Enterprise vs Product-Led Marketing
If you are a marketer at a product-led growth business, you need to know product-led marketing.
In the SaaS industry, there are two popular models:
- enterprise-level price points with a sales-led approach to marketing and…
- a product-led growth approach.
Enterprise doesn’t need as much volume, but you need to account for a long sales cycle and the responsibility of closing deals will fall almost exclusively on the sales team.
Product-led growth is more about volume and one-to-many.
It lets people interact with the product before buying in a freemium or limited-time, free trial format.
In product marketing, your marketing — and the product itself — will also bear the brunt of the work when it comes to new customer acquisition.
“With many SaaS companies, marketing is built into the product — that’s what product marketing is.”
With that being said, product-led growth falls on a spectrum.
“Say, my friend or client uses Zoom. I now have to download it to use it, but can access it for free as long as I want. But, as I see the features, I’m now thinking about being a customer. Using the product itself generates leads.”
Another common approach is the freemium model.
“It’s still product-led growth. The product is still the marketing vehicle. But it’s not as pure because there’s a time frame. The user needs to activate it and see the whole value of it during the free trial period.”
This can present a problem for SaaS marketers because most are focused on monitoring the content marketing funnel. Instead, product-led marketers track how people use their products.
To help SaaS companies master a product-led growth strategy that turns more leads into customers, I recently talked to Derek Skaletsky, Founder of Sherlock, a product engagement scoring solution that helps SaaS businesses track utilization.
Here are just five valuable tips that came out of our conversation about product-led growth in the SaaS industry.
1. Know where you are as a company
Before getting into a product marketing strategy, remember not to think of all SaaS companies as the same. There’s a difference between go-to-market and the other steps along the line.
And each one requires a different approach to growth marketing.
So, start by evaluating what your goals are as a company and team before building a strategy or collecting data that will help you reach them.
2. Leverage data in all aspects of marketing
The next generation of technology and product-led growth marketers will be even more comfortable with cloud-based software, marketing and PR enablement technology.
They’ll be dependent on data — not just to make decisions, but to also drive messaging.
“Cloud-only companies in the SaaS industry are actually still a small percentage. I think it will go more in that direction to the point that, in the next 5-10 year it will be majority SaaS — but I don’t think it will (or should) ever be 100%.”
3. Create a strategy and environment that’s nimble
Effective product-led growth also means that marketers should continually be more aggressive and flexible.
“Changing a website used to be something you did once every 3 years. Now, you should be running tests weekly at a minimum.”
Constant A/B testing is not the exception but the status quo.
4. Remember that customer success is everyone’s job
We tend to look to customer failure as a failure to just one department.
But blaming product sign-up and subscription churn on the customer success department is like blaming a waiter for a bad meal.
They didn’t pick the product (the menu), the benefits, the features or the price.
If you’re experiencing high churn, it’s time to dig a little deeper and…
5. Understand your customer engagement
There’s a simple equation to know if your product-led growth is actually leading to business growth:
New monthly recurring revenue = new deals – churn + expansion
Knowing that monthly churn rate is super important for your future ability to grow and will be very important to investors.
And you REALLY need to understand how your free users are using your product in order to convert more people into paid accounts.
That’s where Sherlock helps companies.
They help SaaS companies collect data and create a meaningful framework of signals and scoring. These are tied to key user behaviors and will signal your team when a user has met the established criteria.
Two important signals are knowing when a freemium customer is ready for a sales call and when a user is about to drop out of the B2B customer journey before buying.
By establishing these, your sales team will know how to spend their time and you can fine-tune the product marketing messaging to speak to the aspects users are most interested in.
It comes back to our opening idea: if you are leading marketing for a SaaS company, you are likely already applying product marketing to some degree.
Taking it to the next level requires understanding user engagement as granualarly as you can. This includes:
- The full customer experience finding, downloading and setting up the product
- What features they are using and where they spent time within the product
- The messaging and marketing used while they interacting with the product
- If they saw the value of the product and purchased
- Knowing the indicators that a user will share the product with others
Product-led growth is an expanded marketing role. It touches all parts of the customer journey and leverages owned, earned and paid media.
For more insights like this, be sure to like and subscribe to the B2B Lead Gen Podcast.