Product Led Growth Explained With Wes Bush Of Product Led Institute

Product Led Growth Explained With Wes Bush Of Product Led Institute

Key Stats:

Key Takeaways:

  • Product is so much more than something you sell.
  • Don’t over complicate the product.
  • Understand the pain points of the customers before developing a product.
  • Understand the perceived value of the product.
  • Best products are the ones in which users start experiencing the value of the product immediately.
  • Shortening the time to value gives incredible benefits.
  • 40% to 60% of users who sign up for the product, use it once and never come back.
  • Simplify the onboarding process to reduce churn rate.
  • Failure to let people understand the full value of the product leads to a high churn rate.

Transcription:

Hammad:

Hey Wes, thank you for being on the show. So let's talk about who you are and what you do?

Wes:

Absolutely. Where would you like to start? There's so many places.

Hammad:

So I know you brought this really great book Product Led Growth. Let's talk about what came to your head that you wanted to write that book?

Wes:

Yes. So Product Led Growth before I even had heard about this new concept, I was doing it for years and years. And so for me it really started while I was working at this B2B SaaS company, doing very traditional demand generation, the kinds where you create a guide or an ebook or a white paper, you put it behind a landing page.

You request people to fill out their contact info before they get access to that. So we were using the very traditional demand gen process and it was until we launched a freemium product when I started to realize, Oh wait, okay. This old way is super expensive, like our cost per leads were anywhere from 50 to $150 per lead.

And then we looked at this freemium model and it was driving hundreds of thousands of users in a very short period of time. And so when that happened, it kind of clicked for me. I saw the product wasn't just something we sold. It was the growth engine for the business. And that's really what got me super excited about Product Led Growth, because your product is so much more than just something you sell.

Hammad:

So Wes, you said that you went, rather than hiding the product behind a wall, you actually made a freemium version of it. Was that freemium version of the core product, or you built another product, which you gave for free. And then whoever joined that product, just kind of upsold your core product.

Let's talk about that. 

Wes:

Yeah. This particular case, it was a completely new product that was freemium. And so that was really good because at that particular company, it was larger. And if you're a big company trying to just, you know, roll out freemium on your main cash cab products, I think it can be a really bumpy ride.

And so I don't usually recommend it to just make that big change right away for people. 

Hammad:

Okay, great. So let's talk about Product Led Growth itself and the book. 

Wes:

Yeah. And so what specific parts do you want to learn about? So let's talk about the whole process, man. I'm really keen to learn.

Wes:

Okay. So how to write the book or how it really is.

Hammad:

Oh, what's in the book. What do you teach in the book? 

Wes:

I could have just gone on for attention there about how to write it, but, okay. So when it comes to what is in a book, there's three parts. The first one is really just trying to understand about your strategy. Is Product Led Growth even the right fit for your business?

And in some cases, although product led companies, they have a much lower customer acquisition costs, and they're just way more capital efficient than their sales led counterparts. And there's some scenarios where it might make a ton of sense for you to have a sales led company. And let's say you're in a new market.

You're creating a blue ocean. Just to give you an example. Sales led companies are really helpful because they educate the customer in that particular case. But, right now in the world we live in, it's never been easier to create companies. And so every market is becoming a red ocean very quickly. And it's just like a matter of time before you need that product lead arm of the business.

And so that's the first part. And the second part of the book is all about. What does a product foundation look like, what is it really built on? And I argue in the book, there's really just three things. I think a lot of people try to over-complicate it, it's really just understanding your user, what their problems are, how you can help them communicate that value to them.

So they can really understand the perceived value of your products.

And then the last part is just deliver on that value as soon as humanly possible. So that's really the core foundation of building a product led business. And then the last piece of the book, which is my favorite, is all about how do you take that to the next level and really serve those users much better and create a product experience that helps them become a happy paying customer.

Hammad:

Let's talk about one of your clients or someone you knew, someone you know, who followed the whole book, the whole process. Let's talk about what kind of product they build using that process. 

Wes:

Yeah. So the main kind of applications I've seen a huge success for people on is really around tackling this whole concept of time to value, because I argue like a world class product experience. It's like this, you have your perceived value, what you promised someone, then your experienced value on the other hand and the best products in the world, they have that experience where it's really quick. Like you start using that product, you start experiencing the value of that product. Quick, but a lot of B2B SaaS companies, there's this really long process.

And sometimes that could take a week. Sometimes that could take a month before they actually understand. Hey, I really understand how to use this product, how it's going to help me. And so when you tackle that time to value, there can be some incredible benefits to your business. one of my favorite examples is that there are companies called snappa.com and so they have thousands and thousands of signups every single week. 

And when we looked at it, we found that there's about 27% of those sign-ups they just didn't activate their email address. And so it's a really common step for a lot of B2B SaaS companies. You just sign up and then you're kind of required to go into your email click. I'm a real human, and then you can go into the product. 

And so it doesn't seem like much, but what that's really doing is creating a longer time to value. 

And so when we actually delayed that step and didn't require first time users to do that. We saw its MRR went up 20% almost overnight. 

And so it's really kind of fascinating to me at least. Whenever you reduce friction and make it easier for someone to experience the value of your product, what the end result usually is upgrades because when people experience the value of your product, that's actually when your product has sold itself.

Hammad:

So I was talking to people where they said that, look, if they give freemium model where they just give out the part of the product free to their users, what happens is a lot of people come, you get a lot of people who just sign up, but they never use it no matter what, no matter how easy they used to make it, they still come and they just turn and move on to something else.

What do you say to that? 

Wes:

So in this use case file, I understand correctly, this is going to be someone who signs up for the product, uses it and then just doesn't want to actually upgrade. Is that the case? 

Hammad:

Yeah. 

Wes:

Okay. Yeah. So in those particular cases, that's always going to potentially be a way where someone's going to use the product.

They don't like it. And that's what's going to happen, but I actually found that that's not the majority of cases. What a lot of people think is that's what's going on is when you actually look into the data, here's the real stat that's scary, that most people don't know, 40% to 60% of your users who sign up for your products will use it once and never come back. 

And so that's just a massive amount of people who just never got the value. So a lot of founders will say to themselves, Oh, like people are trying at our products. They're just not coming back. Why is this? And the biggest things, because they haven't really thought about that first time user experience.

And so one of the core frameworks I share in the book is alphabet bullying and let's just take it out of the product world into bowling for a second. So you have a bowling ball. It's your first time playing bowling. Let's say you throw that ball down the alley. What are the chances of it going into the gutter?

If it's your first time, like most people they're going to get in the gutter. I know I did the same first time playing bowling. It's a gutter ball. And so whenever it comes to your product, we're expecting people to basically strike out in that first experience. And it's so unrealistic. It's like, wait a minute, buddy. This is not going to be that easy for that person especially if we don't even guide them in the least of what they need to do in that product to strike that. 

And so the whole kind of bullying, like framework I go through the book is really about like, how could we even use bumpers in the product to like walk people through those exact steps they need to do to strike it.

Hammad:

So how would that apply to a company that's really B2B, for example, one of my friends sells it's management software to plumbers, electricians, and construction workers. And now he tried the model where part of his product was free. And he saw a bunch of people sign up, but didn't know what he did, they would just churn. They will never use a product. 

So instead he had to put up a demo where people just signed up for a demo and they had to be taken to a sales person and then the salesperson had to sell them. And then, after that, the customer would be given to the onboarding team. And then there was this whole two months onboarding only then he found that he could sell and he could get people to use the application.

He tried this whole freemium approach. It just didn't work out. What would you say to a company like that? What should they do? 

Wes:

So, yeah, there's a ton of things that could potentially be the case, but I was literally on a call with someone else yesterday with a very similar problem. And I'll go through there, what we identified as the problem, and maybe it will be similar for your friends here.

So they have the same thing. They had a freemium model. They found that whenever they hopped on onboarding calls, there was a really high percentage of these people who were actually going to convert whenever they got them on a call. So when we're in the session, I'm like, okay, please get that sales rep, I want them on this call because they're doing the majority of the onboarding for you.

And so we started a conversation around, what do you talk to them about? What are you walking them through? And in this case, there was like a couple of key things that they needed. Zero. One was all about like segmentation, just understanding, like what kind of program you're running. And so the core problem we identified in this project case is people didn't understand the full value of the product.

They didn't understand what that better life was. And so whenever they're going through the onboarding, although it was super straight forward of what to do. They're basically giving people pieces of Lego, but they weren't showing people the end result of what they could build, but those Lego pieces and a lot of the times in B2B SaaS products, we promise people like here's your hot and ready spaghetti in five minutes.

Get it in five minutes. But they don't realize that a lot of times when you go to that restaurant, you gotta go into the restaurant and then the server shows you to the kitchen. There's all these ingredients and, like, you gotta make it. It's like, okay, there's a lot more to this than just that hot and ready to get spaghetti in five minutes.

So, sometimes it's product founders, we can go through, maybe arrange all the ingredients. So it's super easy for someone to make that final product using our product. And so, that's the big thing there's one piece is like, what does that end goal? How can we help people understand what that is?

And the second piece is how can we get people there way quicker. 

Hammad:

Great. Great. So let's talk about your book, the actual launch of your book. I mean, this is Launch Legend, right? So yeah. How did you launch your book and what kind of numbers did you do? 

Wes:

Yeah. So in the first month, there were about 5,000 people who ordered the book.

And so in terms of how that process works, like, do you want to go through that writing of the book?

Hammad:

Not the writing of the book. How did you launch the book? 

Wes:

Yeah. So it was self-published through Amazon. So that was one of the things. I did do quite a bit of research ahead of time on what are those categories that you could definitely win on.

And I forget the name of the actual product that I use, but there's like some really cool products out there where you can really figure out what are those categories that are the best for you. Just like any keyword research on Amazon. But that was one of the pieces. There was also my list which at that time was around I think, 5,000 people.

So it wasn't massive or anything else like that. I did have a waitlist before and that was going for about like six months while I was writing the book itself. So I was just gathering a lot of people and I did also send the book out to a bunch of like influencers, key people who had read it ahead of time and left reviews.

And so that was really in a nutshell, like some of the major things. I also had a few partners, that's our business just collaborates with that. We share each other's stuff. And so we were going ahead with that. And then guest hosting was the last one and then doing a podcast circuit. So yeah, it was basically like trying everything at once.

Hammad:

Let's go back a little bit. So when you built your email list over six months, were you staying in touch with the list over time or you were building the list and eventually you just did the launch. How did you measure the list? 

Wes:

Yeah, so I was doing a weekly newsletter at that time. 

Hammad:

Hmm. Great.

And then on the particular product launch, was there just one big event where you passed it out to your list and then you told influencers as well? Or it was incremental. 

Wes:

Yeah. So I just spent that entire week, like promoting for the first week of the launch. And so that was the main focus for everything I was doing and then there was that consistent effort at the end of it to whether it was like doing more of those podcasts and other pieces around the book as well. 

Hammad:

Great. So what was the purpose of the book? Did you win any contracts or any consultancy contracts after that? 

Wes:

Yeah. I mean, it's more of a positioning tool than anything else, especially in, I don't know my category right now.

And so that was one of the pieces is the positioning. But the second is, yeah, there is no doubt more contracts coming in as it was before if I compare it from that end, but it's really weird how you monetize a book because I wouldn't like to say write a book for the money? No. I mean, when you look at your royalties, it's really not much, it's not like a massive amount of money or anything like that.

So, yeah. It's like don’t write the book for the money, it's like, what will this help you get in? So in this case, I was also doing more speaking and stuff like that. So that definitely catered more towards that. but yeah, the main goal definitely was not the money.

Hammad:

But how did you have a one transition plan after the launch?

Wes:

Well the monetization has been a work in progress. I mean, some authors, they write the book as basically lead gen for a course or something like that. So it's more strategically well thought out than what our steering and maybe that'll change. Maybe the next edition of it we'll have more of that baked in.

But yeah, initially there wasn't much other than consulting, that time was one of the biggest ways of monetization as well as workshops. 

Hammad:

Great. And then what about the Product Led Growth? sorry, the summit. How did that come about? 

Wes:

Yeah. And that really came about because I was doing tons of these interviews for the book and I just loved it, like talking to some really smart people is always fun.

And so it was really just a way of like, you know, there's tons of podcasts out there. How could I differentiate and create an experience where It's a little bit different. You can get like a Netflix binge watch of all the content on a particular topic. And so I just wanted to experiment with that format.

After the first summit, I realized I'm like, wait, like, this is such a fun way to build an audience and authority at the same time. And so I just kept doing it till the end of July. We're going to have the fifth one. So it's been quite a few. 

Hammad:

Wow. So how often do you do them? Is it every couple of months?

Wes:

Twice a year. 

Hammad:

I see it. Great. Right. Great. So what's the plan going forward with your Product Led Growth and the product summit. 

Wes:

Yeah, so really building up the audience. That's one of the key focuses right down. And then the second part is going to have more of a platform approach where other people can create different courses around Product Led Growth, because it's not like you could just have a one-off course around this particular topic because it's like, your Sales, your marketing team, even success team like they all have to work differently in a product led business. And so it's gonna be really cool to put that all together and at least have a place where people can download all that information. 

Hammad:

Great. Well, thank you very much for being on the show and, great to have you on board and let's speak to you soon.

Wes: 

No worries. Thanks for having me.

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