S02E26

How product led growth startups can land enterprise customers

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What does it mean to be a product-led company? Does product-led growth work for all startups? How do you design an outbound sales motion over a product-led, inbound growth strategy? Stacey Epstein, the CMO of Freshworks answers these questions

Stacey Epstein leads the global marketing organization, including growth marketing, branding, corporate marketing, communications and analyst/public relations at Freshworks Inc. She brings more than 25 years of industry experience in growing iconic SaaS brands like SuccessFactors and ServiceMax through hyper-growth acquisitions and IPOs. 

Most recently, Stacey was the Chief Marketing Officer and Chief Customer Experience Officer at ServiceMax, a position she returned to when Zinc, where she was the CEO, was acquired by ServiceMax in 2019. At ServiceMax she joined the founding team and led the marketing function through six years of triple-digit growth. She was also Head of Marketing at SuccessFactors for six years and was instrumental in the company’s IPO in 2007 and its acquisition by SAP later. 

Stacey talks about what it means to be a product-led company and how to layer an outbound sales and marketing engine on top of a product-led growth company. 

Edited Excerpts

Q. Can you tell us what it means to be a product-led growth (PLG) company? 

Stacey: There are nuances to the many product-led growth (PLG) companies in the ecosystem. But, the basic principle is that if you make something users want, they will come to your offering, often with minimal outbound marketing and sales effort. And in some cases with no outbound marketing and sales effort. 

There’s a virality component involved in PLG. Let’s take Zoom for example. I need to make a video call. I want something that works. That isn’t difficult to use. That I don’t have to have a corporate license for. If I can send guests a link, and they can jump on, then that solves my issues. Users liked this and they started spreading it and sharing it. 

This stands in contrast to an outbound or enterprise sales model where there is a buyer, and you’re putting together programs and campaigns to reach the buyer. And then the buyer makes a decision for the user. PLG has come into favor over this last decade because companies are more and more focused on what the user needs versus what the buyers are looking for.

Q. What are some of the upsides for startups to take a product-led growth approach? 

Stacey: Enterprise software companies have figured out that these days users have a lot more power. The users demand cutting edge and modern technology to solve their problems. And they can jump on and try things with the ease of technology because now you can try and buy something.

Companies want to react to this, and that is why product-led growth is so hot today. The upside is that it is a cheaper, faster way to gain market share. If I can use virality or inbound search, especially unpaid inbound search through search engine optimization, to attract people to my product, I don’t have to build a big huge marketing team. I don’t have to fund a bunch of expensive outbound sales personnel. I can focus all my energy on building a fantastic product that people love, and then usher them into it. 

More and more companies are trying to leverage this efficiency of the PLG model. And ultimately, it’s a win-win. You’re focused on building a great product that users love and solves their pain points, and they don’t have the friction of having a top-down enterprise cell where they’re told what to use.

In pic: Product-led growth strategy. Also see: The Startup- Scaleup Marketing Playbook.

Q. Do you need to be mindful of whether your product fits into the product-led growth approach?

Stacey: If I were starting a company today, I would lean into seeking something that has a good product-led growth engine. However, it does have some limitations. 

For example, there’s lots of innovation happening in manufacturing, and there’s a lot of solutions to help make the shop floor more efficient. But it’s not necessary that the workers are saying, ‘hey, I need an AI camera that watches me while I assemble a product and tells me when I’ve made a mistake’. 

There are certainly some types of offerings that are going to be sold to a buyer who’s looking at rolling it out across the organization. Sometimes they’re solutions that require a salesperson or a process to communicate the value and the features of the solution. 

It’s certainly a great model to adopt. But I think you do have to think it through and make sure it’s the right fit. Because in PLG, there’s a notion that it has to take off. And if it doesn’t take off, you’re dead in the water. 

Q. How do you layer your PLG motion to build an outbound engine? 

Stacey: A lot of companies are making this transition. They crack the code on small-medium businesses (SMB)  or a departmental sale, and now they want to go up the enterprise value chain. Selling these bigger corporate accounts is a top-down motion and what’s important is to think of it as something that you’re layering on, not something you’re doing differently. 

The PLG motion is a great entry point into a bigger enterprise in itself. You want to keep it going. Because it opens the door to teams and departments using the solution where they may have power over their own decisions. As it starts to crop up in different places of the enterprise, that’s when you can apply marketing campaigns and add some tailwind to your PLG. 

Eventually, you can layer in a traditional enterprise or direct sales model, where you’re selling to buyers, the CIO, or to a procurement team that may be involved. Another big component is if you hold out some of the key enterprise features. That makes users want to step up into a paid plan. It gives you the opportunity to sell these advanced features and to make a case that maybe the company should be using your solution wall to wall.

Zoom is a great example. It was a departmental tool that people were using here and there. A lot of people were on free plans. Then suddenly the pandemic hit, and everybody needed a solution that they could use wall to wall across their organization. That’s where their enterprise motion came into play. They were a bit lucky. One of the silver linings of the pandemic hit them. If you’re not as lucky to have something like that happen in your market, then you have to do some campaigns and outbound marketing. 

Q. And how do you start building this outbound team?

Stacey: First, you want to make sure you have an effective product marketing organization that’s helping you define and communicate the value proposition for the customer. 

Then you want to start layering in some campaigns, whether it’s through digital marketing or in-person events, or you want to be setting up some integrated outbound campaigns. 

Top-level branding and awareness, like public relations, is important. But the most foundational and important thing to do is understand your Ideal Customer Profile (ICP). 

If you’re going to target a persona with outbound motions, you better know who the buyer is? Are you still targeting the user and hoping they’re going to take you upstream? Are you targeting the functional buyer in that domain? Are you targeting the IT team? What do they read? Where do they hang out? What are their needs? What are their opportunities, and then you craft your entire outbound message on that true understanding of the buyer.

One of the most fundamental mistakes companies make when crafting this message is that they focus too much on the features of the product rather than its intended benefits. 

Q. What are some of the downsides of a PLG motion? 

Stacey: Churn is one of them. You need to expect higher churn. If your product is easy to get on and try, then a lot of different people will be trying it and not all of them will fit the ideal customer profile. 

This is in contrast to enterprise software where if I bought it, I went through a process, I evaluated it, I picked it over something else, I shelled out the money, and now I’m spending time implementing it. It’s less likely that I’m going to churn. 

The other one is you build your whole company around leveraging all the benefits of PLG and it never really takes off. Often it’s because you didn’t achieve product-market fit. For example, Zinc was a company that I took over. It was built to be a product-led growth company and it was meant to be like WhatsApp for work. The problem was people didn’t want it. People were happy using WhatsApp for work and they didn’t want the extra features we were offering. So the PLG motion just never took off and we had to pivot. 

PLG doesn’t always work and it’s not for every company. Sometimes you try it and you realize this isn’t going to be a thing. You don’t have product-market fit and you have to pivot.

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