Most Software-as-a-Service (SaaS) applications operate on a free pricing model. Meaning it’s easy as pie to create a seamless and
Most Software-as-a-Service (SaaS) applications operate on a free pricing model. Meaning it’s easy as pie to create a seamless and natural hands-free sales process. All a customer has to do is to sign up and they have full access to the product. This already demonstrates a natural leaning toward a product-led approach.
Why perform sales pitches when your product can do it for you? Get the word out there that your product exists, and the customers will self-educate on what your product does and how to use it. Give the power to your product, and witness product-led growth.
Becoming a product-led organization does require a mindset shift, but with the right tools and advice, your products can speak for themselves.
What is a product-led organization?
Provide the best product possible, and the customers will follow. This is the ideology behind a product-led organization. The product comes first and every strategic, marketing, and priority decision is made with the product in mind.
Being a product-led organization is about getting the best product into the hands of as many customers as possible. Organizations with single products like Slack, Canva, and Netflix are product-led. But some organizations are product-led while having various products available.
Take Amazon, for example, they have many products but remain as a product-led organization. Amazon has products like Audible, Amazon Plus, and drone delivery services, but even their online store is a product that leads their design. Giving customers the best shipping experience possible is what Amazon sells to the masses.
Google is also product-led, and while they develop new technologies all the time, if the product made from those technologies doesn’t hold up, it gets scrapped. Google Glass was a technology-led decision, but it flopped because Google didn’t make sure the product was in demand.
Most SaaS are product-led. That is not to say there aren’t sales-led SaaS products, just that it is becoming the main way to distribute SaaS. Software-as-a-Service naturally lends itself to adopting this approach, as granting access to online services is simply a click of a button, unlike software that needs to be installed on-site.
Why is this approach beneficial?
With a product-led approach, the customer’s first interaction with your organization is through the product. The product speaks for itself and it can be very beneficial to an organization.
All that is required is for an interested customer to find the landing page, and your product will do the rest. It’s that simple. Letting the product do the work for you makes for higher conversion rates, and if your free product is what the customer needs, they will also market it for you. Word-of-mouth marketing is a crucial tactic for the longevity of products, and customers are much more likely to spread their praise when it’s an easy and simple process to reach what they’ve been looking for.
Instead of investing in sales, you can invest your time and money into making the best product possible for your audience. The real-time feedback that you receive can be utilized to amend your product over time, to grow the product and to provide the customer with everything they’re hoping for.
How to become a product-led organization
Turning a sales-led organization into a product-led organization takes some finesse. You can’t just wake up one day and abandon your sales team with the hope that your product will do the heavy lifting for you. You need a plan to make this work.
1. Mindset shift and evaluation
Becoming a product-led organization demands a re-focus. This is a time to look at your entire relationship with your product from a different perspective. To better understand the product-led mindset, let’s look at some of the other common organizational strategies.
As a Sales-led organization, the focus is on acquiring and retaining customers. The aim is to close deals and do everything in your power to retain customers, even thoroughly personalizing products to meet the specific needs of each customer. The downside with this approach is it limits the scalability. While you can provide what a few high-value customers need, you wouldn’t be able to scale it indefinitely while keeping the sales customized.
As a Visionary-led organization, you provide an inspiring personality for the customers to follow. Steve Jobs and Elon Musk are good examples of visionary leaders. While both Apple and Tesla are also product-led, their visionary leadership puts them ahead of their competitors. Visionaries are very rare, and it can be difficult to make it in this market.
As a Technology-led organization, the development of new technologies is at the forefront of your strategy. But without a product to develop out of those technologies, you may have difficulty finding paying customers. Some companies, such as Meta (formerly Facebook), are large enough to invest in a technology-led approach, but you can already see the public push-back to Meta’s metaverse technology. It is not currently a product the customers want.
As a Product-led organization, the focus is on product development. With this approach, you’re developing a product that aims to hit an extensive breadth of people rather than a handful of paying customers. You need all teams to understand the shift in mindset.
This is where collaboration is needed. Firstly, establish where the organization currently sits in terms of the common approaches. Then, meet with all departments within the organization to gauge feedback from as many users as possible. This is where you will begin to evaluate your current situation, and how each department can be utilized within a product-led environment.
Strategy is where the real plan comes into play. Without a clear product strategy, you will lack the necessary harmony to shift your organization from sales-led to product-led.
You’ll also need to reinvent the customer journey. Make a switch from taking qualified leads and turning them into sales, and start funneling your customers to try your product. You’ll have to adjust your marketing strategy and funnels to bring customers to your product and let the product do the sales pitch for you.
Pricing in sales-led organizations considers the cost of acquiring qualified leads and turning them into sales, which is usually very high. With a product-led approach, you can reduce your prices. More customers paying less can provide a much higher revenue and a more stable one. Losing a high-value customer when you only have a few can be a deathly blow. You may also want to re-evaluate your pricing to consider the element of customers onboarding themselves.
3. Get the right tools in place
Use every tool at your disposal, and consider acquiring new ones to help make aspects like product discovery, product development, road mapping, product management, and customer feedback management a breeze.
Tools aren’t just a means to get things done; they can significantly impact your mindset. As the old adage goes, everything looks like a nail if all you have is a hammer. Make sure the tools you use have the product in mind. You might need to replace some sales-specific tools.
Don’t forget to define success. You cannot measure success without data, and without the right tools, you will have no data or no way to analyze it. The data you collect will help you identify success and lay the groundwork for future developments.
Tool bloat is one potential pitfall you can avoid by choosing a tool covering as much ground as possible. A tool like Craft.io is well-positioned to handle many, if not all, of your needs when shifting to a product-led approach.
4. Collect customer feedback to better the outcome for your audience
Customer feedback is the cornerstone of any successful product-led organization. Without knowing how your customers use your product, you cannot improve it. You need an outside perspective on your product. A single customer isn’t always right, which is why the sales-led approach to product development isn’t sustainable. But many customers usually are correct, and you should listen.
Collecting, managing, and analyzing customer feedback within your product management tool can make it straightforward to find links between your decisions and their outcomes. Pick the tools you’re going to use and the data you want to collect right from the start. You don’t want to leave this step for last, as that may result in incomplete data, or worse, no relevant data at all.
The sales-led approach is dangerous, with more and more customers looking to experience the product before making any decisions. The cost of acquiring customers is high, translating into a higher price for the customer.
However, with a product-led approach, you can expect your customer base to grow organically as you invest in your product. The less friction your customers experience on their journey, the more likely they will try and then buy your product. A better product with a lower cost is a win for everyone.
The shift to product-led doesn’t have to be painful. Pick up a tool like Craft.io to help you transition. Make the shift in mindset, plan out your path to becoming a product-led organization, and don’t forget to listen to your customers; they may have great ideas for your product.