The Foundation of Product Led Growth: Create Products Customers Love

September 6, 2016

Editor’s Note: This is the second article in a series by OpenView’s Entrepreneur in Residence, Natalie Diggins, where she explores and defines product led growth. Read the first post here.

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 our last post you learned that a product led growth (PLG) strategy is a capital-efficient way to engage prospects, turn them into passionate customers, and drive explosive growth. Now you want to bring that kind of success to your own product practice, but where do you start? Free trials? Referral programs? Upselling your existing customers?

The good news: there is no one right answer, and regardless of where you are in the product maturation cycle, there are specific steps you can take that are right for you and your customers. You’ll learn more about how to do this in coming posts.

But before choosing tools from your shiny new PLG toolkit, make sure you’re building a PLG strategy on a strong foundation. PLG starts with Product. And it’s the underlying user experience – how the product solves the user’s problem in an effective, efficient, engaging, way – that has to be outstanding for any PLG strategy to be effective.

After all, free trials users will not turn into paying customers if prospects don’t believe that the product will meet their needs. Users won’t make referrals if they don’t think their friends will have a good experience. Suggestions that a user upgrade to a more advanced set of features will be ignored if the basic functionality doesn’t deliver as expected.

Expensify, Datadog and Slack are companies with robust PLG practices. Expensify is especially successful with automated customer success, Datadog with free trials and Slack with product virality, but as you’ll see in the examples below, they all build these practices upon a strong product foundation.

Creating Expense Reports that Don’t Suck

The website of Expensify, a San Francisco-based OpenView portfolio company, lays out their purpose in simple, clear language: to make expense reports that don’t suck. Tired of suffering from the pain of submitting expense reports, Expensify’s founders recognized there had to be a better, more efficient process. And they were right. Today, Expensify “has millions of happy campers”.

Jason Mills, Director of Sales and Success, shared with me their approach to the flagship product:

“Let’s be honest, expense reports are one of those things that no one wants to do, but everyone has to do. So we provide a very easy-to-use mobile app that has a great technology called Smartscan…You just need to take a picture using our mobile app on your phone. And then we’ll take all the interesting and relevant information out of that receipt. We’ll take the merchant name, the transaction date and amount, stuff accounting and finance cares about, and then attach it to a corporate card transaction, if that’s also something that your company is using. Then we go through the entire approval process, and voila. You get paid using Expensify the next day.”

These “happy campers” translate to the bottom-line: Expensify has a very low customer churn rate, a high user growth rate and positive word of mouth.

Building a Better Solution

Datadog, also an OpenView portfolio company, is a monitoring service for dynamic cloud infrastructure that delivers a unified, integrated view of platform services at scale. Similar to submitting expense reports, monitoring servers is not in itself a novel idea – it’s been around for decades. But Datadog has managed to build a successful and rapidly-growing business by simplifying and improving the experience.

I met with Alex Rosemblat, VP of Marketing at Datadog, in their New York headquarters. He explained:

“Datadog is taking a lot of things that have been done previously in monitoring companies, and made the experience so easy, so straightforward, so intuitive that it’s no biggie. Half of it is the fact that we do solve the needs and problems that our customers have. The other problem is that while other monitoring solutions have done that in the past, they were so difficult to use that even though they did solve a problem it was a problem to actually make it solve a problem.”

Datadog offers such a good solution that a large portion of their trial business comes from word of mouth. Happy customers = increased sales.

Your Customers’ Success is Your Success

Slack, a messaging and workflow software application whose mission is to make your working life simpler, more pleasant and more productive, focuses their product on enabling customer success. Like Expensify and Datadog, Slack is reinventing an old school product in new, interesting ways.

During an interview with Kelly Watkins, Head of Product Marketing at Slack, she shared:

“We really care a lot about this idea of customer success and customer happiness. And we’re trying really hard to enable customers to achieve what they’re trying to do with the product. And I think that focus on enabling people’s workflows, enabling their tasks really leads people to have a strong sense of affinity with the product.

Slack’s product makes their customers’ lives easier, which creates passionate advocates who become evangelists for the product.

Expensify, Datadog and Slack all deliver products customers love. They solve customer problems, they build a better solution, they enable their customers’ success. They have built a strong foundation from which they can achieve even greater success using robust PLG strategies. This is the secret sauce.

We’ll hear more about how they and others do so in upcoming posts.

Today’s Tip:

Many companies with successful PLG strategies use a freemium or trial version to demonstrate product value to customers prior to an upsell. Dialpad, a unified communications tool in the cloud, has taken this one step further. Their flagship product is a fully-functional IP-based business phone system. To get users comfortable with the service, Dialpad offers a free conferencing product called UberConference, which introduces customers to the company’s ability to radically reimagine and improve legacy business telecom products. A free trial of UberConference is the first step toward upselling customers to their paid Dialpad product.

Craig Walker, CEO of Dialpad told me:

“We felt that if we could do a free product without having it cost us a ton of money, we could use that to upsell to our premium product, and then use that relatively large base of conference call users to then go sell our ultimate product which is Dialpad. And that’s our unified communications in the cloud, business phone service. It would give us a nice kind of runway of happy users that we could then sell into and try to upsell them on additional stuff. So that was the strategy. We’ve been doing it for five years, and it’s actually shockingly kind of working, so we’ve been pretty happy with it.”

Have your own PLG strategy? We’d love to hear about it in the comments below!

Entrepreneur in Residence

Natalie is Entrepreneur in Residence at OpenView where she is responsible for consulting with the firm’s portfolio in a technical capacity. As the firm’s first EIR, Natalie works within OpenView’s Product & Engineering practice as part of OpenView’s Expansion Platform. Specifically, she helps OpenView’s portfolio companies set technical priorities, establish procedures and identify and support opportunities for investment and growth.