.
In their case, new users get started for free with full access to all Pro features (similar to a reverse trial). Based on what the user has done in the product, they’ll receive a series of personalized outreach that guides them through the journey to conversion.
Let’s dive in a little deeper
Coefficient works to automate as much of the manual sales work as they can. When they are using smart trials to convert users, they might try a handful of tactics such as:
- enforcing the trial time-limit with a countdown;
- extending the trial period (if the customer is eligible); or
- collecting data on why they’ve decided not to buy.
For them, it’s a matter of knowing when to make the sales ask through a rep or through a smart trial.
“We want sales to do what they do best,” Coefficient COO Ben Crosswell told me. “It’s a more valuable use of our sales resources to spend time with high intent and high fit prospects.” Specifically, their sales team only reaches out to free accounts when they can provide value that extends beyond automation such as navigating a procurement process or helping develop a high value use case.