Companies that are product-led put a lot of emphasis on user experience because it is important to them. They need to have a smooth and personalized experience that meets customer expectations.
We now have the technology available to create personalized experiences that are responsive and cross-platform. However, some organizations are not taking advantage of this opportunity because they lack an overarching plan. They have the individual tools and pieces of data but don’t know how to put it all together.
This is where the power of integrations comes in.
Integrations can help to improve the user experience by bringing all sales, service, product data, etc. together. This can also help to improve operational efficiency, increase KPIs, and grow bottom-line revenue.
What Is Product-Led Growth?
PLG is a growth model that focuses on using the product to grow the customer base through acquisition, retention, and expansion.
Product-led companies such as Slack, Calendly, and Datadog can more quickly and efficiently grow their businesses by using their products to create a stream of active users who are then converted into paying customers.
Product-led growth is not just a way to market a product that is free and easy to use. It is a way for any company to improve its user experience and increase its efficiency in marketing.
Product-led growth is a strategy that is here to stay for the foreseeable future.
Nowadays, end users have more power than buyers and they want software that is easy to use.
To be successful in the current Age of Connected Work, software companies need to build a product that meets the needs of the market and then distribute it directly to the end users.
A Brief History of Product-Led Growth
A study by MIT found that it takes the US Air Force an average of 70 days to install a new system It used to take a long time to adopt new software, but now it happens much faster. A study by MIT found that it takes the US Air Force an average of 70 days to install a new system.
Now software is appearing in the workplace without any formal introduction from management. Individuals are finding, downloading, and using products without any directive from their bosses. End users are the ones informing their bosses which software to buy.
The software market is evolving, and we’re now in the Age of Connected Work where the end user is more important than ever.
In this new era, the software is more than a tool. It’s become a fundamental utility that powers our working lives. In the past, we would “own” or “rent” software, but today we simply use it.
The market is shifting towards the Age of Connected Work, which has large implications for how companies do business. This is not a revolutionary change, as the software industry has been moving in this direction for some time. However, companies who don’t adapt to this change will be left behind.
The On-Premise Era: 1980s – 1990s
In the 1980s and 1990s, software was installed from a physical box. Large, monolithic on-premise software programs were expensive to build and buy— typically costing six to seven figures.
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The Cloud Era: 2000s
In the early 2000s, Salesforce.com and others disrupted the traditional way of doing business by driving software out of the data center and into the cloud. With the rise of on-demand software, development costs plummeted.
Sales in the early 2000s aimed at a new type of buyer, the non-technical executive. These executives used factors like key performance indicators (KPIs) and return on investment (ROI) to work out whether a particular piece of software would help them achieve their team’s goals.
The “marketing-led growth” model became popular during this era, as well as new terms like “marketing qualified lead” and “sales development representative.” Inbound marketing caused a high demand for inside sales, and everyone began trying to get as many demos and sales as possible.
The era of cloud computing is coming to an end. This is what the investors and software developers are saying. Even though it’s declining in relevance, it’s still happening quickly.
The End User Era: 2010s
The infrastructure is more scalable than ever before and developers no longer need to hard-code every program from scratch.
The increase in efficiency has led to lower prices for customers, making it very inexpensive (usually free) to try out a new product. There are thousands of new products available with just a few clicks or taps. The affordability and accessibility of software has made it possible for anyone to purchase it.
The primary decision-making criteria for these users is not how the product will help the business’s bottom line, but how the product will help them in their day-to-day.
Attracting lots of individual users and getting them to convert to your product requires a scalable distribution model that works from the bottom up. This kind of model uses the user experience to let users find and evaluate your product, and then adopt it on their own.
Blake Bartlett of OpenView was the first to coin the term “product-led growth” in 2016. This has been the key to the success of companies in the “End User Era” such as Atlassian, Dropbox, and Slack.
The Age of Connected Work: 2020s
We now find ourselves able to work remotely and connect with others through technology.
The new era of work recognizes that users have embraced workflows that are powered by automation in order to be more productive, reduce human error, and gather valuable data. Our reliance on software services has increased dramatically, and if one of those tools goes down, it impacts entire systems.
The interconnectedness of our tools, automation, AI, and APIs has led to another major development: the users of a product are increasingly other products rather than people. Businesses that are successful are redefining what it means to leverage product as a growth engine and are incorporating PLG principles into their businesses.
The Business Benefits of PLG
Creating a product that users love is the best way to ensure continued success. Focusing on growth that benefits end users is not only good for them, it’s good for business too. Making a product that users will enjoy is the best way to guarantee ongoing success.
Today, there are 40 large public companies with a portion of their business model based on user-generated content (PLG)—including all of the top IPOs in 2021. That number is expected to continue to rise as more PLG companies go public each year.
Overall, product-led companies have raised 50 percent more money and are valued 50 percent higher than their counterparts. Not only do PLG companies outperform their peers after going public, but they also grow faster at larger scales. On average, PLG companies have raised 50% more money and are valued 50% higher than companies that don’t use this approach.
Our data suggests that product-led growth companies hit the $10 million ARR mark and then scale faster than their peers. The reason for this is that they aren’t artificially constrained by labor-intensive lead generation, sales, and customer success processes. They can grow more efficiently, boasting a lower-than-average CAC payback.
According to survey data from the 2022 Product Benchmark report, product-led companies are more than twice as likely to be growing quickly (100%+ year-over-year revenue growth) than sales-led companies. This is especially true for those offering a freemium product. PLG strategies such as ease of use, freemium or free trial, and self-service are becoming users’ expectations.
The fact that public PLG companies have a growth rate 25% higher than other SaaS companies is not surprising, given that they have higher margins.
What Are Integrations and How Do They Deliver Better Experiences?
Different tools in a tech stack can communicate with each other through integrations. This allows apps to share data and automate various tasks, which helps different internal teams work together more efficiently. Most importantly, integrations can help create a seamless experience for customers so they don’t run into any roadblocks.
An integration is a way to connect two apps so that information can be passed between them. This can be useful if you want to use data from one app to drive actions in another app. For example, you could use data from a customer’s purchase history to create a more relevant and personalized experience for that customer.
This text is discussing the idea that software integrations are beneficial because they allow for a more holistic understanding of the customer. By being able to access all of the data at once, companies can provide a better overall experience.
Here are some examples of what this might look like.
Appointlet ran segmented email campaigns by connecting Appcues and Intercom via Zapier
When creating a new product, it is important to keep in mind the goals of the customer. By understanding what they are trying to do, you can ensure that the product is able to provide the relevant guidance to help them achieve their goal as quickly as possible.
Appcues uses Zapier to integrate with Appointlet, which passes user responses to Intercom. This allows for tagging users’ Intercom records with form responses and segmenting email campaigns by topic interests and goals.
The Appcues <> Heap Integration helps product managers improve activation and retention
This text is saying that customer experience is directly related to customer behavior, and that data from both sides can help inform and improve this relationship.
Heap is an analytics platform that automatically collects and organizes customer behavioral data. This gives product managers insight into how to improve their products with maximum agility. By connecting Heap and Appcues, product managers can quickly identify bottlenecks in their customer experience and address those issues with targeted messaging from Appcues.
The two-way integration between Appcues and Heap ensures that data is continuously flowing in real-time between the two platforms. This allows product managers to see how effective Appcues’ product guides, walkthroughs, and tooltips are, while also being able to export behavioral cohorts from Heap into Appcues to create targeted engagement and activation.
This means that you can get new users up-to-speed more quickly, they’re more likely to adopt new features, and they’re less likely to stop using your product. For example, Heap can help you figure out where users drop off in your onboarding process, and then create a segment of users who didn’t finish all the steps. With the integration, Heap can send that info to Appcues, which can generate a modal popup to help those users get back on track. Finally, Heap can analyze the performance of the modal to see how effective it was.
Calm increased retention by 3x by surfacing key features with Amplitude’s Outbound.io integration
The integration of data between apps can help to automate actions and improve results. For example, the #1 mindfulness and meditation app, Calm, used Amplitude’s analytics platform to help them make improvements to their reminder feature.
After using Amplitude’s behavioral cohorts feature to compare the retention rates of users who set reminders with those who didn’t, the team at Calm discovered that the former group’s retention rate was almost three times higher. What was most exciting about this was that only a little over one percent of users were setting reminders, meaning that the feature was being overlooked by many users even though it was buried deep on the app’s Settings page.
Calm tested Amplitude’s integration with Outbound.io (now Zendesk Connect) on a portion of new users to encourage them to set a Daily Reminder. For the test, Calm presented new users who had just completed their first meditation session with a screen that surfaced the Daily Reminder feature. The result: Calm saw the same boost in retention for users who set a reminder via this prompt as they saw in the users who found the reminder feature organically.
Calm was able to use data from Amplitude to improve retention by taking an active role in driving the behavior that they knew would improve retention.
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