106. 3 Ways to Drive Product-Led Growth and Monetization
In today’s episode, I am joined by Eric Keating. Eric is a go-to-market strategist and the vice president of marketing at Appcues. He has worked in the SaaS world his entire career, starting with a company called Sonicbids, and has spent more than 10 years in marketing.
Eric is an expert in the concept of product-led growth, what we have called the free trial or the freemium experience on this show. Today, we’re going to dive deep into product-led growth and monetization.
What is Product-Led Growth?
“Product–Led Growth is defined as a go-to-market strategy that relies on using your product as the main vehicle to acquire, activate, and retain customers.” (Source: ProductLed)
Essentially, the name speaks for itself. In product-led growth, we provide a free self-service product for our visitors. In order to turn visitors into active customers, we have to hook them and provide clear value. Often this is done through free trials.
“Product-led growth is this concept that’s really gained a lot of steam and awareness over the last one to two years,” Eric said. “It’s the idea that your product is the primary driver of your user experience. Making your product available to try for free in a self-service capacity as often as possible is one of the most effective ways to go-to-market today. . . . Leading with a self-service free product experience is something that has been true at almost every single company I’ve worked at.”
Below, Eric has shared three ways to increase our product-led monetization growth.
1. Communicate with Our Customers
Communication is essential to monetize our self-service products.
“In this world in which you need to deliver more self-service, effective product experiences, there’s this need to guide and communicate with users inside of your application,” Eric explained. “That’s the type of product experience that, when you do this effectively, can really drive adoption of your product and create new monetization opportunities.”
In product-led growth marketing, we are offering a free service. But how do we continue to deliver value to our users, while also turning them into paying customers? The key is communication. We can’t just launch a free trial and hope that will be enough to monetize. We need to guide our users through the experience by raising awareness of the features our product offers. From there we can explain the advanced features and benefits they can receive if they pay for premium access to our product.
Communication is essential in increasing awareness of the benefits and value of our products. Surveys, announcements, and newsletters are a few examples of how we can spread awareness and communicate with our customers. The goal is to keep them engaged, keep them using our product, and ultimately, adopt it fully.
One of Eric’s biggest home runs was while working for Compete, Inc. Compete had thousands of free users every month, but they weren’t converting as many customers as they would like. So, Eric started a project focused on analyzing how their customers were using the product, what features they were using, and what features and benefits they found most valuable.
After doing the research, they created an incentive for the users to upgrade to the premium plan based on what they discovered through the data. He was able to double his company’s monthly revenue over one month because he understood his users’ wants and needs, and then communicated the value they were offering effectively through his promotion.
2. Focus on the Initial Experience
In order to convert our potential customers into active customers, we need to make sure they have a good initial experience with us and our product.
“One of the most important parts of product-led growth is having a fantastic initial product experience,” Eric said. “I’m talking about the first minute your user starts using your product. The first day, two days, of their experience is so critical, not only to whether or not you’re going to ultimately be able to convert them into a customer but also to their long-term retention.”
One of the biggest mistakes Eric sees companies make is flooding a new user with every little detail and feature about their product. When they give a customer a product tour, they think they have to show the new user everything. However, it often has the opposite effect of what they intended. Instead of feeling amazed at the product’s features, the new user gets overwhelmed.
“[The new user is] starting to use your product because they have a specific goal or outcome in mind, and your job is to get them to that goal or outcome as quickly as possible, not show them every aspect of your product,” Eric explained. “It is a phased approach. Get them to that moment, and then start exposing them to more. It’s this gradual process, and trying to do everything in the first minute can really mess with your activation rates and conversion rates.”
In order to get a new user on board, we really need to focus on solving their problem. A product tour should be about explaining to the customer how we can help them, not about how amazing our product is and why they need it.
3. Offer Level 10 Passions
How do you stand out? Puppies.
A few years ago, Eric attended an event with tens of thousands of attendees, and hundreds, if not thousands of vendors. As Eric and his team at Zaius planned what they were going to showcase at this event, they asked themselves, “What can we do to stand out?”
“We were still in the early stages,” Eric said. “The objective [was to] make sure that everybody attending this conference heard about Zaius, and that we were a familiar name from now on out.”
They asked themselves, “Well, what does everybody love?” And the answer came — puppies. They reached out to an animal shelter down the street from the event and asked if they could show off some of their dogs. If anyone wanted to take a dog home, they would cover the adoption fees.
“We had the [dogs] there for about an hour and there were crowds. There were lines to come up and see these dogs. Mission accomplished. We had a ton of interest, not only in the dogs but eventually in our product as well,” Eric said. “Ultimately, the objective was to increase our brand visibility, awareness, and recognition, and we did that.”
After three years with Zaius, Eric helped grow their customer count 100x and revenues 35x, raising more than $43 million in venture capital.
So, what’s the point of this story? Think outside of the box and discover your customers’ level 10 passions. When we do that, it will help to differentiate us and better connect with our potential customers.
One of the tectonic shifts that are happening today is for every hour and every dollar that our customers have to invest, they’ve got a thousand good things to choose from. There’s so much distraction. We can’t just be good enough. We have to identify their level 10 passions and connect with them through those (level 10 being a passion that is a driving factor in their life).
Identifying the level 10 passions of our target audience and building our whole business around those passions will make us stand out. When Eric brought in puppies to the event, he leveraged a huge level 10 passion for many of the attendees. There were thousands of vendors at this conference, but he became the priority when he added puppies to their brand.
In order to drive the growth of our products, we need to make sure we are identifying and connecting through our customers’ level 10 passions.
Thank you so much Eric for sharing your stories and knowledge with us today. Here are some of my key takeaways from this episode:
1. Communication is key to monetize our self-service products. We need to guide our users through their product experience by raising awareness of the features and benefits our product offers.
2. To convert our potential customers into active customers, we need to provide a great initial experience. The first impression really matters.
3. Our job is to show our customers that we can meet their needs as quickly as possible. We don’t need to show them every aspect of our product.
4. If we can help our customers achieve their level 10 passions, we will better differentiate ourselves and build stronger connections with customers.
Connect with Eric
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