A growing number of SaaS companies are shifting from sales to product-led growth models. According to the Product-Led Growth Benchmarks 2022 report, 58% of B2B technology companies have a PLG motion in place.
But product-led growth, while contributing to efficient growth, can be challenging. If you are moving from a sales model to product-led growth, you not only need to change the mindset of the teams but also adapt the teams to the new model. Although PLG stands for "product-led growth," the product team will have to work with marketing, sales, and sometimes services that will likely be outside your team.
In this episode of Product Led Revenue, our host Breezy Beaumont welcomes Partho Ghosh, senior director of product and growth at Hootsuite. Partho and Breezy get into the benefits and challenges of the PLG model. They discuss organizational structure in the PLG model, the difference between PQL and PUQL, and the free and paid plans offered by Hootsuite.
💡 Name: Partho Ghosh
💡 What he does: Partho Ghosh is the senior director of product and growth at Hootsuite.
💡 Company: Hootsuite
💡 Noteworthy: Partho brings more than a decade of experience in B2B SaaS, MarTech, and e-commerce, and typically, he oversees product management, product growth, product analytics, product design, and product marketing. Partho has led numerous product transformations at growing startups such as Unbounce, Bananatag (ex: Staffbase), and MEC eCommerce. In the past decade, he has helped three companies go through acquisitions. At Hootsuite, he focuses on transforming the organization from sales-led to product-led. On the side, Partho is a keynote speaker and has spoken at numerous conferences such as Mind The Product, INDUSTRY, Pendomonium, Traction Conf, Pavilion, and more.
⚡ The PLG model requires a different organizational structure.
Hootsuite was a sales-led company, but its user base changed a bit during the pandemic, and it started turning into a product-led movement. Partho describes what organization setup looks like today. "We've got a pretty large sales team from being a sales-led organization — about 300–400 people are on the sales side. CS rolls up into our sales org as well, and so CS, for the most part, has been pretty enterprise-focused; we've kind of separated success and support through that. That's been a big change — to be very delightful and ensure that everyone's having success. We've ensured that customer success and support is available to all of our customers. I sit in the product growth department, which has five different teams. My teams include monetization, activation — which includes onboarding — and engagement, which really focuses on the long-term adoption of all of our products. Then we've also got two other teams that are really experimental, all kind of under the product growth department. And I roll up to our CPO and our product department. What is unique is that we are basically directly in the middle of product and growth marketing."
⚡ How can you accelerate the growth of a company?
Hootsuite had seen an annual growth of 10% for several years until Partho advised them to conduct several experiments. One of them eventually led to a growth rate of about 30%–40% per year. Partho explains what kind of experiments were involved. "The experiments that we were running — a couple of them were really testing an SMB market and focusing on them instead of just mid-market and enterprise customers; there's a large focus on Fortune 1000 customers. And it was like, ‘If you're looking at expansion growth, go back to the roots of being the best in social.’ And during the pandemic, we had some hypotheses of a lot of mom-and-pop shops, solopreneurs, and even places like coffee shops requiring to sell coffee beans during the pandemic instead of the cafe experience — they could use Hootsuite.
And so those experiments were around testing different segments and markets, but what we had done was we really improved the onboarding flow."
⚡ PUQL: sourcing leads in self-serve and free plans to go directly to a sales-led motion.
After going through many changes in the sales organization, Hootsuite now has an alternative to PQL (Product Qualified Leads). According to Partho, these are product upsell qualified leads (PUQLs), which is basically sourcing leads in their self-serve and free plans to go directly to a sales-led motion. "When we first started PQL, it was really looking at our free product and our trial product and calling out PQLs from the areas. So we removed the notion of MQLs and SQLs from our vocabulary and tried to find people that use the product to hit that Aha! moment that then should convert. The difference with PUQLs is our separation of self-serve and talking about PQLs and self-serve versus those that are ready for our kind of mid-market enterprise sales-led motions.
So maybe, that's more of an internal conversation, but it just seemed like we weren't the only ones in that model."
💜 Free and Paid Plans at Hootsuite
"Right now, we've got a free plan and a free product; we've got a paid trial, so a free trial for one of our paid plans; and then we've got a sales motion where there's no trial period whatsoever. So, our free-to-paid monetization team that rolls up to me is accountable for that.
I also have a monetization team that focuses on expansion and improving ARPA. So, they also look at that, which is more going from our Professional Plan to our Team Plan or from our Professional Plan to our Business Plan, which are our self-served plans."
💜 What Goes Into Product Upsell Qualified Leads (PUQL)?
"It's a data model that we started working on about a year ago. It needed to go through a lot of refinement, a lot of changes, but the first thing I'll call out is that there's a lot of tech debt that might be very specific to Hootsuite. But I have been in SaaS for over a decade now, and it seems to be a very common thing. There's a lot of billing tech debt; there's a lot of tech debt with plans and entitlements and how that all works. One of the challenges that we had was that we separated our procurement flow. So we've got our subscription management platform or our billing platform, but sales-led deals that are often six or seven digits wouldn't go through that platform; they would use something different, like NetSuite or something like that. And so a lot of data from our enterprise side was completely missing. So, a large part of it was consolidating that data, aggregating it, being able to then use it for this model. And the model really looks at usage behaviors. It uses mixes of what I would call customer success health scores along with key product drivers to then really quickly call out during the free plan phase or even the trial phase, 'Instead of this, let's call it a $1,200 a year product or a $6,000 plan on the midsize mark.’ They're probably ready for a bigger thing; they're more sophisticated. It's really just trying to predict that behavior."
💜 Optimization at Hootsuite
"Our product had both a free plan and a trial; a lot of other companies out there skip the trial phase completely because they have that free product and the freemium model. A lot of our customers kind of self-select, automatically going to that. We have some nudges that we've tested a lot. We use Pendo guides, which is like Appcues or WalkMe — basically, digital adoption platforms to easily test and build out different nudges, guides, things like that. There are a lot of products in that field. Any of them are really great. I'm pretty agnostic as to which one you select, but having something where you can easily put something up and not have to rely on development resources and then even A/B test them. So we connect our Pendo guides to Optimizely and experiment what nudges we have."
[05:09] "We're a PLG shop, and that means change — for myself in my role, if you're a CSM, if you're in sales, or if you're in marketing."
[16:49] "We're not focusing that much on finding direct leads for our sales team anymore, mostly because we are trying to be a true SaaS platform where our product management departments putting the best product they can out there."
[19:51] "We had a really large free entitlement change at the start of 2021. That drove a huge amount of expansion from Free to Professional, and today, it also quickly converts those customers who probably recognize that, 'Oh, I'm not gonna get the value I need from Free,' and moves them up to Professional."
[21:35] "Our challenge is that there are some social networks that are really hard to get connected from an API perspective, and it's really cumbersome for a user to go through. It's very technical vis-à-vis some of the other social networks where we have a 99% connect rate because they have made it so easy."