Spearheading PLG at Stack Overflow: How Product-Led and Sales-Led Growth Fell into Alignment

Our third annual Product Benchmark Report showed a massive uplift in the number of companies adopting product-led growth, not only in the Cloud 100, but also in early startups as well.

And with the SaaS industry eagerly embracing product-led growth, we found that it was time to define a new user journey—one that centers around users and product activity, not executive buyers and sales and marketing. We wanted to share these benchmark metrics so SaaS leaders can see how their businesses measure up at each stage.

I recently spoke at the Product Benchmark: Insider’s Look event, hosted by OpenView and Lerer Hippeau, where I got to do a deep dive into benchmarks for each stage of the new user journey. I also got to chat with Teresa Dietrich, chief product and community officer at Stack Overflow, about how the company transitioned PLG and optimized activation by experimenting with both free trial and freemium offerings.

The original Stack Overflow, for devs by devs

Stack Overflow started as a public Q&A site for developers and grew to be one of the top 200 most popular websites in the world. The company then created a SaaS product called Stack Overflow for Teams that provides the same Q&A internally to big names in tech that were clamoring for the product, and the company as we know it today was born.

With 100 million unique visitors to the public site every month, Stack Overflow recognized how that massive exposure to the Stack Overflow for Teams product meant a huge opportunity to move visitors down the funnel.

“We needed to invest in a self-serve motion,” she explained. “We had a fairly large sales-led program. We explained we’re not swapping from sales-led to product-led—we’re adopting a full-growth strategy…We had to experiment, slowly implement, and be very experiment-driven, but sort of in a different way than if you were starting with PLG from the beginning.”

They had to consider how the transition impacted the metrics that the sales-led org relied on, like marketing leads and form fill-outs. For Teresa, the challenge became striking a balance between implementing change without sacrificing their successful sales-led Go-To-Market (GTM):

“You also want predictable and reliable revenue growth at the same time. And when you’re already a fairly good-sized company, you have to be very careful in your experiments because you can move the needle in a way you didn’t expect.”

Laying PLG on top of sales-led

Teresa led Stack Overflow’s product-led transformation last year, and is focusing this year on owning product-led growth. This process, Teresa asserted, is possible thanks to consistent and effective collaboration with the C-suite folks, particularly the chief marketing officer (CMO) and chief revenue officer (CRO).

Even with the help from leaders across the org, making the move to PLG while balancing the sales-led motion came with a lot of unknowns.

“I saw a lot of stuff written about hybrid growth, which I didn’t love. I found in some small part of the internet: full-growth strategy. That’s actually what we’re calling it: full-growth strategy.”

Stack Overflow’s GTM was divided into two unique models: managed-sales and self-serve. This strategy was a major change for the business, but expected.

“There’s always going to be pressure—natural tension, healthy tension— between a managed-sales process and folks who are trying to drive PLG,” Teresa said.

When leveraged correctly, that healthy tension bolsters any success that managed-sales and self-serve GTM motions can achieve. For Stack Overflow, it was the company’s change in focus—specifically on proof of value as a part of PLG—that benefited both GTM strategies.

Two types of leads, one sales flow

This change in mindset helps the managed-sales side convert and handle enterprise sales more effectively. In particular, they turn to product usage data gathered by self-serve users and try to determine which users are most likely to convert via managed-sales.

According to Teresa, there are two types of leads that come in from the product:

• Product-qualified leads, or PQLs, are the higher value of the two. These leads have been using the product actively for a certain amount of time and have invited other users.
• Product-influenced leads, or PILs, are leads who may have signed up for a freemium plan but haven’t been very active in the product. The goal is to see if these leads can be leveraged in some way to be of value to the revenue org as a sign of interest.
  • For example, if five people from a company sign up for the product, that’s a good indicator of the company’s need—even if those five users abandoned their freemium instance. In this case, Stack Overflow might reach out to conduct a managed-sales motion.

A sales development representative can contact a company and tell them that there might be a pain point in their organization—making employees want to look into a Stack Overflow solution. Providing context and use has proven to be much more successful than a cold-call from the sales team.

On the other hand, having self-serve as an option aligns with the wants and needs of Stack Overflow’s target customers and meets them where they’re at.

“Engineers often don’t love talking to salespeople. Of all of the functional areas, engineers prefer more of a product-led or self-serve option. That’s who our users are. That’s who our buyers are.”

Encouraging managed-sales and product-led sales to work in tandem by applying targeted and timely sales pressure has been a successful strategy for the business.

From free trial to freemium

Even before they formally started experimenting with PLG, Stack Overflow had built-in lower tiers and had been testing free trials. When Teresa joined, the issue was that free trial wasn’t being instrumented in a way that allowed them to see how cohorts were progressing, specifically who was doing well on the product and who wasn’t.

The company’s decision to create a freemium offering was driven in part by insights uncovered from free trial usage.

• Different teams and orgs did not take the same time to understand product value. “We had better conversion by letting people take as long as they need…then they’ll be willing to pay for the product.”
• Freemium is more of a process, involving the creation of basically a whole new product with all new business considerations. “Once you give somebody something for free, you can’t really take it away.”
• A free trial was simpler, as businesses could dip their toes into PLG. “What you’re basically doing is taking one of your tiers that you already have and giving them a coupon code for a certain amount of time. Then they have to convert.”
• Freemium by contrast, requires limits such as feature gating, number of users, or usage volume.

Ultimately, there’s a really delicate balance to strike. According to Teresa, “You have to really manage between being conservative, but also you need to give them enough in the free instance that they’re actually going to get value,” she said. “And you’re going to get the adoption and engagement that you need to be able to get them to pay for it.”

Ultimately, there’s a really delicate balance to strike. According to Teresa, “You have to really manage between being conservative, but also you need to give them enough in the free instance that they’re actually going to get value,” she said. “And you’re going to get the adoption and engagement that you need to be able to get them to pay for it.”

New motions = new metrics

Layering product-led growth led to a recalibration of Stack Overflow’s measure of success and perceiving a user’s realized value. With more teams becoming stakeholders in the customer journey, making sure that metrics were aligned and accounted for became a much more convoluted ordeal. Fortunately, Teresa and the team at Stack Overflow came up with a strategic way to navigate this shift.

“We actually went through and did a full RACI [matrix] through the whole programmatic customer journey,” Teresa said. They assigned accountability and responsibility for each phase to a specific group throughout marketing, sales, product, or product experience.

Not only did it demonstrate how every team was a stakeholder in various parts of the customer journey, but it was really useful in determining who is accountable for which top metric and the sub metrics below it.

According to Teresa, determining the appropriate activation metric was what was most challenging for the team to wrap their heads around.

“We’ve finally come up with our ‘North Star’ metric, which we call ‘knowledge reuse,’” she told us.

Knowledge reuse, which measures how frequently content is accessed or consumed, ties back to the value derived by Stack Overflow for teams’ users.

When it comes to knowledge management, “You want to have one good version of the answer that everyone can leverage. That’s really what we’re about.”

“[And] so our activation—where we think people see value—is when we start getting that knowledge reuse ratio, where you’re reusing more knowledge than there are questions being asked on a regular basis. That’s where we create value and deliver impact.”

Creating a true product ecosystem

The value proposition of the Stack Overflow for Teams—the ability to get answers to questions in a technical community—really lends itself to product-driven traffic. The Stack Overflow team invested significantly in the UI that allows people to contribute content, leading to incredibly high page views.

“I love businesses that have multiple products in multiple product areas,” explained Teresa. When she joined the Stack Overflow team, they were treating all their products as separate entities. Building a true product ecosystem was one of her initial visions for her role.

There were multiple steps that led to the creation of this ecosystem.

Product research

The company serves an extremely varied set of users, particularly in regards to scale. The public site has 100 million unique users a month, and their biggest enterprise customer has about 100,000 users.

On the freemium level, the product is also serving much smaller teams. When a new feature idea arises, there has to be a conversation about whether it’s a feature they build first in the B2B SaaS product before bringing it into the public-facing product or vice versa. User problems are the same, but how do they differ at scale?

Developing tiers and features

Teresa recommends that businesses in similar positions keep moving features and functionality down the pipeline. She gives single-sign-on (SSO) as an example: “One of the things that will get you most called out, especially if you sell to technologists, is if your first paid-tier doesn’t have SSO.”

Even more fundamental than the decision of what are the must-haves for each tier is the decision of how many tiers to offer, and how their offerings lead into the next upgrade.

According to Teresa, “It is every bit as much an art as it is a science. You also have to look at the population—who’s using your product tiers—because you may assign product tiers thinking this is how users are going to self-select into, and then they surprise you!”

Key takeaways

• Use insights from product-led strategies to apply sales pressure in the right places. Product-led or sales-led isn’t a one-or-the-other proposition. In fact, it’s best when they’re working together. PLG strategies can help your sales team identify opportunities to convert users they could have missed.
• Offer a freemium tier so teams can realize the value of your product at their own pace. If your product is used by a wide variety of companies and scales, having a freemium offering removes the pressure of hoping your users adopt your product and realize value before their free trial expires.
• Align teams across your org on who is responsible and accountable for each metric. When incorporating product-led growth, the responsibility of revenue generation expands beyond the sales team. Have a conversation with all GTM-involved teams, from product, sales, marketing, and customer experience, to determine who specifically is in charge of optimizing each key metric.
• Leverage product research to determine tiers, feature access, and build a product ecosystem. Your assumptions about who’s using your product (and how they’re using it) may be wrong. Investing in product research and analytics is essential for informing your decision-making in regards to what tiers to offer and what features to allow access to.