How Logz.io Took Self-Service from 0 to 50% of New Customers
At the end of 2019, Logz.io launched their first self-service offering with only two engineers and a completely manual back-end process.
They’ve since scaled up their product-led motion and now a whopping 50% of their new customers come in via the self-service channel. On top of that, about 10% of their self-service signups become enterprise opportunities.
Logz.io’s smaller self-service customers are highly valuable, too—they grow their spend by an average of 300% over the course of their first year.
This was a big change for a company that was solidly grounded in a traditional go-to-market motion. As a global company offering an observability service platform to modern engineering teams, Logz.io serves primarily mid-market and enterprise organizations; and their way into these organizations used to be a sales-led strategy.
Above: Logz.io’s pricing page
Why the shift to embrace self-service and product-led growth (PLG)? Because of the need to adapt to the way developers buy software. To put it simply, developers don’t want to talk to a salesperson.
Even developers at large companies would rather avoid the whole sales process. Like everyone else, they’ve become accustomed to the ease and convenience of our self-service, sales-free world. From booking hotel reservations online to ordering an Uber on your phone, we’ve all gotten used to buying streamlined, self-driven experiences that instantly deliver what we want—no human interaction needed.
What started out as an adaptive move to help Logz.io align with buyer behavior turned out to be a powerful way for them to open up the market and take advantage of incremental opportunities while giving themselves new paths to build on their existing success.
I had a chance to speak with Asaf Yigal, Co-Founder and VP of Product at Logz.io. He shared five key lessons that he and his team learned along the journey to incorporate a self-service channel into their go-to-market.
As a disclaimer, Logz.io is an OpenView portfolio company. We led their Series B funding in November 2016 and subsequent Series C in November 2017. The company has now raised more than $120M to fuel their rapid growth.
1. The biggest challenge is often internal alignment
The first and most trying hurdle Asaf and his team had to clear was getting everyone within the organization on board. It’s hard to make the case to invest engineering resources on a self-service model when 90% of your ARR comes from large enterprise customers whose use cases and requirements are too complex for a fully touchless purchase.
“People couldn’t understand why we were going to spend engineering resources to fund something that’s designed to deliver the lowest-end customers,” Asaf recounted. “They’d ask why we wouldn’t use engineering resources to build a feature that an enterprise wants, or to build something a salesperson could sell into a big company.”
Logz.io got past this potential roadblock by carefully navigating tensions with product and—eventually—getting some initial wins. It’s much easier to sway people’s opinions when you have numbers to back you up. It also didn’t hurt that Asaf and his team had investors like OpenView in their corner advocating for a PLG approach.
2. Self-service gives you the ability to spend more on marketing—and make that spend more effective
The main thing that makes marketing risky, especially in a traditional enterprise sales environment, is not knowing what the return on investment will be. Self-service is an excellent way to establish more consistent and predictable results because the elimination of the human variable makes it easier to accurately determine outcomes.
And since self-service provides a more direct and reliable link between marketing spend and return, it gives companies the ability to strategically increase spend in key channels. In short, a self-service model gives you the ability to place your marketing bets with confidence.
In addition to delivering a GTM motion that can be relied upon to deliver zero-touch, self-service customers month after month, a product-led approach also helps create more awareness that translates into more enterprise customers asking to speak with sales.
“Ultimately, we are after the enterprise customer,” said Asaf. “But if we increase spend to create more awareness, that awareness is going to bring in more enterprise customers alongside the self-service customers. And we know that it will be money well spent, because we’re basically increasing the spend without incurring any cost to the business. We know that if we spend another million, it will bring us much more.”
3. The best way forward is to start small and iterate quickly
When Asaf and his team launched their initial self-service effort, it was like launching a startup within the company. The goal was to get to market fast, and they had to work with the resources they had until they could prove the model with some measurable success. There were only two people on the team, and they kept things as simple as possible.
“We did only the most basic stuff, like using the Stripe plugin to process credit cards. Everything else was manual,” Asaf explained.
After getting the project off the ground, they started experimenting with self-service pricing.
With a sales-driven model, changing prices is a complicated and arduous process that involves training your whole sales team. A self-service model, on the other hand, allows you to run experiments more quickly and easily, and it delivers results you can see before you commit to any long-term, company-wide changes.
As an example, the team had a theory that their entry price point was too high. To test the theory, they ran a promotion over the last two weeks of 2019 offering 50% off the first three months of service. This offer doubled the conversion rate.
Building on this success, in early 2020 they continued to modify entry-level pricing and were able to find a price point that best balanced acquisition and conversion. These learnings again benefited the entire organization, not just the self-service funnel.
The fact that a self-service model generates exponentially more data helps accelerate experimentation and learning on all types of variables. The difference in scale of having the data from 400 to 500 signups each week versus 100 sales per quarter allows you to optimize the experience and flows to improve conversion much more quickly, efficiently, and effectively.
4. Self-service isn’t anti-sales
Self-service and sales can go hand-in-hand, often to great effect. As Asaf told me, “We try to contact everyone—even people who come in through self service—because we know that conversion rates increase dramatically if we can engage them, articulate the value, tell them a story, and run a bigger demo.”
That said, there are still plenty of instances where the self-serve lead has no interest in engaging with sales, saying that they can try the product out on their own. And that’s fine, too. “When they scale to a level where they need and can afford more, they come back to us to have the conversation,” Asaf said.
To accommodate the different user personas and their preferences, Logz.io gives its new signups the option of a self-directed path, an assisted path with a product specialist, or a demo with a sales rep. While most initially opt into the self-directed path, some take advantage of the assisted or demo routes; and others evolve to a place where they want/need sales involvement to move to the next level.
5. Self-service delivers great land-and-expand opportunities
With self-service, Logz.io hasn’t just attracted very small, SMB customers. Rather they’ve found that self-service facilitates an extremely powerful land-and-expand motion. On average, new customers coming in through the self-service channel grow their spend by 300% over the course of their first year with Logz.io.
Logz.io is building on this success by leaning further into usage-based pricing. This model has become fairly prevalent, but it wasn’t something Logz.io was doing prior to launching their self-service channel.
“Consumption-based pricing helps reduce conversion friction because one of the biggest questions people have when considering a purchase is how much they will need,” Asaf explained. “Allowing them to purchase the service in a pay-as-you-go way lets them estimate their needs, which then allows us to create a monthly or annual contract.”
Self-service might be more powerful than you think
The bottom line is that self-service can bring significant benefits—even if your main source of revenue is enterprise customers who typically require sales engagement.
Self-service helps to increase product awareness, get a foot in the door with new customers, and implement a land-and-expand strategy. It improves confidence and ROI of your marketing spend, enabling companies to accelerate their growth investments. And it enables more rapid experimentation, including on new pricing models.
The good news for any organization thinking about branching out with a product-led, self-service go-to-market strategy is that it may not be as hard to get started as you think. Logz.io’s self-service team has grown from two to five people, and they expect to add another three or four to the roster before the end of this year. Knowing how Asaf and his team got started and where they are now should provide plenty of inspiration.
For more on usage-based pricing, download our Usage-Based Pricing Playbook.