Unpacking Product-Led Growth with Leah Tharin

00:00:04:01 - 00:00:25:17

Ben Hillman

Well, hey there, folks. Today I've got an episode of Protect the Hustle for You, featuring Leah Theron. Now, for those of you who don't know, we did a deep dive video on PLG that includes a lot of different clips from this episode. I strongly encourage you. Go and check that out. You're going to get a lot more depth out of that.

00:00:25:19 - 00:00:43:17

Ben Hillman

But for those of you that are wild like me and like to listen to the unfiltered interview, this is for you. Without further ado, let's get into it there in the interview where she talks all about product and growth.

00:00:43:19 - 00:00:51:16

Ben Hillman

MCCOOL We're going to talk through PLG today. Can you do you just give me like the your definition in your own words of PLG?

00:00:51:16 - 00:01:15:07

Leah Tharin

So one of the definitions that we use for product like growth commonly is referring to anything that has to deal with self-serving value towards the customers. I would say that's something where people don't really fight about it. What do we mean besides this is the pipeline that can do stuff without having to talk to Gary from sales. That's usually where the agreement kind of ends.

00:01:15:08 - 00:01:44:21

Leah Tharin

So what I talk about when we talk about sales, self-service or product like growth in that sense is the most efficient way in how to connect your users and the visits that you have on the website with the value of your product without being too restrictive. And why is this important? Because we also want to use the free users of our products to attract other users that might be actually those that are paying for it.

00:01:44:23 - 00:02:08:01

Leah Tharin

So we're leveraging pretty much everything that we have. It's not just about monetizing everyone. It's only about monetizing those that have a pressure behind this, Right. Like that also wants to pay for the product. And we're not going to ask for a credit card unless it's really absolutely necessary. And I think this is a big, big difference between what we used to do, where we try to monetize everyone.

00:02:08:01 - 00:02:26:16

Leah Tharin

We try to not give too much for free. And yeah, this more holistic view of like we incentivize the teams by it, we try to optimize and reduce the the friction that is between us and the core value of the product, which is that's, that's PLG. We try to give you value as fast as possible.

00:02:26:18 - 00:02:46:23

Ben Hillman

Do you think that comes from like this exasperation of maybe, I don't know. I don't know how long, like we say, this PLG movement has been going on. Is it just an exasperation of like, we want to. All right, fine. You want to like you want to see the product. Here it is. Like, here's the value we've been telling you as this value for so long.

00:02:46:23 - 00:02:53:06

Ben Hillman

But now it's finally like, hey, here you go. Like, experience the value yourself. Tell us, you know, if we're crazy, if.

00:02:53:06 - 00:03:15:11

Leah Tharin

You think about what a company does on the marketing side. So the messaging that kind of gets you into the store to consider, hey, know, this could be something. I'm going to check it out. That is a value promise. So we are being promised something. So there are some expectations that are being woken the value experience. So like using the product is then usually the reality check.

00:03:15:11 - 00:03:33:04

Leah Tharin

And the closer that the expectation and the reality check is, the higher the conversion hopefully is in the future. But this is a bit of a weird thing with sales, because sales usually still promises you a lot of things. They don't really let you use the product. So even a product demo is not really the value of the product.

00:03:33:04 - 00:03:52:22

Leah Tharin

It's getting closer read like it's just like a it's a betterment of the message that we give to the customer, right? Like it's a it's a more polished version of the the fuzzy message that you had in the beginning, but it still is not the real product. And then we usually require you to pay. And then if you pay, then you can experience the product and then hopefully it kind of works out.

00:03:52:22 - 00:04:12:14

Leah Tharin

But like sales was also trying to reduce the risk. But this process where they just give you also proof of concept time. So you're like you can try the product for at least three months and then if you still love it, then you kind of use it. But that's also not really addressing some of the problems that we have naturally with sales processes.

00:04:12:14 - 00:04:28:04

Leah Tharin

And the first one is, is that people inherently do not trust salespeople because they know that they get money based on whether they are closing you or not. So there's a mismatch between interest. If I want to put out my my legal hat there, it's a conflict of interest because what I want is not the same that you want.

00:04:28:09 - 00:04:50:23

Leah Tharin

But if you can try the product for free, then this entire relationship becomes much more honest. The other thing is that we really have to be careful about is that PLG is originally a B2B term because we always used to do this in B2C where you have a lot of choice and so forth. And if you think about it in this way, let's say you want to have a tool for a very specific problem that you have in B2B.

00:04:51:00 - 00:05:19:00

Leah Tharin

If you have 20 tools to choose from and ten of them offer you a free trial to try it out, then you're not going to call the other ten that it require you to talk to Gary, the sales guy. So before we even get in touch with the product itself, how dense your competition is, how differentiated you are, is going to define whether people will be paying attention to you, having a free trial or not, or like a freemium.

00:05:19:02 - 00:05:31:20

Leah Tharin

And that is very weird for a lot of companies to kind of understand that it's not about their product first, it's whether you can try it or not. And that's usually the case in commoditized markets where we have a lot of competition going on.

00:05:31:20 - 00:05:50:22

Ben Hillman

And there's still a to me, as you see, I've said as much yourself at a sort of agreeable agreeable that it's like, hey, to really understand the value of a product, you kind of have to use the product for those. For folks listening, I highly recommend checking out layers Product Productize Keynote. It's on YouTube Channel Product T is unique.

00:05:51:00 - 00:06:14:06

Ben Hillman

If they look up product, I'm sure you'll come across it and a big theme in your talk is about showing the value. Instead of telling people what the value is to the spirit of that. I was wondering if you could share some examples of where people or companies rather have gotten PLG Right, or maybe even some examples of doing PLG wrong.

00:06:14:09 - 00:06:38:11

Leah Tharin

So we can take a very prominent example is Slack. I think most people know Slack quite well. So Slack is a classical B2B problem solving problem products like this does not really exist for B2C in that sense. Maybe, maybe you have your friend group on Slack. I don't know. But classically this is a B2B product. What Slack does so well as it separates the core value of the product from the more extended stuff that is coming later on in your journey.

00:06:38:11 - 00:06:55:08

Leah Tharin

So what do I mean with that? What we try to do with PLG is we try to identify, okay, so what do you need to know to kind of get really what this product is about? So and the product is not just like a feature A to Z. There are core features. And so it's this is like the basic function of the products is basically in a car.

00:06:55:08 - 00:07:16:17

Leah Tharin

It would be getting you from A to B or whatever you were trying to do with your car. On the other side, we also have features that are kind of nice to have that make everything go a little bit smooth, you know, like whether your phone is actually connecting to the car and so forth. So in the case of Slack, what I mean with that is that the ability to talk to someone and exchange information is contained within the free portion of the plan.

00:07:16:17 - 00:07:49:01

Leah Tharin

So I can sign up. I can relatively easy message you and I can easily drag and drop a picture into the chat. I can just do all these things that are so very, very annoying in composing in an email, even with Gmail, depending on for what you are using it for, you're competing with different car values, right? Because if it's just about exchanging information and keeping track also of the conversation, Slack is actually much, much better than email in this regard, especially if it goes back faster, if it goes back and forth.

00:07:49:03 - 00:08:14:20

Leah Tharin

Right. So that is a very good example. So the extended value is only showing its face afterwards. So what happens if you and me had a conversation in two months about something that we were talking about today? Now you need to have the search function. And it also turns out that Slack is better in finding conversations that have happened over the entire kind of stack that you had with different people and so forth.

00:08:14:22 - 00:08:30:19

Leah Tharin

But now this is locked behind a paid plan. So this is something that you do not even notice in the first couple of days because there is nothing to search for. There are a couple of features like this that only kind of appear once you have understood the core value, because it does not make any sense to search for messages.

00:08:30:21 - 00:08:50:03

Leah Tharin

If you do not understand what it means to use Slack as a base product versus, for instance, inviting external people into your own slack space also does not make any sense. If you've never talked with your team through Slack. So the separation of these features is very, very cleverly done. There's more to this, but like this is where I pause for a second.

00:08:50:04 - 00:08:55:23

Leah Tharin

But yeah, this is a very, very good motion to kind of highlight what it means to have a free version versus a paid one.

00:08:56:03 - 00:09:29:10

Ben Hillman

And it seems like for every company there is to your I think forget the specific way that you use that. I've heard it being used before. As with Slack, it's like, you know, 2000 messages. Is there magic moment or, or the moment of like realized value? An objection that I could maybe I'm making, maybe I'm like making a lot of assumptions here but to take your car driving example, if I'm driving my car and I'm or I'm testing it out or perhaps it's a, you know, a trial run, I know CarMax is a company out here in the States where you can drive a car for a week.

00:09:29:13 - 00:09:58:02

Ben Hillman

And if you even test drive it essentially for a week, and then once you're once you're done, you can bring it back, no questions asked. I know I want to put a pin in that for a sec because I know time boxed value like like free trials. I know that's a that's an issue in itself. But if my I want to make sure that my magic moment is not something like artificial, like, hey, the car is free to drive, you have to pay to turn the air conditioning on, that sort of thing.

00:09:58:02 - 00:10:12:17

Ben Hillman

And so could you help me differentiate a bit what we're talking about here, where it's like we're not talking about from the seller side, taking advantage of maybe things that people I mean, this is an extreme example. I don't know if Slack really has air conditioning, although maybe they're coming out with that soon.

00:10:12:23 - 00:10:35:07

Leah Tharin

This highly depends on who you are. Right? So just because you use a car doesn't mean that you want to use it for driving long distances and so forth. And so I can also have different variations. So let's say you are very specific. I see people with I KPIs, we talk about ideal customer profiles that are representing the users who are getting the most value out of your product for the use cases they have for the most amount of money, right?

00:10:35:07 - 00:10:58:15

Leah Tharin

So like we can take an identical product and put it on different ISP's, which then also generates different pricings. So even though we do not change the product, so what do I mean with that? If you take a very specific car, this car has a different value to a pizza delivery driver than it has to a chauffeur. That is like actually driving people around.

00:10:58:17 - 00:11:17:23

Leah Tharin

So for pizza delivery drivers and some other things that might be much more important that the car is very small so they can squeeze into, you know, like you can park it really fast or that they have some kind of connection to keep the stuff cold or whatever it is. Right. Maybe the navigational system becomes more important than we see other people who have much more local knowledge, whatever it is.

00:11:17:23 - 00:11:41:15

Leah Tharin

So even though you have the same exact product does not mean that you're willing to pay the same amount of price for it. And with that also these moments. So the moments where you drive value from it are also starting to change. So for instance, for a delivery driver, it could be the first time they actually successfully completed an order with a client or maybe it's when they return to a home base, right?

00:11:41:15 - 00:12:02:13

Leah Tharin

So like before they have to fill up the car again, whatever it is. So this might change depending on the different ISP's that you have and not because of the product. So it's not product specific, it's more like buyer persona for specific. So like who do you actually serve with this? That is so fascinating because this completely changes how you designed the product.

00:12:02:13 - 00:12:20:20

Leah Tharin

If it is important for you that the first delivery is done fast or more reliable or whatever. This is changing the direction of the product, right? Because if I have teams on this that are really like working on this, they try to kind of reduce the friction of this. Is it important that the car is fast? Is it important that the car is safe?

00:12:20:22 - 00:12:31:08

Leah Tharin

Is it more important that the car has, I don't know, wings where you can actually take off and fly into the air? That's why this is so much more than just like a distribution framework where we talk about, you know, like we just give you something for free.

00:12:31:12 - 00:12:53:14

Ben Hillman

But understanding to that where where those signals are coming from. And if it may, you may be hearing a lot of noise about delivery drivers, but in reality, maybe your core customer base is chauffeurs like. And so making sure that you're catering to the larger user base I guess is probably more important than maybe just the ones that are most loud.

00:12:53:16 - 00:13:13:10

Leah Tharin

There's a specific danger that comes down to the maturity of the business. So let's say you starting completely new. We have a lot of assumptions that we make about the business. We have to kind of find out with qualitative research on who we're going to go for. Now, we have data that proves that this is a very dangerous process.

00:13:13:10 - 00:13:32:20

Leah Tharin

Why is this a dangerous process? Because we know that most of the companies at that stage will fail in trying to kind of find buyers that are willing to pay money for this. Now, let's just say, okay, you have some kind of revenue. You can stumble into quite a lot of revenue actually nowadays and you do not really know like so now, how should we grow the business?

00:13:32:20 - 00:13:50:03

Leah Tharin

Because this is usually the stage for appeal. G also becomes quite important there. You really have to go into your data and try to figure out, do we know who actually gives us the most money for the most for the most value that we are presenting? Can we actually narrow it down now and really execute on these people specifically?

00:13:50:03 - 00:14:14:12

Leah Tharin

If you have like 4 to 5 million of revenues, sometimes you have a small base in your data that is retaining incredibly well on the longer term. So all of these customers, all of these people have converted in the same way, but some of them love your product so much more than the rest. And this can sometimes be the one case that you want to have to scale up the company.

00:14:14:14 - 00:14:38:05

Leah Tharin

So a good example would be let's say you have a telehealth application and you are trying to allow doctors to give medical advice to their patients, and you start to figure out that the doctors that are dermatologists, so people who are treating skin aberrations and that kind of stuff are loving your product much, much more. And you try to figure out, so what is what is the deal?

00:14:38:05 - 00:15:11:19

Leah Tharin

Why do they love our product more than the other average doctors or they just like they have more requests or like something is different about them and the data? Then you might find out that because dermatologists are treating with stuff that is very visual, they can handle much more of their patients journey through the visual medium. And so like, hey, sending pictures, using AI to kind of also diagnose patients and so forth, this is a very good example of where it can sort of make sense to understand who actually loves this value that you are providing the most, or is there an opportunity where we can actually do the inverse, where we say, Hey, if

00:15:11:19 - 00:15:25:11

Leah Tharin

we have a AI and we can use image analysis that we might actually be a better product for dermatologists because they do not have a current solution in the market. So that's a good example of why virtualizing down and really understanding who gets the most value is important.

00:15:25:11 - 00:15:44:19

Ben Hillman

For folks that are unfamiliar to our folks that are building a business. Just starting out already, already running. PADDLE has a B2B SAS index report that we put out monthly where we track the cumulative monthly recurring revenue. It's from a sample of 35 to 34000 plus companies on our metrics product. And our December report was sort of an end of the year.

00:15:44:21 - 00:16:08:02

Ben Hillman

Look back. We found that there was the first ever decline in compound annual growth rate since we started tracking the index January of 2019. So we're talking about like a four year period. And if you're sad, yet it gets worse. Sales is also down, churn is also up. And I've got some questions, but any initial reactions that you have to that.

00:16:08:04 - 00:16:27:05

Leah Tharin

This is really to be expected because we have a lot of stuff that is coming from quite a few directions. So the first one that we have is, is that we are still suffering from capital not being this readily available, which means also our customers have less money to pay. So they're being also more defensive about where to spend stuff.

00:16:27:05 - 00:16:50:02

Leah Tharin

On the other side, we have a AI. Everything is becoming much more efficient and efficiency. Unfortunately means if you have a business that was running on 100 people for a very specific revenue, now you only need 75 people to run the same revenue. That means you can actually reduce the prices to gain more market shares. So we are starting now to fight on price, which is then increasing TAC.

00:16:50:04 - 00:17:13:08

Leah Tharin

It's also increasing TAC payback periods and so forth. So we have pressure from the market because of the technological advancements. On the other side, we also have the capital question. And the third thing is it has never been easier to compete in this market with a product. Does not mean that it's easy to compete with your product, but you there has never been more competition for the same amount of market that we had before.

00:17:13:08 - 00:17:42:08

Ben Hillman

And to that to the spirit of that. So we found in the in the report well, actually in the OpenView benchmarks report that we did as well, the separate report all the links and stuff will be available below. Right. They'll be below the link to product to lay out their income. I'm wondering, so the outliers that we've found that have actually done well and maybe become more efficient in a world where efficiency is so important right now are those that are typically air native or in vertical SAS?

00:17:42:09 - 00:17:54:08

Ben Hillman

Is that just the direction that every company should every company focus on having an act on it or like figuring out that radicalization? Or is that just we learn from what they're doing?

00:17:54:08 - 00:18:15:19

Leah Tharin

Absolutely. No, Not every company needs to have an A component, but I'm saying what I always say also in regards to whether you should do PLG or whether you should not, if the core use case that you're serving is substantially better by having a I and you're not doing it, then one of your competitors will do it. This is putting you in front of two problems.

00:18:15:19 - 00:18:39:07

Leah Tharin

So whenever we have a technological jump, like the one that we have right now, this is putting companies who are completely established in a market for in front of a very big problem. First of all, if you have a running revenue and you're changing a system like this so much, you will lose revenue. It's normal. This is absolutely normal because you're changing something about the core product.

00:18:39:07 - 00:18:53:17

Leah Tharin

You know, like some people just don't want to change with you, but you have to also do it at the same time. Changing a boat that is moving already in a specific direction is difficult and is more expensive than like completely founding a new company that is doing this now natively, as you said. So that's the first thing.

00:18:53:17 - 00:19:17:11

Leah Tharin

But I do not believe that this is the deferred, the final destiny for for all these companies. On the contrary, you can also run a strategy where you think like, hey, you know, like the human touch here is actually much more important than whatever I can provide. There's a lot of stuff right now happening where you specifically go outside of your way to avoid AI, and that can also make sense.

00:19:17:17 - 00:19:44:19

Leah Tharin

But these are usually highly, highly, highly specialized and vertical solutions about very specific use cases that cannot be served with like a horizontal approach. So what this is, is it is a play on going upmarket, you know, delivering more individual solutions for individual industries, for very individual players, because their it still makes sense to have a sales motion and that's that's what it is It's always been the case.

00:19:44:19 - 00:19:59:13

Ben Hillman

Are there points where like it's it's a little bit too much where the value is actually speaking to a person. I know there's definitely for myself customer experience experiences where I would prefer to have that human touch, which I may use case of one here, but I know that that exists.

00:19:59:13 - 00:20:29:15

Leah Tharin

I think we have two major motions right now that we see materializing in the market where also people are willing to pay money for. So, you know, like real value, not just like Apple Vision Pro, this is amazing for 10 minutes And then they never then they return it. I mean, real, real value when you think about Jenny or any of these productive tools like CBT that can formulate a text for you and so forth, they're not good enough to cover the entire flow from A to Z.

00:20:29:17 - 00:20:47:23

Leah Tharin

So it's not about, you have a salesperson or you have a AI that is doing now the same job, or like you have marketing and then you have to do the same job. What it tends to be is that instead of having and person sitting on an entire job for 100%, we do the start the 10% at the start.

00:20:47:23 - 00:21:07:06

Leah Tharin

Then we have to take over the boring stuff and 80%. And then we put also qualifying portion of this at the end of it, which is to human again. And then you tend to have a really, really good solution in the end. So for instance, customer support is a very good example. Do I mind if I have a chat bot in front of me or a human person?

00:21:07:11 - 00:21:29:12

Leah Tharin

Actually, I don't if the chap genuinely helps me and this is one of the things that is quite funny to me. So if you remember in the past, I don't know, about 20 years there was, there was something really funny happening with Google. So Google came onto the field. We started to search on Google. Everything and every company that I remember had a search engine on their own site.

00:21:29:14 - 00:21:47:00

Leah Tharin

But Google was actually better in searching through company sites and the companies themselves. So what do we do? We don't even use those anymore. We always go back to Google even if we're on the website. So if you go to United and you're looking for, I don't know, the phone number, you probably find it faster on Google if there is one to start with.

00:21:47:01 - 00:22:13:01

Leah Tharin

The customers always go there where it makes the most sense for them, right? And if you cannot provide them a good solution, they will not go for your solution. Unfortunately, in the case of airlines, you have to also talk with this particular airline if you can separate with air. And air is really good in this regard. Like if you can just like take like 30% of the support requests and handle them through air, then there's a real case to be made that you do not need maybe the Indian support call center anymore that was outsourced.

00:22:13:01 - 00:22:32:13

Leah Tharin

It handles really, really simple requests that you don't need to have the business context for. So this is a good example where we really try to marry what I actually offers as additional value with what we do as as humans. And there's a lot of examples like this, but that's, that's just yeah, that, that's just what it is.

00:22:32:15 - 00:22:36:06

Leah Tharin

It's going to be a hybrid going forward for, for a lot of use cases.

00:22:36:06 - 00:23:06:01

Ben Hillman

I brought us away a little bit away from the appeals specific talk. So just want to make sure that and again, that statistic we were talking about was that the combined old growth rate in December of last year was the lowest that it's at that span of the last four years. Sales are down, churn is down. Specifically, does PLG like if you were to just and I understand you can't just turn on PLG tomorrow it's it's a tier point shift moving a large ship which is a metaphor we use a lot over here.

00:23:06:03 - 00:23:14:04

Ben Hillman

Does PLG fix all these issues? Is it get you directionally like is PLG to improve your your sales, your churn, your compatible growth rate?

00:23:14:04 - 00:23:35:18

Leah Tharin

So I think classical sales, classical sales that does not care about retention is over. I really do believe so. So why what do, what, what am I saying here? What am I saying here is that again, if you have commoditized markets or like anything where there's competition, if the customer can switch, they will expect to be able to switch.

00:23:35:18 - 00:24:14:08

Leah Tharin

Times where someone commits to for two years, even on an enterprise contract are getting rare and rare and rare. So why is this now relevant for PLG? Because PLG is a distribution framework, right? Like where we can get some volume or like some value just that we can self-serve. This matters because if we are so good in understanding, like what kind of features about our products are actually important to acquire a user, then the step to understanding like what we now need to have to retain them is also just it's just, you know, like it's one step a little bit further and then what kind of features do we need to, to, to wow the

00:24:14:08 - 00:24:45:21

Leah Tharin

users on a more longer term basis. So like what also creates habits, This view tends to be much more efficient in creating good long term products, like fixing churn, improving nets, revenue retention. Then just going by what Gary in sales thinks it is, because what sales does and what sells is really, really good at as well. Like if they're on a system like classical sales is to come up with features that help you sell the product, but that does not retain the customers necessarily.

00:24:45:23 - 00:25:07:04

Leah Tharin

Why the sales not care about this or the classical sales functions, because their compensation plans are rewarding them for just selling but not for retaining. And usually two year contracts are longer than the average tenure of, you know, a salesperson that does not perform, but that closes really well. Companies are much more interested in finding long term revenue.

00:25:07:06 - 00:25:25:02

Leah Tharin

We know this, all investors are or companies are. And this is why this classical kind of sales shark behavior in that sense is going to go away. We will see this in changing sales compensation plans. We will see this with much more data maturity because exactly as you said, we see in the data what works on the longer term and what doesn't.

00:25:25:04 - 00:25:33:18

Leah Tharin

It doesn't help you if you get 20 new customers, if you're losing 22 at the end of it, the metric of net new revenue is nice, but it's not not good enough anymore.

00:25:33:22 - 00:25:37:16

Ben Hillman

How do you get sales on board with PLG? Like, should they feel this threat?

00:25:37:21 - 00:25:56:03

Leah Tharin

Absolutely not for two reasons. The first one is, is that 95% of businesses that distributes through product led growth have a sales department. It's very, very clear that we need to have sales. The difference is, is that sales is becoming data driven. Now, what do I mean with that? Every salesperson that I know uses data already, but the question is what kind of data?

00:25:56:05 - 00:26:26:21

Leah Tharin

Classical sales is really good and kind of figuring out like, who am I talking to? What kind of company do you sit? What is the size of the account, Who is the buyer, who is the approver? Like, you know, buyer personas, that kind of thing. Now what we are trying to do from the product side, we are trying to give you usage data that you can use to combine it with this firm of graphics together to kind of not only figure out who am I talking to, but when is the best time to actually call them up in case it's necessary.

00:26:26:21 - 00:26:50:06

Leah Tharin

And that together is generating a very, very efficient sales motion that is not so much focused on outbound, which is not efficient anymore as we know because of a I again, but that is depending on a really like on an inbound strategy where they are trying to see that, okay, here are some leads that are very interested in the product and here's what they did in that product before you even pick up the phone.

00:26:50:08 - 00:27:04:22

Leah Tharin

This is creating a very personalized experience. I mean, I cannot tell you how many times where I started to get a B2B product. I was talking to one guy who did not know that I was talking to another guy and in the customer success guy, I also had no idea what I was talking about with the first guy.

00:27:04:23 - 00:27:31:01

Leah Tharin

This has to go away because B2B companies who manage to get this kind of onboarding experience and, you know, like talking to them much more smooth will always win out for against the other ones. But this costs money. So we have to make sure that it becomes efficient. And PLG is really good because it identifies the people who will pay with you much, much better than compared to a classical sales motion.

00:27:31:01 - 00:27:40:13

Leah Tharin

So it's not about sales versus PLG, it's actually about product led sales. So it's a combination of both because PLG alone cannot survive its sales led growth alone cannot survive.

00:27:40:16 - 00:28:01:12

Ben Hillman

And this comes down to, as you said, like it's come after expansion revenue as well, where, you know, it's been our advice with with cross sales and with upsells. And I know you've said as much yourself, but I'm wondering kind of going back a little bit to driving the car and getting the air conditioning unlocked, how do you optimize for expansion revenue without compromising the user experience.

00:28:01:12 - 00:28:21:10

Leah Tharin

Thinking about how we used to build products and how we're doing this right now. So like, let's say you have a classical product that has an enterprise tier and like a smaller company tier, your first initial reflex would be to put the enterprise people somewhere over there with their own product and then the small company product. So over there, but they have completely different experiences.

00:28:21:10 - 00:28:36:21

Leah Tharin

Now you could argue and say that, well, these are different products because, you know, the smaller teams do not have that many needs as the enterprise customers have and so forth. And you might be right in some kind of way or you start to challenge just and say, Hey, we're going to go and do what HubSpot does, for instance.

00:28:36:21 - 00:28:55:15

Leah Tharin

So what HubSpot does is they take a very specific use case. So for instance, the marketing up and then marketing up conceptually feels exactly the same as it is for a small marketing team, as it feels for a big smart marketing team. So like if you know how to use it in a small team, you probably also know how to use it with a lot of teams.

00:28:55:15 - 00:29:14:08

Leah Tharin

There's still a lot, of course there some additional functionality here, but we do not restrict the users by size. Why do we not do this? Because there is a specific chance that the that the account is going to expand on two ways. The first one is maybe they only onboarded one team and now we have multiple teams starting to use the product.

00:29:14:10 - 00:29:31:22

Leah Tharin

So therefore we already have a champion team in the company that is going to help them to on board or the company is naturally growing with you as there are with you. You know, they start to make more revenue. They also start to hire more people. So naturally these new people will also start to use the product. So where does the expansion revenue come from as well?

00:29:32:00 - 00:29:54:20

Leah Tharin

Maybe in that company we see how successful the marketing department is and now we're going to cross-sell to the side to also sell something about the CRM. How is that different? Well, it is different because the entire marketing department already loves you. You're already present as a vendor in the system. So I don't have to go through this entire process anymore with you that everybody else that is now offering the CRM has to.

00:29:54:21 - 00:30:14:00

Leah Tharin

It's this typical conversation that you have in a sales call. by the way, we were already using marketing the marketing suite that you have. yeah. that is easy, right? Like, you can just like it's easier to activate. This is how you're driving this. So it's not about like having one entry way to the product. You actually offer use cases and then you give them an entry.

00:30:14:00 - 00:30:30:10

Leah Tharin

And then if there is a natural expansion from this, use case to another use case, you make it easy for them. And that's how we think about business on a conceptual level. So we're not separating anymore enterprise from small. We really try to separate by use case whenever it's possible, and that's the product strategy decision that everybody can make.

00:30:30:10 - 00:30:48:21

Ben Hillman

I know a little more data at you with this, but it's supporting what you're saying there where from our State of SAS pricing report that we did last year primarily, you know, we have this person product which if a not about pricing kind of channel plug in there a little bit. We found that 63% of respondents change their prices in the last year, which is good.

00:30:49:00 - 00:31:11:15

Ben Hillman

That's that's much, much better than in the last ten years. But the next step is focusing on what you just said. There is, you know, we want folks to trust pricing a little more frequently like quarterly. But most importantly, and I think this is tied in to that expansionary revenue conversation, we know that value based pricing is the way to go, not focusing on something like competitor based or cost plus.

00:31:11:20 - 00:31:23:02

Ben Hillman

Because to your point, if someone using your product and it's based on value, it should be logical on both that when they expand, either go up or cross-sell or something like that.

00:31:23:03 - 00:31:45:05

Leah Tharin

That is exactly what it is. And I could give you also good example, when we were selling our product, our like our PDF solutions, our chickpeas were completely different than the ones from Adobe or the ones from Fox. It even though the product solution or like the technology behind it is largely the same, you don't see from the outside exactly who the ICP is, except for maybe in the messaging.

00:31:45:05 - 00:32:02:21

Leah Tharin

But like you don't see it in the product and how it behaves per se, right? Like it's not that easy to see. Or is that that easily like who you're actually targeting? Yeah, You know, to your point, I mean this is what it is, right? So like, if we have different kind of special cases, it's almost like having different verticals inside of our product that we are starting to address.

00:32:02:21 - 00:32:07:15

Leah Tharin

And that seems to be going better than just like horizontal solutions that try to take everything.

00:32:07:15 - 00:32:27:19

Ben Hillman

If we move back in the I'm thinking, I guess in the in the funnel side surprise marketers thinking about the funnel. It seems like this does put the onus a tad more on marketing to bring those initial users, those users that are going to be actually using that product before actually paying your money. Does this shift the onus on to marketing a little bit?

00:32:27:19 - 00:32:57:02

Leah Tharin

So marketing has always been struggling with this kind of blame game that starts like you have to bring us better quality leads or like you have to bring us by the despair that that right So like product tells them like what to do or there's always like this kind of mismatch. And the reason for this is, is that there is a gap between marketing and product that we have never really covered, and that is who is responsible for improving this process between the people that are landing on our website and the people who are using the product.

00:32:57:04 - 00:33:12:11

Leah Tharin

And this is what we call growth as a function. It's about how do we activate these users in the most efficient way? How do we decide which one of those do we hand off to sales, Which ones of them do we keep in the product and so forth? And to your question, a very modern way to look at this.

00:33:12:11 - 00:33:33:04

Leah Tharin

And also like with effective marketing is that we're not measuring anymore necessarily like this classical. MQ Well, where are you just like, okay, now this is a marketing qualified lead, but we can also start to measure how many of the people that you are bringing into the product per dollar are reaching the moment, which is like this core value again, right?

00:33:33:04 - 00:34:02:06

Leah Tharin

So like before you even pay, like we just want to have people who are reaching the moment because we can also predict afterwards how many of those that are reaching the moment and convert into having a trial with us. And then how many of those are converting into being full customers? Because this is dealing with with a really interesting problem that marketing has, the higher the quality is of the traffic that they're bringing, the more likely they're also going to convert to the moment.

00:34:02:08 - 00:34:16:16

Leah Tharin

And this is something that you usually struggle with. So like how do you determine the quality of a marketing traffic? Well, well, it's you know, if sales is converting better, but is it now because of sales or is it now because of marketing bring better leads? So this takes away a lot of this kind of blame game, right.

00:34:16:18 - 00:34:37:21

Leah Tharin

Because we're trying to attach some kind of quality that has nothing to do with payment. It tends to be that between a visitor and a payment, there's just way, way, way too much happening that we do not observe with data. And this is where growth teams come in specifically for policy, because the payment usually happens later that we try to separate the steps.

00:34:37:23 - 00:34:48:16

Leah Tharin

And this allows us to experiment on pricing, on packaging, the onboarding flows. And just by doing this, you learn a ton that you have never really expected beforehand.

00:34:48:16 - 00:35:09:05

Ben Hillman

It feels like a self repeating cycle in a sense for like the more people that come in, they realize the value like better qualified. You are qualifying those leads for folks that are doing this that maybe, you know, going back to that ship metaphor, this is seems like a pretty dramatic change that needs to happen for a company that maybe isn't considering PLG at all.

00:35:09:05 - 00:35:26:21

Ben Hillman

And there's an opportunity. What are some of those like sort of initial conversations? I mean, I myself, let's say I'm just hearing a PLG, I'm in the marketing department. I know. Stretch. How would I approach maybe the rest of my team, like, Hey, we should think about this. You know, this this has a lot of opportunity here.

00:35:26:21 - 00:35:52:07

Leah Tharin

I can give you a very specific example again from where I am right now at got photo. We have 20 million in revenue. And the question is, so like, how do we evaluate whether PLG makes sense? And a lot of the things that we just do is we try to really simplify it again. So the very, very first step that any company has to do is to define like, okay, so like for one buyer type or like for one ICP What is the moment?

00:35:52:07 - 00:36:17:14

Leah Tharin

And an moment is something that we can measure when person so-and-so reaches for the first time. This particular moment they have reached this particular moment, right? Like and then we can measure this and just getting to this particular alignment should be the very first step. Once you have that, you can start to think about, okay. Are there things that we can do to actually increase the conversion rate to this particular moment?

00:36:17:17 - 00:36:36:19

Leah Tharin

Of course, the entire kind of the entire kind journey is a little bit more complicated than this, but like, this already puts a lot of challenges in front of of teams. So how does the product manager query for this moment do they have data access? Do they know how to find this stuff? How does this fit into the entire business context?

00:36:36:19 - 00:36:58:02

Leah Tharin

So just like starting simple, defining one signal and making sure that people can consume the data but also surface it themselves and create business cases based on it is probably the start of everything because then you can also try to analyze like, Hey, is what we do really efficient versus what we're like? Yeah, what our competition is doing or whatever it is.

00:36:58:02 - 00:37:23:06

Leah Tharin

Whatever triggered you first to kind of look into this? Because oftentimes it is the competition because they see like, they offer a freedom and we don't. I always encourage people to do it step by step. So if you have absolutely nothing, try to start with an interactive demo. An interactive demo, even in the most enterprise led ways, is a way for marketing to also kind of try to figure out, Hey, can we give something to customers that also has tracking inside of it?

00:37:23:06 - 00:37:41:03

Leah Tharin

So there's a lot of companies that are starting to do this that are just offering interactive demos as a service. And once you have figured out or like you're confident that you can actually offer more, then you can also offer a trial. Once you figure it out, your trial, you know, like, so, hey, how does this work? Like you know, like this entire onboarding friction is a bit much.

00:37:41:03 - 00:38:06:05

Leah Tharin

And you can also think about adding a freemium. But what I definitely do not recommend for companies is to jump into a freemium without understanding whether you should even do a trial or like, you know, there is just so much stuff to learn that going from having a sales process to we have freemium trial, reverse trials and then some other interactive demos, you just you're trying to do too much in too little time.

00:38:06:07 - 00:38:13:08

Leah Tharin

So going down the ladder is probably easier for most companies. That's what I would say as a as a first principles.

00:38:13:08 - 00:38:33:22

Ben Hillman

Answer I just want to clarify here, because I know earlier on you said that folks who just have a demo like that's not exactly Pogo here. In this instance, though, are you suggesting that a demo could lead into like a freemium offering, a free trial or something like that? That's but that's like kind of the leading thing that you could maybe set up.

00:38:34:01 - 00:38:38:05

Ben Hillman

But but that itself is not. PLG Basically, I think what you would.

00:38:38:06 - 00:38:56:00

Leah Tharin

Say, who cares? Who cares whether it's PLG or not, like what you are after is it's like you are after more revenue. I think the lines are becoming really blurry. So traditionally we said that, well, you know, having an interactive demo is more like a sales assist, right? So like, we're we're producing something that is helping sales to sell.

00:38:56:02 - 00:39:18:22

Leah Tharin

But now I can flip it on my head. I can also say that, well, what if this entire tool has analytics in themself? So like, let's say, instead of me giving you the demo, I just I give you the demo and then I lead you through it and we are tracking how you're using this. So in HubSpot, it automatically updates whether you've seen a specific part of the product or not, or whether you're sharing it with another colleague or whatever this is.

00:39:18:22 - 00:39:40:04

Leah Tharin

Now. PLG, I don't know. It depends on what you're doing with this kind of data because at the moment I am not in the picture anymore. I can also give you this interactive item on the website itself, so you're kind of self serving some kind of value already. And this is the thing where I'm just saying like it doesn't really matter whether it's PLG or whether it's like sales, like growth.

00:39:40:04 - 00:40:04:11

Leah Tharin

If you can automate and make it more accessible to the customer to see something so, for instance, transparent pricing, there's just like this eternal site about, should we have a pricing page or not and so forth. And I'm always like, Hey, if you cannot be transparent in your pricing, you will have a multitude of problems unless your product is really so complicated that not even a competitor would start new, could do it simpler.

00:40:04:11 - 00:40:25:06

Leah Tharin

But that's now in a totally, completely new can of worms. But this is why, I mean, like there is no reason in 2020 for why you do not have at least an interactive demo. I don't care how upmarket you are. I really don't care if we can do it for robotics companies that have ATVs of like 5 to 10 million and so forth, you know, like actual hardware products.

00:40:25:06 - 00:40:30:07

Leah Tharin

And you cannot show something on the website. Come on, That's just like, is this no more excuse?

00:40:30:07 - 00:40:43:09

Ben Hillman

It seems like it comes from a place of fear of of of being trans that transparent. The element that you said is around is there some boner? There's a lot of vulnerability there where you're exposing yourself to if you really are providing that value that you say you are?

00:40:43:11 - 00:41:04:01

Leah Tharin

Yeah, there's two reasons for this. The first one is like, Yeah, I don't know how to do this and different. So that's more coming from a place of I don't know what I do not know. And the other thing is like, yeah, again, sales compensation. If you jump into a meeting like this and you say like, Hey, we're going to change how you earn money, nobody wants to hear this, the Sierra going to do and I want to hear this.

00:41:04:01 - 00:41:19:15

Leah Tharin

And the Sierra is usually also the person in the company that is the closest to the revenue. So now you have the person who is generating the most revenue having a panic attack. So like this is also where product people just like they just need to learn how their stuff is related to the revenue. And that goes also to founders.

00:41:19:15 - 00:41:46:20

Leah Tharin

Like if you cannot make these two motions comparable with each other and how they can actually help each other, you have no chance. You're not going to go with conviction like, it's cool. You're not going to go against 10 million in revenue. Like, it's cool. And this is not, we should do it. Or yeah, we should redefine the way how we call things or like we should have a freemium, I guess always going to ask yourself like, okay, so what are we doing with the existing revenue?

00:41:47:01 - 00:41:49:11

Leah Tharin

So you need to have a business case behind this. That makes sense.

00:41:49:15 - 00:42:01:09

Ben Hillman

Well, I could talk for another hour, but I want to be respectful of your time here. Is there a place where folks have finished up here? Where where should they go next? They got to lay out they're not com Is there is there somewhere you are some folks.

00:42:01:09 - 00:42:13:03

Leah Tharin

There is this website Google. You just go there type in my first name Leah and then PLG and then you find a lot of material. That's the good thing about having a strong brand. I can just like it's like my first name, PLG, and then you see a ton of my stuff.

00:42:13:06 - 00:42:15:10

Ben Hillman

And for folks listening, how do they smell that?

00:42:15:12 - 00:42:18:20

Leah Tharin

Leah is just Leah and PLG is PLG.