Shifting to Product-led Growth

A common theme in a lot of CMO searches is the desire to find someone who knows how to do product-led growth models. The story for the hiring companies is somewhat similar – a company is looking to drive more volume sales with freemium models, or more e-commerce from what is today a classic MQL/SQL sales-driven model. Of course, product-led growth models are somewhat specific to software companies, and other types of companies where customers can experience the product before they pay for it.

The question for CMOs tasked with this change, is how do you make the transition from MQL driven to product-driven revenue?

Here are some ideas for those of you contemplating this change from MQL/sales to product led/e-commerce/sales.

Classic SQL Model is Sales Driven, Not Customer Driven

In the classic MQL/Sales model — the marketing team drives MQLs/SQLs and hands them off to the sales team. This is followed by endless meetings about bad leads, good leads, bad lead follow-up etc. (I couldn’t resist adding this). The sales team then takes these leads and turn them into money. Ideally, there might be a BDR team in the middle to help move leads through.

The product team, of course, is also engaged, but tangentially. The product team is generally responding to product questions and issues during an evaluation with the sales engineering team working as the front line of product information. The sales team and sales engineers are there to support customer trials in a very hands on approach. If the product is hard to install? No problem as the sales engineering team can help install. In a heavy sales approach, many product sins can be overcome. A customer looking to experience the product can even be gated requiring they talk to sales before getting a demo or the product. The sales team is very much the gatekeeper to products, demonstrations, product knowledge.

For a lot of companies and go to market motions, this is the correct model, and it works.

Product Lead Growth – The Customer is in Charge

Now let’s flip to more of a product lead growth model.

In this model, marketing drives trials/product downloads. Once the customer has the product, the sales cycle is somewhat out of the control of everyone. Product design is actually what is in control. A customer either gets to “wow!”  in the product or not. Sales and marketing can attempt to talk to people trialing the product but theoretically, there might not be a lot of information about who is even using the product.

Why no information? If the goal is to get usage, and usage drives purchase, then anything you put in the way of someone trying your product causes a reduction in conversion. In some markets, like developer tools, asking them for any kind of information drops trial amounts precipitously. Even when you collect information, the amount of Gmail accounts and spamminator emails can be high. Few prospects want to talk to you and get on your email and call lists.

A better approach is to create casual modes of on-demand communication where trialers and prospects can decide to engage with you to ask questions in a very safe manner. Slack channels, Twitter, online forums are all great venues. To do this, however, you have to staff these channels with people that can answer product questions. These aren’t primarily sales channels. If you treat them this way, prospects figure this out.

This product-led model is just very very different than an MQL/SQL model. In one model, product trial support is metered out to the most qualified prospects. It is a give/get model. I will help you if you tell me your budget process etc.

In the product-led growth model, it is a give give give model. Everything is focused on product adoption that hopefully at some point results in an e-commerce transaction or someone calling in for a quote.

Even with a product-led growth model, there are still MQLs and SQLs. Some customers want help with an evaluation. Other customers won’t try a product unless they first discuss the product with the company. This alternate MQL/SQL channel is perfectly acceptable provided you don’t warp your process by giving someone in marketing a goal to drive MQL/SQLs (Guilty! I did this once). Having MQL goals while also having product trial goals just doesn’t align that well. However, there will be a natural percentage of trials that will result in inbound inquiries for more formal evaluations.

Going from MQL to Product Led Growth

The main difference between these two models is the linkage between sales and marketing. In the MQL model, marketing drives MQLs. In the product-led growth model, marketing drives trials, and MQLs are not the focus. In fact, attempting to both collect MQLs and drive product trials will introduce a huge amount of confusion to the marketing team.

With a product-led growth model, prospects have your product. You want to provide them everything possible so they decide to purchase. This could include support, white papers, technical documentation – everything. Your entire goal and the goal of the product team is to remove friction so that customers can experience the product, and call you up to buy.

The MQL model is much more of a controlled approach where deal control is maintained with the company and sales. In a product-led growth model, the customer is solidly in control. Attempting to take back control, just causes friction internally and with the customer.

So how do you move from an MQL model to a trial model?

First, the product team has to drive this. The product team has to do everything possible to drive friction out of the product experience. When I have talked with company’s looking to go more with product-led growth, they are sometimes surprised that the CMO candidate is sort of saying “not my job.” You need to stick with this. There is nothing worse than trying to drive a product-led growth model where you as CMO see product issues in installation, adoption, and getting to WOW, but the product team is focused on features for enterprise customers, and the sales team is asking for MQLs. You can have your goals be “drive product-led growth”, but you can’t do it without the product team having this as their primary goal.

Second, marketing now drives trials. MQLs will happen, but you can’t goal marketing on this. So everything marketing does on the web site is to drive trials. You can still have a button that says “Talk to Sales” or “Get a Demo” — but withholding pricing? Don’t do it. People won’t try products unless they know the cost. What about registration pages before you can get product support? Don’t do it. It is friction. Believe the product will generate demand. You have to trust the process. You have to trust the product trial will result in product purchases through e-commerce or online quotes.

What is Sales Doing?

With this change, what does the sales team do? Is the sales team waiting around for people to call up or email and order? What do they do all day?

The answer is that sales is now a seperate channel to revenue. As e-commerce ramps up, more and more product revenue should go direct to e-commerce. The sales team can now figure out how to wrangle additional revenue from either existing accounts, or by trying to divine what is happening with the trials and being proactive in the larger accounts.

But wait, doesn’t this contradict some of the earlier comments? Not really. It just changes how sales interacts. In stead of being gatekeepers to information, they have to be more passive intelligence agents working to figure out what is happening in larger accounts.

Ideally, your product works great, and there are no issues. Ideally, there are no political issues in an account preventing adoption. Ideally, everyone reads your website and knows exactly how the product works and how it stacks up against competitors. But we know this is never true. So sales role shifts from responding to inbound leads, to trying to figure out how to add value during trials. The best reps know how to do this. The worst reps call up and try to qualify trials. If sales then pivots and spends a good amount of time watching product usage data, connecting the dots between users in large accounts, helping run best practices calls, roadmap sessions, sales becomes a value add in a customer-controlled sales approach.

Summary

This transition is not easy. But with the right set of metrics and goals, you can get the product, marketing, and sales team aligned and move to a product led growth strategy. The key is the role of product management to drive to wow, marketing’s requirement to drive trials, and a shift in sales thinking from acting as a gatekeeper, to constantly trying to figure out how to add value in the trial process.

Good luck!

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