Twilio is one of the pioneers of the product-led approach and a huge proponent of usage-based pricing. But with thousands of users signing up to access their product, how do Twilio's sales and customer success teams know who they should be reaching out to, and when?
In this episode of Product Led Revenue, Glenn Weinstein, Chief Customer Officer at Twilio and Correlated's Breezy Beaumont, discuss the most common challenges product-led companies face, the importance of high-quality sales teams, and why usage-based pricing is, as Glenn describes it, 'a win-win.'
💡 Name: Glenn Weinstein
💡 What he does: Chief Customer Officer
💡 Company: Twilio
💡 Noteworthy: Twilio acquired Segment in 2021 for $3.2B
💡 Where to find them: LinkedIn
⚡ When do you "ring" the sales bell when almost all of your prospects are already customers?
There's nothing more rewarding for a sales team than closing a deal and converting a prospect into a customer. But how does a company, such as Twilio, measure success, or better say, define wins when almost anyone who signs up for an account uses Twilio somehow? ''There are customers that are spending significant portions of their IT budget on customer engagement through Twilio. So there are these two ends of the spectrum: customers that are sending messages for pennies and customers who consider Twilio a strategic provider. So somewhere in between, there becomes or emerges the notion of a deal where an opportunity closes as a win.''
⚡ Avoid customer churn by having relevant conversations
Although every product-led company is based on a philosophy of a product selling on its own, customers still expect to have someone to talk to when a particular problem or a doubt occurs. ''The first few really large customers that Twilio got, we got some very frank feedback from them, basically saying, 'You don't know us, you don't talk to us. You don't really understand how we're using Twilio.' So, we lost a business from our first couple of really large customers, and they said, 'You know, if you only would have talked to us, you probably would've kept the business,' and that's a wake-up call.''
⚡ Put your customers at the center of everything you do
Faith drives success, says Glenn. As a CCO at one of the most successful software companies globally, he has pretty straightforward advice for anyone eager to start a product led-company. ''Have faith in your customers. If you build a group of committed evangelists and you're providing a great product, it really does start with a product that adds value. The widest net will catch the most fish. Let your products be played with, experimented with. Don't do the traditional, 'Wanna talk to us, fill out this form.' Let them fill out the form when they're ready, when they want to talk to you. Have faith in your vision. If your product is great, more exposure is better. It's PR 101. Get it out there, get it to the masses, and figure out how to monetize it later.''
💜 Twilio is one of the pioneers of the product-led approach
''The company was founded in 2008. It has been a developer-led motion from the very start. Twilio is all about self-service for developers. Today, I think we actually take for granted a little bit, as software developers, that you can go to a company's website, get a free login, get a trial account, start messing around.
But Twilio was doing that back in 2008, and it's still, to this day, our number one source of leads. It's the number one way that companies get introduced to Twilio is when a developer on an IT team or an App Dev team starts playing with Twilio and solving customer problems with it.''
💜 The value that free users bring to Twilio
''If there's a spectrum of how much our company values free users or values developers that may or may not turn into paid customers, Twilio's pretty far on the end of the spectrum. We love developers, and it's a long game for us. If you don't ever spend a penny on Twilio, but you're a successful developer, we consider that a win.
We have a belief that down the road, you'll work for a company that finds your use case interesting, or your experience with Twilio will lead you to eventually solve problems with Twilio.
[...] All that said, we do start to draw the line to figure out where it might be helpful to reach out to a developer from a business point of view and say, 'Can we start to talk about pricing?
Is there something more that we can be doing for you?' And that threshold really gets to repeatability.
We're looking for developers who show a pattern that they've done something once, and then it happens again the next day, and it happens again the next day. [...] The actual number of API calls or the daily spends that we consider being sticky enough when it repeats over a series of days or weeks, that's how we look at it.''
💜 What is considered a win in a product-led world?
''That's a fascinating question in the context of Twilio because [...] we will ring the bell when the customer either starts to spend that incremental spend or even, in a lot of cases, say they will, without necessarily committing to that because Twilio is a usage-based model.
Generally speaking, customers don't buy a yearly license to Twilio; you spend for every message, every minute of voice, every email, so even that part's tricky. Like, did the customer really commit to soft commit, hard commit? What does that mean? But, we have our definitions, and we try to engage, okay, I think the customer's often, and they're on their way. They signed a master services agreement, and so we put a stake in the ground and say, 'Yeah, that's a win."'
💜 As the business grew, so did the need for a high-quality sales team
''There's always been some sales personnel at Twilio to help customers that need somebody to speak to about commercial terms and that sort of thing. But it really took off four years ago.
The company made a concerted effort to build more of a traditional sales organization with some of the traditional trappings of sales, quotas and territories, and things like that. It was really just recognizing the incredible growth of Twilio, the graduation from solely serving individual developers and software companies and starting to get into more traditional companies.''
💜 Customers should only receive messages they want
''Twilio, as much as any other company, recognizes that SMS is both a powerful communications mechanism for outbound but also one that requires a great deal of responsibility because consumers, even prospects, should only receive messages that they want, that they asked for.
So we model that behavior and in our own outbounds, campaigns to establish a relationship with a customer and have them opt into how they want to be communicated with and then communicate with them on their chosen channel.''
💜 Both customers and companies can benefit from usage-based pricing
''Twilio is really one of the great examples of a usage-based pricing model and the great thing about usage-based pricing is, it's truly a win-win, to throw another cliche out there, but it's good for the customer, clearly, you only pay for what you use and it's really good for Twilio.
It trusts the customer that if we produce a good product, we service that product and stay in touch with your needs, and we're a good partner to you. You'll naturally use more of it because it's succeeding in achieving whatever objective you're trying to achieve.
Look at Twilio's net expansion rates, I mentioned earlier. Our customers tend to spend more every year, and that's pretty significantly more than most software companies. And we do that, not because they're locked into a 2000-seat contract, but because they're getting more value from the platform every year.''
[14:19] ''At some point, you just have to admit you need an accountant.''
[18:03] ''Every software company is aspiring to get granular and track the way that their customers are using your products. Twilio may be a fairly extreme example of that because we don't just track the features customers use or the patterns, but we're charging them based on their usage of the product.''
[20:06] '"Write it down' is one of Twilio's core values, so there's a lot of written analysis that helped make sense of our data.''
[22:41] ''Twilio has a really healthy net expansion rate or dollar-based expansion rate. Customers tend to spend more with Twilio this year than they did last year. But the broad statement does mask individual customers' behavior where some customers do have their usage drift away over time gradually, and we're looking for better ways to pick up that signal earlier on before it gets to a 20% or a 50% drop.''
[33:33] ''Customers are demanding the best pricing they can get, and, um, and it's really up to Twilio to add value on top of that CGOS (cost of goods sold) to really earn our spot in this world.''