Product-Led Growth to drive down your CAC
Product-Led Growth to drive down your CAC
“Product-Led Growth is about helping your customers experience the ongoing value your product provides…” — Nir Eyal, Author of “Hooked” and “Indistractible”
“Product-Led Growth isn’t a tactic or hack. It’s a model that drives teams and companies to deliver the maximum value and experience to their customers directly from the products they build and design. Getting this right means you need a deep understanding of those you serve and how to help each customer become successful. If you can just get these two things right, you’ll increase your odds of building a company with legacy value.” — David Axler, Growth and BD, WaveHQ
I spoke to the Deputy Growth guys (Francois Bondiguel – Head of Growth and Jordan Lewis – Director of Growth) about their experience bringing the method into a fast growing startup where different stakeholders have different opinions on how to drive leads while driving down cost of acquisition.
This is one of the main promises of the book: “How to Build a Product That Sells Itself”.
The point is that advertising is expensive, which means your CAC (Cost-of-Acquisition) is high. The promise is that if you design your product experience, then customers will:
- recruit customers,
- refer customers or
- the product automatically draws other customers in
- and the product is so closely aligned to a users “Job-to-be-done” that the churn rate is low and people start to talk as a substitute for advertising.
The video and transcript are below.
David Jones 0:01
Yeah. So you guys have been been active (or Jordan’s been active) in the product Product-Led movement, I guess you could say. And that seems to be associated with a lot of OpenView Associates, portfolio companies. Do you want to just speak to that about what’s been great about product with and what you think where that sort of fits in the modern way of viewing things is from a product team perspective?
Jordan Lewis 0:26
Yeah, I just got back from the Product-Led growth summit in San Francisco that OpenView put on and I could spend in the last three years, it’s gone from 20 people to 80 people in the Boston office to now you know, a conference center in the valley. So it was pretty cool to see.
Jordan Lewis 0:43
The thing I love about Product-Led is that it really backs the product – it backs the quality of what’s being built to sell itself and it says essentially, if you provide a low barrier to entry, and you get your customers to experience the value you have, if you’ve got a great product that will sell itself. And obviously that that runs out as you get to the higher end of the market and the company like Deputy that has small to enterprise businesses. But we get people organically taking a trial you know that you know thousand plus employees <…> approach we have that really healthy tension with sales like phone numbers a great one, you know, “we should make phone number mandatory” and the Product-Led growth mentality says “no”, and that as part of our CEOs ethos as well, I guess.
What is Product-Led?
Francois Bondiguel 1:32
Yeah, absolutely. I agree with your with your definition and why I mean, ultimately, like, you know, I’ve been working in software for almost 11 years now actually studying my career working as an operation manager for a web design company. And then six months later, you know, three people like through your first created our own SaaS, which we’ve done B2C SAS for about three and a half years. And, you know, when you have a software company, you’re a Product company in the same way that if you are manufacturing, anything physical, you’re product is what sell, you know, you need a great product. And ultimately, you know, if you forget that and, you know, you could make great marketing and great sales and get to revenue, but your product is at the core of what you do and your value should always be valuable is the product delivering on the promise, you know, because saying, as Ashik (Deputy CEO) says, our mission is, every shift on Deputy will help businesses around the world, you know, manage their employee better will increase the employee happiness level. And we make sure that, you know, business don’t break the law and pay employee accurately. If you have that mission on paper, but your product doesn’t deliver, then, you know, it’s kind of funny, right? Where you think Product-Led growth is very much like, hey, the product is aligned with the mission. And, you know, that’s what is driving the growth and what we’re here for is more amplifying that. Make sure that everyone in the world that is relevant should know about us.
David Jones 3:05
How do you draw a line between? Or how do you explain to that sales person that wants the phone number in there? What Product-Led growth is, you know, like, okay, sure, it’s, it’s easy to say, okay, it’s a barrier. You know, by asking for making the phone number mandatory, it’s a barrier to actually getting that and you’ll get a drop off rate. Do you literally show the salesperson the drop off rates at that particular point? Or do you go back and say, Product-Led is about aligning that with the mission, how do you how do you kind of communicate that product with…
How to communicate Product-Led inside the company?
Jordan Lewis 3:38
So, in one example we had the salesperson come to me and Francois with the costings right. They are, like, “if we had this built we will get X amount more drop off during the onboarding flow, but we should be able to convert X percent more and therefore the revenue uplift is this”. And that’s quite a compelling argument. Right, but what isn’t there is the costings of sales team itself. The scaleability of that business unit. So there’s other factors that play that maybe isn’t part of the day to day concern? Yeah. So it’s really where we just, I don’t get into that argument because they are right. And there may be a short term view and in a long term view. So so you know, for example, in iOS, we put it we put a field and that didn’t exist before to capture phone number. And we did it in such a delightful way that 55% of the <…> and the sales team are really happy with that. So it’s just about finding a balance coming with the numbers and kind of iterating too mandatory if you have to. But one of the games, for example, and gamification, where you can see here, the third one, which is a blue phone, is to essentially give us your phone number and we say “because we’ll send you a link to download the app”.
David Jones 4:50
Jordan Lewis 4:51
So we say “cool, I hear you How else can we get to this result in a way that doesn’t cause drop off?”
Francois Bondiguel 4:57
This is what I was talking to, you know Wes Bush?
David Jones 5:01
Yeah. The guy who wrote the book.
Francois Bondiguel 5:03
yeah. Yeah. So I just actually just done an interview podcast with him recently that that is going to be in the Product-Led growth summit, I think in the end of January, which is a big online event.
David Jones 5:14
Yeah, yeah, I saw it.
Francois Bondiguel 5:15
Yeah. So I think there’s hundred plus speakers. So I got the opportunity to talk to him. But one of the things that I didn’t discuss with him, but I think could be interesting in this forum, is that, you know, Product-Led growth is not a religion. It’s not something where, you know, like, any decision you’re going to take is just Product-Led growth, you know, like, we’re not on a crusade here. We’re here to have a principle, which we really believe that if you continue product innovation, and you solve real problem with real product solution, then you’re going to win in the long term. But it doesn’t mean for example, if we realize that if you talk to someone, with a conversion rate is 63% then of course, we’re going to try to connect you with someone because you know the revenue is there, right? So it’s a principle but it’s not a religion.
David Jones 6:05
Great, excellent. Thank you.