Let Your Products Sell Themselves
When making big purchases, how many consumers would buy the product without first trying it out? A new house? Not without a walk-through and a thorough inspection. A new car? Not without a test drive. A new evening gown? Lead me to the fitting room. A new perfume? Give me a little spritz first so I know what it smells like.
For many businesses, trying the product is and always will be an essential part of the buying process. It’s an undeniable consumer trend that is not going anywhere.
But there’s a much larger business trend evolving that will make product sampling much more of a reality across almost every industry sector. After all, there have been enough studies by now that show the sales cycle is changing, that consumers no longer want to deal with salespeople, have their email inboxes overloaded with irrelevant marketing pitches, or have their days interrupted with cold calls.
Instead of sales processes led by marketing and sales personnel, the new sales strategy is product-led, and it’s upending the traditional sales model. Instead of talking potential customers through long, drawn-out, and sometimes expensive sales cycles, companies now are giving consumers the keys—either literally or figuratively—and guiding them along their sales journey so that they see how they will benefit by using the product or subscribing to the service.
Product-led growth is a business strategy that relies on using your product as the main vehicle to acquire, activate, and retain customers, Wes Bush, founder of the ProductLed consulting firm and author of Product-Led Growth, explains in a blog post.
“Unlike sales-led companies where the whole goal is to take a buyer from point A to point B in a sales cycle, product-led companies flip the traditional sales model on its head,” Bush says. “Product-led companies make this possible by giving customers a way to experience the product for free, either through a freemium product or some kind of free trial. If the customer experiences a meaningful outcome while using the product, upgrading to a paid plan becomes a no-brainer.”
There are several forms of product-led growth.
FREEMIUM MODEL MOST POPULAR
The most common product-led growth strategy is the freemium model—giving users a free product or free, limited-time subscription—with the option to upgrade it for more functionality, according to Leadfeeder, a provider of B2B lead generation software. Company leaders recommend that the free version should let prospects accomplish the most basic tasks for which the product can be used.
“The premium options can then provide extra value,” Leadfeeder explains in a company blog. “For example, Grammarly’s free option runs a basic grammar check, but its premium option suggests advanced changes to give your writing an extra flair.”
Grammarly was founded in 2009 and introduced a freemium product in 2015. The company maintains a freemium business model, offering Grammarly Free as well as Grammarly Premium and Grammarly Business, which are paid upgrades.
“We only make money by selling these subscriptions, ensuring our business incentives align with that of our customers,” a company spokesperson said in an email.
“Our freemium model has been highly successful in allowing us to reach even more people worldwide as we deliver on our mission of improving lives by improving communication. It has also contributed to Grammarly’s significant expansion as we’ve grown to serve more than 30 million people and 70,000 teams globally, leading into milestones such as the launch of Grammarly Business in 2018 and our $13 billion valuation in 2021,” the spokesperson added.
In addition to Grammarly, other companies offering freemium versions of their products include Calendly, Dropbox, Slack, Zendesk, and Zoom, just to name a few.
Leadfeeder adds that companies offering free trials or other alternatives to freemiums can optimize pricing for product-led growth by focusing on the following:
- optimizing smaller contracts to build a bigger user base;
- supporting small contracts so they can grow and compound over time;
- setting pricing based on the value that customers perceive directly after or while using a product; and
- continually improving the user experience so people can more intuitively use the product.
The major drawback from the freemium model is that the company offering it has to invest resources in continuing to support the product for freemium users, some of whom will never become paying customers.
Companies also run the risk of the free trials cannibalizing actual sales.
“Just slapping on a free trial to your clunky enterprise tech that has a super long time to value might not be the best idea,” Bush cautions. “Users will have to slog through a bunch of hoops to figure out how to get value.”
Paddle, a provider of billing support and solutions for managing checkout, subscriptions, invoicing, and taxes, says there are three basic keys to a successful freemium model:
- Know the customer.“You may think you’ve got a killer feature set aside to be exclusive to the paid version of your product, only to find out that customers aren’t particularly willing to pay extra for that feature. Perhaps worse is the possibility that the feature for which they would pay big money is something you didn’t view as important and gave away in the free version.”
- Make product messaging clear.If your product messaging is off and you don’t advertise your value proposition the right way, then prospects never know how much better things can be if they upgrade to the paid version.
- Have a cost buffer: “Customer acquisition takes time. This is true whether you are using [pay-per-click] ads, [search engine optimization], or a freemium product to attract those customers. One of the reasons freemium fails is that companies that treat it purely as a pricing strategy fail to have a buffer set aside to account for acquisition time.”
Jumpmind, a provider of cloud and mobile point-of-sale solutions for large retailers, takes more of a collaborative approach to product-led growth.
“We come at things differently than anything else that I’ve been engaged with during my career,” says Clifford Perlman, vice president of growth and partnerships at Jumpmind. “We don’t assume that the customer that we are engaging with will agree to fit within a predefined box that we tell them they have to fit in. Our engagements are very collaborative.”
Jumpmind provides qualified prospects a proof-of-concept sandbox, a type of software testing environment that enables the isolated execution of software or programs for independent evaluation, monitoring, or testing. This enables the prospect to become comfortable with the solution, ask questions, perform some integrations, and be fully comfortable before going into full deployment. “Every part of the business knows what they are getting into when they move forward with getting themselves off their monolithic legacy system,” Perlman says.
Perlman credits this approach for Jumpmind’s last three customer wins, including the 750-store the Vitamin Shoppe, which was announced in the second half of October. “All of them said that [the sandbox experience] was one of the catalysts that kept them comfortable making the leap.”
Such a comfort level is essential when asking large enterprise customers to make such a large investment. Each retail location has multiple POS terminals, so any change is monumental, and failure would be catastrophic.
“Most people would rather have open heart surgery without anesthetics than go through a POS replacement because the risk is so high,” Perlman says.
Jumpmind didn’t start with this product-led approach. It evolved out of the company’s working with customers to solve issues beyond the scope of the initial platform, according to Perlman. “It’s in our DNA to collaborate with merchants. In the last year, we’ve become more and more comfortable giving prospects access to our environment in a sandbox, letting them get comfortable with our software and uncover any gaps that as future partners we will eventually have to fill.”
Pelman adds: “We always felt that if we gave [prospects] access to our software, they would be able to see the difference with our software vs. our competitors’.”
Jumpmind invests significant time and financial resources in its sandbox approach, Perlman adds. “I don’t want you to think that this is simple; there is effort from us up front. It’s not like we just flip a switch. But we believe that the investment that we make up front pays off in multiple factors through the engagement, during the project, and in the success of the implementation.”
DIGITAL TWINS
Another product-led strategy is to allow companies to employ digital twins, which is particularly popular when buying automation. With this strategy, potential buyers can simulate working with their new devices before finalizing a purchase.
Though the concept goes back further, several sources credit NASA for coining the term “digital twin” in 2010. McKinsey defines a digital twin as “a digital representation of a physical object, person, or process, contextualized in a digital version of its environment. Digital twins can help an organization simulate real situations and their outcomes, ultimately allowing it to make better decisions.”
Digital twins have been used in the manufacturing and technology environment for some time, typically enabling organizations to compare a virtual and physical machine or software to see how changing from a legacy system to a new one will affect operations. There are also system twins that can replicate entire factories, power grids, or transportation networks, for example.
McKinsey research indicates that 70 percent of C-suite technology executives at large enterprises are already exploring and investing in digital twins.
Vention is a company that has had success selling automation hardware and software through a digital twin approach, says Joe Wykes, its chief revenue officer.
With the digital twin, prospects create virtual machines to simulate how the physical machines would work in actual use, Wykes says. “You can program the machine to do everything that you need it to do. You can use a lot of different recipes, depending on your particular products and processes. You can select from approved designs and share in the community of other engineers. You take some common applications and build on what we have. It’s very easy and intuitive.”
Vention’s digital twin offering includes a library of 1,000 parts designed to work together seamlessly, according to Wykes. “You can build something that is incredibly custom depending on your needs. The ability to simulate and know what you’re going to get on the floor is extremely powerful.”
Vention has experience centers in Montreal and Berlin. Prospects who can’t go to one of the experience centers can use digital twins at one of Vention’s partner companies or directly stream the digital twin experience online.
Wykes is happy with the conversion numbers. “There is substantial growth and adoption. The idea that you can simulate your workplace and needs easily and rapidly is powerful.”
FREE SAMPLES AS POPULAR AS EVER
With traditional advertising delivering less bang for the marketing buck these days, many companies are turning to an old brick-and-mortar marketing gimmick: handing out free samples at the local supermarket. They’re finding that this is a way to quickly gain customers because you effectively get your product or service to people who are most likely to want what you are selling and in the very location where they can buy it.
The thinking here is that people will try something new if it doesn’t cost them money. They might actually feel an obligation to buy something when given something for free. And then they might also tell other people about what they got for free, creating a buzz.
Such a product-led strategy has fueled the growth of many companies, including health and wellness company Beyond Slim. The company raises awareness among prospects through social media, then offers samples to drive growth. The social media content relies on personalized stories to connect with potential new product users.
This social media and sample marketing strategy has helped the company grow 35-fold in the past year, according to Rachel Kellogg, vice president of sales at Beyond Slim.
Even with that growth, Beyond Slim is still a relatively small company. But the sampling effort is gaining renewed traction at much larger companies as well. Walmart, for example, has been holding weekend demonstrations with complimentary samples at more than 120 stores since June. Based on the success so far, the retail giant plans to expand this service to 1,000 locations by February.
IT REQUIRES A CHANGE
Sales reps need to operate differently when their companies follow a product-led growth strategy.
“The traditional sales role is evolving as more companies adopt product-led growth, especially for reps in SMBs or the midmarket,” says Adam Greco, a product evangelist at Amplitude, a company that allows potential customers to sign up to start using its software for free and get access to product analytics, campaign reporting, feature flags, and more. “With product growth driving customer acquisition rather than sales expansion, sales reps need to shift their focus from generating leads to identifying pain points in the product buying process for potential customers. We’re seeing those sales reps own responsibilities typically held by solutions engineers, and as a result, a merging of those roles.”
A growth-at-all-costs mindset is no longer viable, especially in today’s unpredictable market, Greco says further. “It doesn’t matter if you have tons of new customers coming in if you can’t retain them. Instead, companies should focus on relative growth. If you can grow faster than your competitors, you’ll emerge from [this period of uncertainty] as the market leader and will be set up for sustainable, measurable growth long-term.”
To do this effectively, product teams need to understand what people want from digital product experiences, which is still a mystery for many companies, according to Greco.” Understanding your users is critical to success as it allows startups to find product-market fit, grow their product, and convert users into customers. This requires trusted data, clear insights from data, and the ability to act quickly to improve customer experiences, all of which are returns on an investment into [product-led growth].”
It’s important to remember that growth can’t just live within the product organization, Greco adds. “Without a cross-functional growth strategy, you won’t see the success you want. Investing in growth marketing is a key part of an effective [product-led growth] strategy, and in Amplitude’s case, this team has today driven 110 percent year-over-year pipeline growth generated from the product through our investment in product-led sales.”
Product-led marketing, driven by the need to entice customers to use products sooner and the desire of customers to experiment with products before full purchase, will continue to grow, experts predict.
“As your company continues to expand, sales-led growth will feel less and less worth it,” officials at Leadfeeder contend. “The cost of each new sales rep doesn’t equate to the revenue they add. That’s why you should swap to a product-led growth strategy early, putting your product front and center. Starting is tough, but once it’s under way, you can keep expanding your user base while focusing on just making the product better for users at different stages.”
Phillip Britt is a freelance writer based in the Chicago area. He can be reached at spenterprises1@comcast.net.