Why B2B Marketing Needs To Care About PLG

For most of my career, I’ve been trying to figure out how to get to a 1% conversion rate between somebody filling out a form and leading that to revenue. B2B SaaS marketers who’ve been in the same shoes can tell you that’s been a good conversion rate from marketing to revenue. Over the years, I’ve realized and learned from so many peers that product usage is the ultimate intent signal. 

It’s not rocket science and some have figured it out a while ago that your best leads are your greatest users! Everyone is realizing that the product is a big part of the funnel now. And product-led is certainly a movement.

How it started and how it’s going

I have a long history of being in demand generation. I was obsessed with the funnel. Specifically, the traditional “request a demo” funnel, which looked something like this:

‘Request a demo’ funnel

 

Most marketing efforts are focused from the lead to demo stages and then passed to sales and success. Probably more than 90% of my time, my team’s time, and our budget over the years were spent creating a new sales pipeline and constantly thinking about how to improve our pipeline coverage. After the pipeline was created, other teams would pick up the ball. We did some customer marketing, but not nearly at the scale of demand generation. Our goal was the pipeline.

Not only my team and I, but most B2B SaaS marketers are in the same kind of job. And those of us still generating leads from saturated channels are spending more for acquisition every year. It’s great if you can achieve a good revenue conversion rate from your leads, but sooner or later the company will put a ceiling on your marketing budget. This is one reason why I think product-led growth is such an awesome opportunity for marketing.

You don’t have to wrestle with almost everyone else out there for your customer’s attention. Your customer acquisition, engagement, and retention primarily revolve around your product and usage in PLG. New signups, product engagement (churn mitigation), seat expansion (existing product), product expansions (x-sell)—it’s a whole new game for marketers. It’s not about the pipeline. It’s about users, growth, and revenue. 

A deal is never really “closed won” like in the traditional “request a demo” funnel. You’re always looking to expand. Marketing goes from delivering a pipeline to delivering on the entire lifecycle.

Marketing to the entire lifecycle

The big change

The paradigm(-ish) shift in the way B2B marketing operates is more like a bunch of course altering-changes led by the PLG movement, which I’ve come to develop through the 100+ customer interviews we’ve done as we’ve been building Inflection.io.

User centricity: OpenView and other industry influencers have done enough research to prove this. We are in the end-user era and the purchasing power is shifting (if not already shifted) from a buying committee to the actual users in the organization. 

Data and insights: We have so many more ways now to analyze and generate actionable insights from product usage data, putting your product at the center. Product data can tell you more about the customer intent, their pain points, and “Aha” moments with a better degree of certainty than their interactions with your gated content. 

Personalization: A Cyber Monday discount coupon is not going to cut it! Customers are expecting much more now that they have virtually endless choices. Delivering tailored experiences from the first touchpoint of the user journey is the benchmark now.

Acquisition: Think about how your budget for online ads changed in the past few years. You might even have been in that budget meeting where you had to justify your team’s efforts to get a few more leads with higher spending than last year. The ever-increasing customer acquisition costs (CAC) and decreasing (in some cases, the same) lifetime value (LTV) are the reality of saturated SaaS marketing channels. 

To summarize, the reasons why I think PLG will transform B2B marketing are

  1. PLG is about empathy, guiding, showing, and being user-centric.
  2. The product is now part of the funnel and also a channel. All your analytics are coming from product usage.
  3. The bar for personalization is so much higher. The best personalized experiences are truly about relevancy, not just simple replacements.
  4. The funnel we all obsess about is much different now. With the skyrocketing CAC, it has to make room to include expansion, upsell, and cross-sell.
  5. Bonus: There is a new intelligence muscle that everyone is figuring out for the first time. That automatically creates awesome opportunities. As a marketer, if you can figure out how to do things better with the product as your channel, this is a shift as big as social and SEM.

One playbook doesn’t fit all

There are definitely a lot of different definitions for product-led growth (PLG). There’s a popular misconception that PLG is just freemium which is usually true in the case of the “viral” products where people are sharing with others creating a new user loop—for example, Calendly. However, you don’t have to have a freemium model to be PLG. To be honest though, freemium and time-boxed trial definitely dominate the space.

So, what exactly is PLG? To me, product-led growth is offering an online signup or evaluation of the product, i.e., not having to speak with a salesperson to give it a whirl. It doesn’t matter if it’s freemium, consumption-based, seat-based, developer or open source-based, etc.—those are just pricing or package changes.

What exactly is product-led is blurry. What is consistent with product-led is the marketing focus after signup, whereas the traditional SaaS playbook is basically all pre-sign up (pre-opportunity, really).

Doing differently

PLG needs a few big shifts from what you are used to. In a traditional SaaS company you’re driving towards the initial pipeline, or towards getting demo requests so your business team can focus later on the funnel and expansions. But in PLG, you need to understand the product funnel—interacting with product data, being much more involved in the post-purchase lifecycle, multiple funnels (self serve vs. enterprise), etc. To put it simply, be savvy about product usage data and product analytics.

Another big difference is the marketing efforts pre- and post-signup. In PLG, customer marketing isn’t a junior employee, it is most of the marketing. In the old way, most of the revenue is from the initial sale. In PLG, the vast majority is after the signup. This requires different (more like flipped on its head) ways of thinking and operating. You also need to start caring about what were traditionally post-sale interactions like billing, user onboarding, support, etc.

In traditional SaaS, marketing rarely helps the product actually become better. With PLG, marketing is moving more into the product than ever before, and (truly) owning more of the lifecycle as a result.

Marketing and PLG

I see quite a few wishful-thinking phrases floating around like “a product that sells itself” and even entire articles on “how PLG can propel your SaaS company to success—no sales team needed.” In my opinion, a great PLG company propels to success through marketing and sales—moving upmarket, getting bigger deals, selling more seats, and so on. And, we see this with every unicorn-size PLG company.

If a PLG company is looking to sustain growth, sales and marketing are critical. I’ve interviewed dozens of marketing folks at companies that have a product-led motion. The foremost of the things I have learned is that everyone seems to be starting from scratch. Everyone is doing it a little differently. 

Leaders are super powering their companies with product-led. Being in marketing at a product-led company is a great place to be. I believe PLG is the future. But there’s so much to learn.

One of my goals for 2022 is to bring people together to share and, hopefully, make PLG easier. For everyone starting or already thriving in PLG, ProductLed.Marketing can fill gaps and offer value so that we don’t start from zero.

DR
Dave Rigotti

Dave Rigotti is the co-founder and CEO of Inflection.io, a stealth startup developing software for marketing teams at product-led companies, and ProductLed.Marketing, a PLG community. Prior to Inflection, Dave held marketing leadership roles at Adobe, Marketo, and Bizible.
You might also like ...
Product-Led Growth
A New Era for PLG: Introducing the Age of Connected Work
OpenView first coined the term product-led growth (PLG) in 2016. In those six years, PLG has transformed into one of...
by Kyle Poyar, Sanjiv Kalevar, Chris Gaertner
Product-Led Growth
Inventing Product-Led Growth: How PLG Went From An Idea to the Biggest Trend In Software
Product-led growth—PLG for those in the know—has become one of the biggest trends in software seemingly overnight. Buzzwords come and...
by Kyle Poyar