Product Led Growth: Strategies from Slack & Expensify
Editor’s Note: This is the first article in a series by OpenView’s Entrepreneur in Residence, Natalie Diggins, where she explores and defines product led growth.
Slack, Expensify and UberConference – what do they have in common? All three companies are deploying a robust product led growth (PLG) strategy – a capital-efficient way to engage prospects, turn them into passionate customers, and drive explosive growth. But what is a PLG strategy, and more importantly, how can your company apply its own flavor to achieve success?
Here at OpenView, we’ve noticed that many of the most successful and admired companies have built go-to-market features into their products, yet to date no one has articulated a common language around this relatively new strategy, let alone a common set of processes to implement and metrics to measure success. As interest has increased and product leaders begin to talk about what’s working and what’s not, the need for a common vocabulary has become more apparent.
To this end, I have been meeting with executives and product leaders at companies leveraging PLG to discuss this trend and learn about how expansion stage software companies can apply it to their own products. The conversations have been fascinating – I’m blown away by how generous and willing everyone has been to share their knowledge and passion.
Over time, I’ll be sharing what I have learned through a series of articles looking at PLG strategies and where they can be most effective. Through interviews with product leaders, you’ll learn how savvy companies conceive and implement their product led growth strategy. In addition to the higher-level strategy, I’ll share specific, actionable tactics that you can begin applying to your product practice immediately.
To start, let’s broadly define product led growth:
Product led growth is a go-to-market strategy that relies on product features & usage as the primary drivers of customer acquisition, retention and expansion.
In conversations I’ve had with experts from a range of companies, I’ve asked who they look to as the leader in implementing effective PLG. Almost all of them mentioned Slack, a messaging and workflow software application whose mission is to make your working life simpler, more pleasant and more productive. And for good reason.
Slack has had a particularly interesting evolution. It was initially created as an internal tool to solve some very basic communication needs for distributed work teams at what was then a gaming company. When employees expressed that they didn’t want to work anywhere that didn’t have the tool, it became apparent that the internal tool was a viable external product. Over time, the company focused exclusively on the messaging and workflow software application.
With so many people citing Slack as the paragon for PLG, I was excited to talk to their Head of Product Marketing, Kelly Watkins, and the conversation did not disappoint. Kelly shared that an important aspect of the strategy starts with a positive product and user experience, which then drives value:
“It starts with the product first and the product experience first and by the nature of that product experience itself having substance and providing value to people, that is where the benefit comes in of it selling itself, or of it being the mechanism that propels the success forward with other aspects of the company assisting in that.”
And herein lies a clue to Slack’s secret sauce: Slack isn’t selling software; Slack is selling a positive user experience. Stewart Butterfield, Slack’s CEO, shared a memo he sent to his team just before they launched their preview release three years ago. In it he explains that by building something genuinely useful, they’re selling a reduction from information overload. They’re selling the ability to make better decisions, faster. Ultimately, what Slack is really selling is organizational transformation by changing how team members relate to one another, which improves productivity. Slack is building something that people want, and that will make their users significantly better off than they were before.
The mechanism for delivering value may involve starting off by romancing users with a free trial. It may upsell existing users by promoting a version with more robust features. Or it may automate elements of the customer success function. But at its core, Slack is about delivering a positive user experience, and that is the foundation on which all of its PLG capabilities are built.
As you can see, there’s a lot of subtlety underlying the PLG aspects of even a “simple” communication tool like Slack. As we study dozens more products, we’ll see how PLG is more than just free trials and in-app conversion. Some products are especially good at engaging with pre-qualified leads and converting them to customers. Others create individualized experiences tailored to the user’s situation. In this series, we’ll examine these and other topics and provide a roadmap to a successful PLG strategy.
PLG can be a powerful tool to help qualify prospects for your sales effort. In a future post we’ll do a deep dive into several great examples of this, but today I want to highlight how Expensify, a San Francisco-based software company that enables “expense reports that don’t suck”, identifies pre-qualified lead opportunities. As Jason Mills, Director of Sales and Success at Expensify, told me:
“The biggest [indicator] is…you’re someone who is getting a lot of things sent your way. And typically, what we see is, if you get about three or more users in your company submitting things your way, that’s a signal to us that there’s a latent opportunity here. And that’s an opportunity that we need to reach out and have a better conversation around.”
Have your own PLG strategy? We’d love to hear about it in the comments below!
How did the team at SurveyMonkey know it was time revamp their pricing strategy? Find out which signals tipped them off and how they made it a success.
Mike Walsh, CMO at Reflektive, has gone through multiple pricing processes and has developed his own framework for assessing the situation and then developing pricing that is appropriate and effective. Learn more about his 4-step framework here.