At Cogent, we firmly believe that being a product-led organisation is a competitive advantage that leads to faster growth. And we’re seeing more and more proof that companies who are product-led in the B2B SaaS space outperform their competitors.
When in growth and scale mode, product-led growth is achieved cheaper and faster than adopting the sales-led or marketing-led alternatives. Imagine trying to scale Dropbox, Atlassian or Intercom using a territory by territory sales team or marketing budget. It would have been costly, inefficient and growth would have been far slower.
Slack and, more recently, Notion are companies where spectacular growth is driven by their product. And let’s not forget high-profile Australian success stories right now: Canva and Deputy, plus emerging companies like EstimateOne and BuildKite who are at the inflection point of impressive growth.
Take a company like Slack as an example.
My guess is that the take-up of Slack in your organisation was similar to mine. A colleague started using it, suggested that a bunch of others do too and pretty quickly everyone is on it, for free. At some point, there is a need to use paid features. By then, the organisation has deep experience with the product and got plenty of value by using the tool, and so they upgrade to a paid plan.
All of a sudden Slack is embedded in organisations around the world.
What might not be obvious is that this is no accident. Companies like Slack are intensely focused on driving engagement for their free users, obsessively measuring everything so their product team can make informed decisions, rather than building the features the sales team want.
Even less obvious is what happens next. The focus of the Slack sales team isn’t driven by a traditional enterprise sales list of ASX Top 100 prospects. Instead, it’s driven by real-world data that predicts engagement patterns that are more likely to result in a sale.
The product engagement drives the sales pipeline resulting in higher conversions and a massively reduced cost of sales.
B2B SaaS companies that successfully scale share many traits:
Founders and a leadership team who ‘get it’
Although companies like Slack, Intercom and Atlassian now have many teams jointly responsible for growth, their Founders and Leadership Teams understood from the beginning that their growth depends on user experience. That adding features for large business and enterprise markets must not come at the expense of the end-user. And that getting the timing right for establishing dedicated sales and customer success teams is critical.
Leaders of B2B SaaS companies structure their business so that product-led growth will be the fastest and cheapest path to achieving their growth ambitions.
Users take care of promotion and sales while the product takes care of conversion
Product-led companies all started with incredible products that addressed problems being experienced by real people. Their product is at the centre of their organisation. Their product handles on-boarding. Their product handles payments. Their product handles upgrades and expansion of use. Their product handles help & support. Their product is the experience.
Users are advocates who encourage adoption. Pretty soon everyone in a company is an advocate and when they move to another organisation, the cycle continues. A product-led approach for B2B SaaS companies is a powerful strategy that fuels growth, powering some of the fastest-growing companies in history. They do this by obsessively focusing on satisfying the needs of the end-users of the product better than the competition.
Everyone in the organisation understands and supports the product-led strategy.
From outside the organisation, users and customers see an awesome product strategy. However, it’s the culture of the company – the people, the structure, and the ways of working that enable a product-led company to execute on that strategy, and to thrive.
There’s a certain type of product thinking that is embedded within these successful organisations, and it’s not just the leadership team, strategy boffins and product managers who think this way. Finance teams, Customer Success teams, Product Delivery teams, Marketing, Sales and the whole C Suite are all aligned.
The product team will architect their product around the end user. Instead of prioritising features requested by the sales team to get the next buyer over the line, they solve real-world problems experienced by the user, not the buyer. They understand that the path to the buyer is through creating an enormous amount of value for the end-user. And they are obsessed with it. They know how to create that value and when and how to charge for it.
The sales function in a product-led company collaborates with customers to create value for all customers and support the integrity of the product, rather than the traditional sales model of capturing value one customer at a time. The product itself remains the growth engine for the business, supported by Sales, Customer Success and Marketing teams.
Delivery teams are in constant discovery mode
Successful SaaS companies have a suite of methodologies, practises and rituals that enable them to make decisions quickly and deliver value to users fast.
Product discovery is constant. It’s a collaborative effort which involves all areas of the business without slowing delivery. They continually research and measure user behaviour, engagement, needs and problem spaces. They know who their customer evangelists are. They engage with users and customers (both current and future) on new product features. They capture product usage data and use it to inform product direction and assessments of success.
High-performance, outcome-focused teams who work together
An organisation is only as good as the people within it, and the support that the organisation provides so that people can thrive in their roles. This isn‘t confined to the product-led organisation. Every organisation should have high engagement, a clear vision and purpose that is meaningful, and staff should all be on board with it.
At a certain point in time, the CEO and co-founder step out of the way and allow teams to work autonomously. In companies that thrive, staff engagement is high and is measured with plenty of effort to continually nurture engagement and evolve the culture.
Being product-led allows you to grow fast and protect yourself from the competition.
Many successful businesses who rely on a direct sales model and who are excellent at marketing. There is plenty of evidence that these strategies work, and can serve businesses well at all stages of growth from seed right through to maturity.
The risks though are that the sales-led organisation will be overtaken by a marketing-led organisation, or that businesses with either of these two models will be overtaken by a more efficient and nimble product-led company. That product-led competitor is likely to be a global player, not limited by the costs associated with marketing or setting up sales teams across geographies.
Don’t wait too long to employ a product-led growth strategy.
And if you can’t, spin-off a product line or new business that can. The future of your business may depend on it.
Find out more about working with Cogent for product-led growth here.