A Pattern for Product Led Growth Relationships

How Customer Relationship Models Affect Growth?

This is Part 9 in a blog series on Customer Relationship Marketing

A New GTM Philosophy??

For the past five years, Product Led Growth [PLG] has been the rage in the VC-backed companies. Modern B2B SaaS companies have discovered - and morphed - the best practices from consumer marketing such as ad-based user acquisition, free trials, freemiums and community based support to reimagine a new go-to-market [GTM] motion. Some go so far as to call it a new philosophy of building and taking SaaS products to market. Minimally, it is a bottoms-up, user based pathway to get software adopted within an enterprise. Companies like Slack, Dropbox, Airtable, Calendly are the poster children of this approach.?

This is not a general post on PLG or its philosophy. While PLG is critical to user growth, I identified it as one of three pathways into an enterprise in an earlier post . Long term, B2B growth depends on orchestrating across all three pathways. [See references at the end for a deeper dive into PLG].?

In this post, I focus on just one task: how does a model for Customer Relationships CR apply to the PLG.

And through that lens I explore these questions: what type of interpersonal relationships are necessary between a tech company and its users in PLG? Why are these important? What is a common pattern of relationship equity [i.e., relationship reach, depth or power] and in what order should a tech company build them??

Product Led Growth Still Needs Relationship Equity with Users

It is a common misconception that B2B tech companies pursuing PLG don’t need to build user relationships since everything should be “self service” and “scaled” without humans in the middle. While it is true that such companies can grow their business with low touch, and ultimately with low capital, they can only do so after their products have achieved product-user fit. That is, after a company has iterated its product to find a fit with a core set of users who adore the product.?

To understand the product-user fit and why a tech company needs relationships, we can apply the Jobs To Be Done [JBTD] framework.?

The company offers a new product that helps users make progress in their job in a way other alternatives cannot. This new way of doing the job triggers changes which may be simple or complex for the user.? Simple jobs can be setting a calendar appointment [Calendly ], storing files [Dropbox ] or signing a document [Docusign ].? More complex ones are applying for a mortgage, buying a rental property [RoofStock ] or running a background check [Checkr ].?

In all cases, the company needs relationships with users to help them mediate these product driven job changes - more complex the changes, more direct the assistance needed.

Over time, the company needs to reach and build relationships with an entire segment of users whose jobs can be improved by the product with as little assistance as feasible. But the first task is to focus on the right user segment.?

Begin by Estimating User Reach among Target Segments

To enter a market, the company needs to identify a segment of users it can reach who are ideally suited for the job their product can get done. Often, product led companies end up building products for users who may not constitute a large enough market. There may be multiple user segments a company could pursue. However, each segment is likely to have a different fit between the product and the job to be done in that segment. Therefore, it is important to identify the right target segment to enter. Such a segment should have a close product-user fit and also have potential to access a large number of users directly or through partner channels.

One can run an audit of the relationship reach for the market by counting users, numbers of segments and access to similar users through channels. This is similar to identifying the Total Accessible Market (TAM).? Once a target segment is selected, we can look at the type of relationships needed by the company.??

A Pattern: Product Led Growth With Low Relationship Scope

Example: Tech co selling a simple tech offering with low LTV to small business users???

Let’s look at relationship patterns for companies with low lifetime value [LTV] selling to small business users. Such companies are limited in how much they can invest in a user; so they have low relationship scope.

Their customer relationship orientation is that of an “Service Coordinator ” - with the aim to serve thousands of users by directing them to solve their problems on their own or through community. Customer support and community managers inside the company serve as these “service coordinators”.?

Relationship Equity Varies Across User Journey in Product Led Growth?

While its scope is low, the nature of the relationship varies over the user journey. Typically, this user journey is represented as a product led growth flywheel .The users are segmented in four different stages based on their use of product [Evaluators, Beginners, Regulars and Champions] and they need to take four corresponding actions [Activate, Adopt, Adore and Advocate] to progress to the next stage of their journey.?

Source: Product Led Growth Collective

We can see in the chart below that a company's CR equity builds at each stage. In the beginning, the relationship is focused on reaching the right users who can evaluate the product [free trial] or part of the product [freemium]. Once the beginners have had the “ah ha” moment of realizing the product’s value, the relationship shifts to scaling user reach through low-or-no touch sales within the target segment. Then, once there is a coterie of regular users the focus is to keep them adoring the product through self service support. And finally, a small subset of users can be converted to champions who publicly advocate for the product.?

Start with Relationship Reach, Build Depth and Add Power Later

To support such a scalable user journey, the company needs to build certain types of relationships in a particular order. It has to begin by building reach with the early users, then build relationship depth with its repeat users and over time build relationship power with its champions. For context, this is the opposite order to the account-led growth relationships.?

Let us look at the reasons for this sequence at each stage.?

Activate: Reach the Right Users for Product?

At the first stage, the relationship focus is simply to reach the right user for the product.?

Unlike in the account based pattern where the relationship is between buyer and sales person, here the relationship is between users and product manager. The aim of a product manager is to find a fit between the user and the job that the product can do for the user. This happens when the user experiences an “ah ha moment” upon using the product, when the job is done well, and the value is realized. At that time, the user turns from being a skeptic evaluator to an early adopter of the product.?

The PM leads the user relationship at this stage since user feedback is critical for shaping the product. She is often supported by a marketer to create outreach, a community manager to ensure education, and customer success manager to resolve product issues.? Together, they are building social capital with the users. Therefore team’s collective focus is on activating product free trial or freemium with the goal of having users reach the “Ah Ha” moment as soon as possible, i.e. the fastest TTV [Time to Value].?

Adopt: Invest in Reaching Beginners at Scale?

Once the product-user fit is reached, the company’s relationship mantra is to reach users at scale. The company invests in growth marketers who step in to help new users discover, try and convert to the product at scale. They try new insights and campaigns and open new partner channels to penetrate the target segment as quickly and efficiently as possible. The PMs focus on removing product friction: lowering trial and freemium effort, simplifying user onboarding and improving time-to-value. Community and support teams scale education and issue resolution to keep users active and satisfied.

Adore: Build Relationship Depth with Regulars?

Meanwhile, the relationship equity with current, regular users shifts to depth. The relationship is now mediated through customer success and community teams. As users engage more with the product, it becomes part of their routine, a habit. PM teams add new use cases, and new ways to engage deeper and longer around the core JBTD [Job-to-be-done]. At this stage, the company builds deeper social capital with the regular users. This product adoration is reflected in user comments, surveys, scores - and renewals.?

Advocate: Grow Relationship Power with Champions?

Once the company has a stable of regular users, it can start shifting to building relationship power among a subset of users for whom the product has become critical. For such users, the product is more than a habit: it is a transformational tool in how they achieve their goals. By building high social capital among this group, the company can convert a few such users into champions. Champions are private advocates or public evangelists who can influence other users. Within their companies, they run user groups, provide early feedback to PMs on product roadmap and may even join product advisory boards due to their deep product knowledge.?

Champions play one more role which is underestimated: they can influence buyers within their company. This can be a game changer. Most PLG companies seek to expand their product usage from a few individual users to teams or department groups to all users within an account. Along this path, sales teams need to build relationships with buyers. User champions can provide the sales teams a credible access and open the door to Account-Led Growth.?

For this reason, companies invest in people [community managers, developer relations, etc.] to grow and nurture relationships with champions over time. Similar to account-based growth strategy, this relationship equity with a coterie of champions is perhaps a company’s most critical asset for expanding deeper into an account, and for entering new segments and channels.?

In summary, when pursuing a product-led growth with low relationship scope, a tech company needs to begin with product-user fit, and once that is achieved, build relationships at scale with early adopters, and then build relationship depth with core users, and finally convert a few power users into advocates to expand reach among others users, segments and channels.

Key Takeaways

• Product led growth is a popular and capital efficient growth pathway for modern SaaS companies.
• The scope of customer relationships is low for PLG companies, but they still need to assist their users at scale.?
• For this, they need a team of PMs, Marketers, Community and Support Managers who assist user groups through their journey. Their relationship orientation is that of a “service coordinator”.?
• The JTBD framework shows why each team member is needed to assist the user in completing the job for which the product is hired.??
• In PLG companies, the relationship equity builds over the four stages of the user journey or flywheel: activate, adopt, adore and advocate.?
• The initial goal is to have the users try the product until they see its value; then to use it often enough to build a habit and finally, to convert a few users into champions.
• The corresponding order in which to build relationship equity is: first reach the right users, then build reach at scale, then build depth, and finally create powerful relationships.?
• Relationships with user champions can provide sales teams with access to buyers within a company, opening the door to top down, account-based growth over time.?

References?

• What is product-led growth? Productled.org
• What Is Product-Led Growth? A Definition & Why It's Taking Off - Wes Bush
• The Product-Led Growth Flywheel ProductLed.Org
• Free Trial vs. Freemium: Use the MOAT Framework to Decide ?
• The Jobs-to-be-Done Growth Strategy Matrix | by Tony Ulwick
• Customer Relationship Equity: Marketing Strategy , Palmatier and Sridhar?

This is Part 9 in a blog series on Customer Relationship Marketing.

Part 1 : Who is the Customer in Business Marketing?

Part 2 : Key Customer Relationships for Tech Offerings

Part 3 : Orchestrating Three Pathways into Business Customers

Part 4 : The Hidden Purpose of Customer Relationships

Part 5 : Pursuing Business Growth with APIs

Part 6 : What is Customer Relationship Equity?

Part 7 : Towards A Customer Relationship Model

Part 8 : A Pattern for Account Led Growth Relationships