Roles and Skills for Product-Led Growth (PLG)
Steven Forth is co-founder and managing partner at Ibbaka. See his skill profile here.
Product-Led Growth (PLG) is emerging as one of the most powerful growth models. Many companies are moving to a product-led growth model as either their main go-to-market strategy or as a complement to another model, most often sales-led growth. Ibbaka has been doing research into the different growth models, how they work together, and the roles and skills needed to succeed with each model.
Product-Led Growth is a strategy in which users begin to use the product before they speak to a sales person, and they may never speak to anyone in sales. Pendo defines produce-led growth as follows.
Product-led growth describes a business strategy that places a company’s software at the center of the buying journey—and often at the center of the broader customer experience. A product-led growth strategy counts on the product itself—its features, performance, and virality—to do much of the “selling.”
Product-Led Growth = Free + Value Paths + User Experience + Virality + Upsell
Most PLG companies offer either a free version of their product or a free trial. Users start to use the product and are able to complete one or more value paths (a value path is a sequence of actions that a user takes that leads to something of value). They have a great user experience, and recommend the product to other people that they work with, creating viral adoption. Ideally, there is some reason for to share the product with other people, perhaps because you want to share a file or work together on something.
DropBox is one of the classic examples of Product-Led Growth. Their home page is a great summary of a PLG strategy.
Atlassian Jira is another example of a product-led growth company. They have developed a suite of products that are a compelling example of product-led growth, beginning with Jira, the most popular way to coordinate the work of software development teams (and increasingly service teams).
Atlassian is especially good at cross sell using product-led growth. Using one Atlassian product leads naturally to another, many companies with Jira also use the Confluence wiki. The free versions guide one seamlessly to the paid version.
Atlassian grew to more than $100 million in revenues without a sales function, and even today, with more than $2 billion in revenues (2021) it has a very efficient revenue generation model. It spends less than 20% of its revenues on sales and marketing.
Product Qualified Leads
One of the hot topics in the PLG world is Product Qualified Leads (PQLs). A Product Qualified Lead is a customer who is already using the free version on your software in a way that suggests they are ready to buy. There are several ways to use PQLs once they have been identified. They can trigger messages and open new paths in the application, or they can be handed off to sales making a connection between PQLs and SQLs (Sales Qualified Leads). When PQLs convert into SQLs the company is running a hybrid strategy in which the product drives lead generation and sales takes over to drive conversion.
See Design your free offer to generate Product Qualified Leads (PQLs).
What are the key roles for Product-Led Growth?
Product-Led Growth requires organizational change. New roles will be added and the activities and skills of existing roles will change. What are the key roles for PLG and what skills do they need?
Roles Before Jobs
Roles are more important to organizational design than jobs. A company with rigidly defined jobs is probably too rigid to successfully adopt Product-Led Growth. The key organizational element is roles.
Roles can be used and combined in different ways.
Jobs are bundles of roles (and different companies will bundle roles into jobs in different ways)
Team roles are critical to the collaborative work
Ad-hoc roles (I am doing this off the side of my desk) are often needed to adapt and resond quickly
Community roles are important as many PLG companies rely on. strong user communities to support adoption and success
Below we share our current thinking on roles for Product-Led Growth. We are coding these into a skill and competency model that we will share with our users.
User Experience Roles for PLG
Customer experience is key to Product-Led Growth. If people do not have a good experience they will not use, and without use the whole PLG model collapses in on itself. This is user experience and not customer experience. The focus is on people as users, not buyers. User experience, or UX, is a well developed discipline and the skills needed in this role are well understood. Many of them are captured under design thinking. Some of the key skills needed here are …
Empathy - feel what they users is trying to do and how they want to do it
Prototyping - be able to explore and test solutions without committing to them
User journey mapping - understand the user journey from beginning to end, and how emotions and value evolve across that journey
User attention management - users today are busy and easily distracted, guiding their attention is key to user experience
Mental model development - one has to help users build a mental model of the application and the domains in which it operates
Guide - user experience design includes guiding users along paths, value paths and the paths that lead to conversion
Customer Focussed Roles for PLG - From Customer Experience to Customer Success to Customer Value
Product-Led Growth builds from Customer Experience to Customer Success to Customer Value Management. One critical difference between Product-Led Growth and Sales-Led Growth is that in Product-Led Growth these functions engage BEFORE the sale is made. Sales-Led Growth is typically a serial process, Product-Led Growth is a parallel process.
Customer Experience (CX) - Extends UX to the experience of all of the stakeholders
Customer Success (CS) - Moves the focus from experience to success
Customer Value (CV) - Moves the focus to the three dimensions of value (economic, emotional and community) and how these evolve over time
Some of the key skills are …
Empathy - the foundation of design thinking, is important across CX, CS and CV
Domain Knowledge - the help users and customers get value generally requires knowledge of their business and role
Customer Journey Mapping - extend the user journey to all stakeholders and layer in value and pricing
Value Paths - design and support the sequence of actions that conclude with something of value
Buying Process - in Product Led Growth UX, CX, CS and CV roles all need to support the customer buying process as they are playing the lead role in revenue generation
Value Management - ensure that value paths are being completed and support the full value cycle
PQL Generation Roles and PLG
Product Qualified Leads (PQLs) are critical to companies executing on a coordinated Product-Led Growth and Sales-Led Growth strategy. This is so important that it deserves its own role to support it and take accountability. It is a version of the lead generation role seen on many sales and marketing teams.
In Sales-Led Growth, the lead generation role is tied to marketing. In Product-Led Growth, this role is more closely aligned with product management and with customer success or customer value management.
PQL Definition - defining PQLs is a new skill, one that product managers and the PQL Generation lead will need to collaborate on
Usage Tracking - PQLs are identified by how the user is using the application, usage tracking is a key skill
User Stories - defining, tracking and supporting the user stories that lead to a PQL
Value Paths - the most compelling user stories are those that are based on value paths
Value Communication - users may be getting value but not be aware of it, to prime a user and convert them to a PQL one needs to communicate value
Collaboration - the PQL manager is the glue between sales and product
Product Management for PLG
The product manager’s roles change under PQL. There is a lot more focus on the free version of the software as this is what is doing the selling. Too often, the free version is a reduced version of the main application, fenced in some way (by time, by functionality, by capacity). In PLG, the free version deserves its own design focus.
Design for Value - economic, emotional and community value need to be well understood and from of mind
Value Paths - design for value is the design of value paths
Connecting Value Paths - to support conversion, cross sell and up sell it is important to be able to connect value paths into chains
Design for PQLs - PQLs are new to many people, and product managers need to be able to design products that will generate PQLs
Network Effects (Viral Software) - PLG works best with viral applications, and product managers in PLG companies need to understand how to make these work
User Experience (UX) - UX is important in all applications today, but it is even more important for PLG companies, the product manager needs a good understanding of UX principles and must be able to guide and coach the designers and engineers
Customer Experience (CX) - extends from the user to all of the stakeholders, and in B2B there are always multiple stakeholders
Customer Success (CS) - product managers need to be able to work closely with the customer success team, understand their needs, and support them
Customer Value (CV) - at the end of the day, the product must deliver value, economic, emotional and community value
Usage-Based Pricing - many PLG companies are moving to usage-based pricing, as the prime pricing metric or as a complementary metric, designing products to take advantage of usage-based pricing is a key topic
Sales in a PLG company
There are very few pure Product-Led Growth companies. In most companies, PLG is more of a lead generation strategy than a sales strategy. Sales continues to play a critical role in conversion. But the role of sales changes in some important ways under product-led growth. The first is the focus on the product and how the product supports the customer. Sales reps in a PLG company (or more accurately, a company that is leading with PLG and supporting with Sales-Led Growth)
The most important shift is that sales needs to be able to understand how the users have used the application, and how they have gotten value, before engaging. One may even want to have a usage dashboard, connected to the PQL, that is designed for use by a sales person before they engage with a PQL.
In addition to all of the traditional sales skills, sales people in PLG companies need to layer in …
PQL Interpretation - a good PQL will give insights into how the user is getting value and the sales approach that should be taken
Usage Analysis - PLG is about how the product is being used, and there is usage before sales is engaged, understanding usage is critical
Value Paths - the usage that matters most is value path completion (users that are not completing value paths are not PQLs)
Connecting Value Paths - the PLG sales process often involves connecting a value path supported by the free version with the value path the sales person is selling
Usage-Based Pricing - given the shift towards usage-based pricing, sales needs to be able to explain the pricing, estimate contract values and make pricing predictable
Data Analysis Roles for PLG
PLG companies are data-centric and the most important data is the usage data. Data analysis is critical to success and PLG companies hire a lot of data analysts. What skills should they be looking for?
Predictive Usage - being able to predict use is critical to managing PLG companies, this is the foundation on which almost all else is based
Predictive Pricing - if usage based pricing is used, then one wants to extend predictive usage to predictive revenue and pricing
Value Path Analysis - What are the steps in the value paths? Where are people dropping off? What signals that completing a value path once will lead to it being completed again? There are many places in value path analysis where data analysis is valuable
Value Analysis - What value drivers are providing value? How much value is being provided and how is that value changing over time?
Clustering - users and customers are not all alike, finding meaningful ways to group users and customers is a key goal of data analysis
Time Series Analysis - understanding change over time is important to PLG companies and needs to happen for individual users and for clusters
Machine Learning - all of the above analysis will be improved with machine learning, understanding of principles and experience with the basic tools is important
Role Coverage and Skill Gap analysis for Product-Led Growth
With all of these new roles and skills companies moving into Product-Led Growth will want to assess readiness and have a plan to fill roles and close skill gaps. Ibbaka supports this through its Role Coverage and Skill Gap Analysis service. Contact us at info@ibbaka.com if you are interested. It is a straightforward process and results in an actionable report.
Once you have identified any gaps there are different ways to close them.