Product-led growth (PLG) starts with the end user. And a healthy PLG engine depends on users discovering your product through no- or low-cost channels, including word-of-mouth, organic search, product virality, communities, and marketplaces.
But Kyle Poyar of OpenView points out that as PLG companies grow past $10M annual recurring revenue (ARR), your larger accounts start to drive a disproportionate amount of revenue and incremental growth, and these accounts will typically begin their journey with a product interaction before they ever talk to sales. As a result, you'll manage to close larger and larger deals by simply allowing users to opt into a sales-led path or by adopting the product qualified lead (PQL) playbook. So, it's no wonder that PLG companies contemplate introducing an outbound motion.
In this episode of Product Led Revenue, Kyle gets into the outbound side in a PLG motion and its benefits. Kyle and our host Breezy Beaumont discuss a new era for PLG, challenges for PLG organizations, and how to handle person email signups.
💡 Name: Kyle Poyar
💡 What he does: Kyle is an operating partner at OpenView.
💡 Company: OpenView
💡 Noteworthy: Kyle leads OpenView's Growth Team, which is responsible for advising portfolio executive teams on strategies to increase revenue growth and dominate their markets.
Kyle specializes in pricing and packaging strategy, which is the most effective yet overlooked growth lever at a SaaS company's disposal. In addition, he's an expert in product-led growth, optimizing go-to-market strategies, and SaaS benchmarks.
⚡ Benefits of an outbound motion.
Many companies with a PLG model do not do pure outbound in the classical sense. Still, many of these companies are interested in finding ways to get better results via more sales tactics. According to Kyle, it takes a while for cold outbound efforts to see real results, and it takes a long time to get folks even interested in conversion rate. "Once you get someone to become a lead, conversion is maybe as much as two to 4% in a cold outbound model versus more than 10+% in a PQL model. [...] What's fascinating about that opportunity around going outbound in a cold way is that you can really target folks that you see in your ICP, which you learn from working closely with folks from a self-service basis; you can be really targeted. You can also test different messaging with that persona to understand how to build more into an enterprise use case or how to talk to your enterprise customers. There's a lot of data that you can collect in that outbound motion that can be helpful for the business."
⚡ Signing up for a free trial using personal email.
Even though companies see a lot of dark funnels when folks sign up with a personal account, Kyle is hesitant to require only business email from a customer. As he says, when folks sign up with a personal account, they might also want to test something on a personal device before bringing it into a business context. "If you're getting that many folks signing up with a personal account, are you paying for the sign-up? Are you paying for that lead, or are they coming inbound in a more organic way? If you're paying for the lead, there are tools that you can use, like metadata.io, that will actually give you insight into who that account is, and so you might be able to get the best of both worlds and get a lot more visibility into that dark funnel without requiring a behavior change from your user's perspective."
⚡A new era for PLG.
Recently, more and more companies are switching from sales-led growth to a product-led growth business model. While working with different companies, Kyle noticed that we are in a different era in terms of how people adopt products. "Software is so mission critical for businesses; they tend to have dozens, if not hundreds of software products, and it's really challenging for people to keep track of all those tools. And a lot of times there's just fear of adding tools that just add sprawl to that stack. And so we're seeing more companies try to embed their products within a user's existing workflow and be discoverable in a user's contact rather than being seen as a destination that someone has to log into."
💜 Christopher Miller's 3D Framework: Discoverability, Desirability, and Doability
"Easiest problem to solve is the discoverability problem. Is it just not clear what is supposed to be done? And how can you surface up in the UI? That is the next step you want someone to take by either simplifying the user experience, adding guides, or adding a checklist — just really making it obvious what to do next.
Once that problem is solved, it's about desirability — helping folks understand why they should take that next step and what results they're going to see. Some folks will include dummy data, for example, to show folks what the end-state looks like and play forward the story, which makes you wanna see what that end-state looks like for your own business, and so I think that showing more value and what's the outcome — it all encourages people to take that step.
And the following one is doability. So people know what they're supposed to be doing, know why to do it, but it's just really hard to do; it takes a long time. There are friction points, and that's a lot harder to optimize; it tends to require real product work. But if it's a doability problem, that's actually where your sales team can be really helpful."
💜 Challenges for PLG Organizations
"As folks think about product-led, their minds go to product management-led. And thinking through what's the responsibility of the product team versus maybe a growth team versus marketing versus go-to-market and RevOps — that challenge is something that literally every company I talk to is debating. It's like, 'Do we have different owners for self-serve versus enterprise sales, or does that actually create tension between the self-serve funnel and the enterprise funnel? Is marketing gold on revenue? Is marketing gold on sign-ups, on leads, on activated sign-ups?' So that's something where there's, unfortunately, not a one-size-fits-all answer, but there are some common challenges that folks run up against. And it's going to be fascinating to see how it plays out over the next six to 12 months. Because I think we'll get a lot more clarity around what the best practice organization looks like for PLG."
💜 The Role of the Growth Product Manager
"The way that they should think of their role is to be the most data-driven person in terms of understanding the funnel, understanding where there are friction points, and then focusing their time and their team's time around proving ways to reduce that friction and improve conversion in different steps. And then they tend to hand off that work to other teams to own in the long run. And so when it comes to this PQL, 'Where should we be focusing our other market resources? Who's most limited to convert?' I would say the growth team should run a lot of that initial analysis and experimentation, especially when you're trying to manage PQL at scale across a relatively large and segmented go-to-market team."
[03:22] "On the PQL side, there's a group of people that are going to be inbound PQLs. They're raising their hand; they proactively want to talk to you. They are ready to buy, and they have the authority to buy — the user is essentially the buyer or is very influential in the buying process. But then you've got companies where your user is just not in a position to ever be the person who makes the purchase but loves your product and is happy to help. And so one of the things I've seen folks do is they try to document the use case."
[13:32] "In PLG, we're always thinking about how to drive active use of our products. If the product is integrated into the place where you're already using another product 24/7, that's the ideal thing. You're constantly working for your users."
[24:14] "I would focus on identifying the company-wide KPIs that the sales team or go-to-market team is focused on improving to find ways to have the PLG motion support their ultimate goals."
[25:17] "We're seeing burnout with our SDR team; it’s hard to retain them. If that's the challenge that folks are facing, then you can start to think about ways to use your product as a marketing channel and essentially get people to be able to try before they buy and open up that funnel."