If you’ve recently converted to a product-led revenue model or are looking to do so, you don't want to miss this episode of Product Led Revenue with Breezy Beaumont.
Earlier this year, Dreamdata transitioned from a traditional sales model to a product-led revenue model, an enormous undertaking for any company.
Chief Revenue Officer at Dreamdata, Steffen Hedebrandt, talks with Breezy about the transition and what they've learned from the experience. He predicts where the company might be headed and the impact that PLR will have.
💡 Name: Steffen Hedebrandt
💡 What he does: Co-Founder and Chief Revenue Officer
💡 Company: Dreamdata
💡 Noteworthy: Steffen started as a B2B marketing leader, but now he's a chief revenue officer.''[Being CRO] comes with a lot of good stuff and a lot of challenges of learning how to do [things]. You know, it was easy back when I just had to ship over the demo calls and then have somebody else close them.''
💡 Where to find Steffen: LinkedIn
⚡ Product Led Growth (PLG) helps you compete with the more prominent tech companies in a way you couldn't before
Steffen and his team were frustrated with the old-fashioned sales model, spurring them to make the shift to PLR. "We quite often went the other way against Bizible, which is owned by Adobe, so a very enterprise with glowing references that they can pull off. In our opinion, tech is getting a bit old. It's not scalable; it's not smart anymore. We were losing deals to these guys. Even though we felt we had the better product. And that just led us to get to a place where we can show people that our product works instead of having to promise that it's going to work, not being able to pull on engineering resources to give proof that it works," he says.
⚡ Switching to product-led revenue doesn't mean lost sales
According to Steffen, Dreamdata has a free option with relatively few limiters, but that hasn't hurt their sales at all. "The quality of the traffic didn't go down; the conversions didn't go down. It was just very obvious to us that people prefer to buy software in a different way than having to be forced to talk to a salesperson," he observes.
⚡ Scaling up your self-service options
Since so many people are using the free version of their software, and the ultimate goal is to hook them to buy it, you need to make sure customers have a positive experience with your software. "As a side track, obviously we're doing more and more stuff that enables people to self-serve. [...] The whole point is that we want to get very close to people or empower them to self-service as much as possible. It's also making sure there are great intro videos that explain to them what to do and so forth," he says.
Embrace the positive pain that comes with shifting your sales model
"After the first month or two, we could see this is becoming annoying because we're too slow at doing these things to keep up with the demand, which is nice. So that's what you would phrase as a positive pain, but still a pain because shit, I'm not an hour late with sending this invite.
When you feel that positive pain, that's kind of your [stuff you can] identity that you can make more scalable, like, let's automate the invite of the email that you send out. Automate different parts of the processes. So we did it very manually, in the beginning, to not spend any resources at all on stuff before we had proof. We'd have to admit; we dropped the ball pretty heavily in April because I think that's where we went from having a hundred percent demo calls to somewhere around a third demo calls, two-thirds free signups in our product."
Focus your sales efforts on your ICP
"So it's about selecting who of the accounts actually looks like somebody who we could sell to, who could become a happy customer and then actually convincing them that they're also in the sales process because the tag says free initially. [...] It's been about helping them focus their attention on your ideal customer profiles. These guys you need to get into conversations with. Don't spend any time on [the rest] because we're not going to sell to them, or they're not going to be happy customers if they sign up for the product.
So we've done a lot of Internal dashboarding around who's signing up for free and looking attractive to help the salespeople spend their time better.
For example, we have five technical points that would condense the kind of - now you're technically onboarded to our products. Have they been onboarded? How much data do they have on the platform? Are they exceeding the limits of our free tool? It's a bit like having cheat codes for the computer game, but we can also see how much money they are spending on ads, which says a lot about their needs for an attribution solution.
Then you're obviously also monitoring: Are people logging into the product? How many sessions do they have within the product? So it's been a lot about helping the salespeople actually see who is hand-raising from product usage in some way."
Pricing for PLR can be a challenge but focus on the customer's data and technology complexity
"We need more experience in the data, but today we have three tiers. There's free, team, and business. Free, you can only have at most 5,000 unique visitors on your website a month if you are to stay there.
If you pass above the 5,000 limits, that's essentially when the salespeople get an order to go. These [are the] people you should start having conversations with. Then we have the team tier, which for us means self-service. And then, we have the business tier, which means we can help the customers make the data work. In the team [tier, your], data models need to be able to sort the data automatically. Then in business, which 90% of our customers are in, we can actually afford to have our engineers help people out.
At the end of the day, we price on two components, amounts of data we need to process on behalf of the customer and then the technology that they use. So the more standardized, the cheaper we are, and the more complex, the more expensive we get."
Consider performance-based pricing
"Something that would be interesting to do in the future would be performance-based [pricing] in some way. This is just me brainstorming and not something happening short term, but we can prove to people how much better their ad spend becomes by using green data, for example.
So say you're spending a hundred thousand dollars in ads a month. We can do a benchmark saying that 80% of all your ad campaigns are not bringing you any sales-qualified leads [and compare that to data] after you started using Dreamdata. Now you're only wasting 50% of your ad budget, but that's kind of just some, some very loose ideas about where we could go in the future."
PLR can provide data that help you optimize your product for future needs
"So far, we've been pushing our attribution product really hard, which I think I would have killed to have that product in my old company, but all of that is actually built upon our data model. And we're now taking more and more steps towards making the data model available for our customers to use wherever they see fit.
So instead of optimizing on the click to your website, we can actually optimize towards something that becomes sales qualified leads, or even one lead if there's enough velocity in that. We've now added a destination. We used to just have sources, and you connect to data, but now we have destinations as well.
So you can begin to connect a reverse internal tool so it can connect BI tools and so forth, and we're just going to be making more and more destinations available. So. I guess the pitch will be there to take care of all the annoying parts of data wrangling and cleaning the data. And then you can just use that to activate the data when it's ready."