This month, Work-Bench, OpenView, Primary Venture Partners and Lerer Hippeau hosted the second of its four-part SaaS Growth Camp — a workshop and AMA series for the firms’ portfolio companies tailored to the complex ideas behind SaaS growth and go-to-market strategies. While the first session dove into the world of pricing and packaging, our second session focused on how to build a Product Led Growth (PLG) mentality from the ground up with Sam Richard, Director of Growth at OpenView.

First, it’s important to know: What is PLG? And what successful SaaS companies are already utilizing this framework?

Product led growth (PLG) is an end user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion, and expansion.

At its core, PLG aims for a natural rate of growth based on the customers’ journey through product. Millions of customers are driven to use the products above not only because the product itself is free, but because there are a number of product-focused go-to-market strategies built into the companies’ DNA.

Here is the five step framework that makes up a great PLG business:

#1: Discovery

The discovery phase can be defined as the way the user finds your product and there are three primary methods in which to do this:

• Organic discovery by early adopters: This is the hardest, yet most most valuable form of discovery. Early adopters are critical in your customer feedback loop and tend to stick with the product longer than others. You can build waitlists or offer your product to influencers during the early stage to build hype.
• Collaboration or virality: Developer tooling is a great example of collaboration and virality. Developers are naturally chatty, helping spread the word of your product from one developer to another. Try to infiltrate these types of collaborative communities and showcase your product’s value there.
• A need that is felt strongly by a user who discovers the tool: In this instance, the user is going to discover your product by Googling their issue, or via other forms of documentation or support content. Developing programmatic SEO and thoughtful landing pages are the best methods to ensure your product is discoverable in this way.

#2: Start

The start phase is a bridged connection between discovery and the actual use of your product. Here your users will say “alright, I’ll sign up and give this a try,” so nailing your product and website messaging are critical at this stage. Here are four tips on how to do this:

• Revolve your messaging around people, not product. Answer the question “how will my product make the user feel better or look good?” Also, use real photos of people (avoid stock photos where possible) so that customers can imagine themselves using the product.
• Use an inverted pyramid to tell your story. Feature the most important and most convincing value proposition upfront. From there, answer the more common or lower-hanging questions.
• Show, don’t tell. Always have some version of your product on your website. When possible, show the product in action by using a video or animation (gifs).
• Create FOMO: Messaging must imply that the top people in your industry rely on your product, and if others want to keep up with them, they need to start using your product too. You can create this messaging by putting logos and quotes on your website that show value, but don’t alienate existing customers.

#3: Activation

*This step is the key to the growth engine of all product-led success!

The activation phase is the moment your product delivers on the value that you promised. It’s also sometimes referred to as the “aha moment” when a user understands why they would actually want to use your product.

In order to have a smooth activation, make sure it’s easy to achieve by the average user, can be completed relatively quickly, predict user retention, and correlates to business performance (aka make sure you can prove ROI for them to pay and ultimately expand).

According to OpenView’s research, browser extensions see the most successful activation rates (>50%) given their simplicity and repeatability. Single-user products (~40%), team products (20%), and multi-user products (20%) follow behind.

#4: Convert

During the conversion phase, it’s time to start thinking about how many users are actually paying for your product. In today’s market, it’s hard for a product to stand out solely based on a free offering, given it’s so commonplace. So how do you create a hook? Spice up a free offering by creating more nuanced options, including:

• Short-period free trials: This creates a sense of urgency for users to prove the value of the tool for their business prior to paying.
• Metric on success: This allows users to start with a free offering, then increase price only once they are successful with your tool.
• Pay-as-you-go: This gives users the freedom to have pricing that scales without being tied down by contracts or sales conversations.
• Power users pay more: This creates a free product for everyone in order to get initial engagement, but then increases pricing for those that use more or deeper features.

Here, pricing and packaging is going to be a key driver of success. But make no mistake — it’s still important to hire an early sales leader / sales team to help drive PLG strategies. OpenView found that PLG companies with no free version had 92% sales assisted growth and even companies with a free version had 47% sales assisted growth.

#5: Scale

Once you have a paying user, your work isn’t done. Now your job is to focus on user retention and user expansion.

However, if you’re a customer success team, what do you prioritize? In the early days, churn can be the most harmful, so start there. The important thing to remember is that even if two companies are converting users at the same rate, if only one is successfully handling retention, at the end of the day, that company will be the long-term winner. While no company can retain 100% of their users, make sure to fill your leaky buckets so the vast majority stick around. From there, make sure a small subset of users are expanding to higher tier pricing or other features.

Thank you to Sam Richard for all her insights for this blog post.

For more tactical guides, check out our Enterprise Playbook Series, which provides founders with the tactical knowledge needed to successfully go-to-market and build a world-class enterprise software company.