Discoveries from 2 years of building our PLG engine Test
Two years ago, Heap embarked on a mission to embrace Product-Led-Growth (PLG). Through countless iterations and valuable learning experiences, we’ve been honing our PLG motion. Some of these principles have since become integral to our go-to-market strategies.
Along the way, we did a lot of learning about what worked and what didn't. By sharing our experience, we hope that you can leverage our insights to build a robust PLG motion of your own. Let our journey serve as a guide as you embark on the transformative path of Product-Led-Growth.
First things first: Why PLG?
At its core, PLG is a strategy where your product takes the lead in driving growth and customer success. PLG empowers you to unlock the full potential of your business. Leveraging your product to sell your product leads to lower customer acquisition costs, faster sales cycles, and a sales team that is able to spend their valuable time on the largest and most complex deals.
It’s no coincidence that some of the most successful software companies (e.g. Slack, Zoom, Dropbox) heavily employ PLG strategies. These companies aren’t doing any magic innovation though. They’re just meeting the preferences of their customers. According to Forrester Research, 75% of buyers prefer to educate themselves rather than talk to a salesperson. PLG meets these demands and propels your business forward.
Where did we start?
The initial focus of Heap’s PLG motion was a self-serve checkout functionality. Our self-serve flow empowered customers to buy our product with minimal or no human interaction. This allowed us to land a large number of customers in a highly scalable way.
While many of these customers were small, the limitless scalability of PLG made it a valuable investment. As a testament to our land-and-expand approach, we've successfully landed multiple customers whose contracts have grown 5-6 times their initial revenue within less than a year.
Things that went well
Like with any new initiative, some things went well. Others became “learnings and opportunities.” Let’s start with the positives.
From dormant to dominant: free trial & free tier
When we kicked off our PLG motion, we had two valuable assets already in place that made a world of difference.
First up, we had an existing free trial option. It wasn't exactly optimized. But, it was there! That gave us a solid base of users streaming into the product each week. We rallied a team to activate and convert these new trials through a new self-serve checkout process. By giving the trial experience some well-deserved TLC, we pumped up our trial activation rate by 15% in just one year!
On top of our free trial, we already had a free tier. This allowed companies with fewer than 10,000 monthly sessions to keep using Heap beyond the standard 14-day free trial. Over time, we had amassed a large base of free users, many of whom had outgrown the confines of the free tier. So, we put our thinking caps on.
Ultimately we got crafty with our in-app guides (we use Appcues) to create a paywall that encouraged, and then forced, free users who exceeded the limits of the free plan to upgrade to a paid plan. Because we used Appcues we were able to do this quickly and with zero engineering time needed. This let us ramp up revenue and the number of paying customers we landed while the Product team stayed focused on improving the trial experience.
These free tier upgrades still reign supreme as our most abundant source of unassisted lands. Every few weeks we pull a list of accounts that are on the free tier but exceeding the free tier session limit. These accounts are entered into an Appcues flow where they are first shown a dismissable paywall notifying them they are exceeding the limits of the free tier and encouraging them to upgrade.
If they don’t choose to upgrade, a week later a non-dismissable paywall forces the account to upgrade before they are able to access Heap again. We make sure only to include accounts above a certain threshold of activity in this flow, which allows us to target just the accounts that are most likely to convert to paid.
Orienting around data
Heap, like many SaaS companies, is a traditional sales-led growth company. Building a PLG motion at a sales-led growth company requires an often tricky change management process. You need time and buy-in from functions across the organization, including Product, Sales, Product Marketing, Finance, and Demand Generation. To tackle this, we let the data take the driver's seat.
First, we set a North Star KPI (Key Performance Indicator) for our cross-functional PLG team. Initially, we focused just on the number of new customers acquired through our self-serve purchase flow.
To ensure ownership and accountability, we also established driver metrics for specific functions within our PLG team. For the Product Development team, the North Star KPI revolved around new account trial activation rate. This was defined by the percentage of new trial accounts that successfully:
Set up data flow into Heap
Defined their first autocaptured event, and
Ran their first query within 14 days.
When an account completes all three of these steps during their trial period, we know (and confirmed by correlating to longer-term account outcome metrics) that the account was set up for success with Heap.
Meanwhile, Marketing and Demand Generation focused on increasing the volume of new trial account acquisitions. So while the Product team focused on getting trials activated and having success with Heap, the Marketing team focused on feeding the top of that activation funnel.
To bring it all together, our cross-functional PLG team started weekly standups. In them we dive into our North Star and driver metrics, providing updates on how each function is contributing. These meetings can be as short as 5 minutes. But they still often spark thought-provoking questions and uncover valuable insights.
Through these standups, we identified key PLG activation and conversion levers. Together these boosted our trial activation rate from 23% to over 40%.
For example, we identified that event definition was our biggest drag on activation. That led us to ship a number of improvements to the event definition flow for new accounts, including proactive automated event definition and making it easier to explore raw data. These led to a nearly 50% increase in the rate of trial users who defined an event within the first 14 days.
Powering sales with PQLs and ePQLs
Our journey into the world of PLG kicked off by revamping our trial experience and empowering small companies to effortlessly purchase Heap without the need for human interaction. But we didn't stop there. As our PLG motion matured, we set our sights on expanding its impact.
Enter the first steps: Product Qualified Leads (PQLs) and Expansion Product Qualified Leads (ePQLs). PQLs and ePQLs are leads sent to sales based on the user’s actions in the product that indicate a conversion or upselling opportunity. For example, one of our PQL triggers was when a user started trialing a paid feature (such as session replay).
Just like we did with our self-serve purchase journey, we started by diving deep into the data to establish some foundational KPIs. How many (e)PQLs were we generating? How much were they contributing to our overall revenue? And which (e)PQL types are our superstar performers? To uncover the revenue potential of driving more (e)PQLs, we even crafted a basic attribution model.
We found our (e)PQLs were among our best-performing leads from a conversion and revenue-generating perspective. In particular, (e)PQLs triggered by users who requested to talk to sales about upgrading to a higher plan from within the product performed especially well.
Armed with this knowledge, we've kicked it up a notch. We're infusing our product with more paid-only and premier features, then adding some cleverly placed gates. The result we’re expecting to see? A surge of high-converting (e)PQLs that will supercharge our Sales team.
Mistakes we made along the way
Our PLG journey hasn't been a smooth, straightforward path. We've stumbled, tripped, and made our fair share of blunders, but those missteps have taught us invaluable lessons. Here are some of the biggest takeaways we've unearthed.
Embrace a larger playing field
At the start of our PLG journey, we rolled out self-serve purchase functionality only to SMBs in the United States. It seemed like a smart move to avoid sales team push-back and tax complexities. But we soon realized focusing exclusively on SMBs in the United States limited our TAM too much to be viable long term.
Lesson learned: a larger playground equals a greater ROI potential for our self-serve motion. Since launch we have slowly increased the geographies and sizes of businesses we offer self-service options to which has led to increased lands (and expands) and more revenue driven from our self-serve business so our Sales team can stay hyper-focused on the largest accounts.
More than self-serve checkout
PLG is not just about self-serve checkout. When we initially embarked on our PLG journey, we had our eyes set on serving SMBs purely through self-serve capabilities. But here's the thing: many people in our Go To Market functions started associating PLG solely with that self-serve checkout experience. This ignores PLG’s ability to accelerate all parts of a business, including landing, expanding, and retaining customers at both SMBs and Enterprise-level companies.
As we matured our PLG motion, we started thinking more about Product Qualified Leads (PQLs) and how we could use the product and surfaces within the product to generate high-quality leads for our Sales team. We’ve rolled out more features in our higher-tier plans that we don’t sell via self-service and promoted them and offered trials in the product.
The result? We’ve grown our PQL program to the point where it now contributes nearly 20% of the total qualified inbound leads sent to our Sales team from any source and across the board are some of our best-performing leads for both landing and expanding customers.
The more the merrier
Building a robust PLG motion is like orchestrating a grand symphony. It requires a diverse ensemble of individuals, ranging from Product to Engineering, Product Marketing to Demand Generation, Sales to Finance. Each function plays a crucial role. Our cross-functional group, though mighty, was missing some key players. This threw a major wrench in our plans.
For example, when we realized that our TAM for self-serve checkout was too small, we knew we needed to grow our trial acquisition volume. We needed the full force of Demand Generation. But we hadn’t included them in the initiative yet. Without their involvement, our levers to increase our TAM were extremely limited.
So here's the moral of the story: Don't underestimate the importance of a well-rounded team. Get everyone on board, each with their unique expertise, and create a powerhouse coalition. Together, you'll conquer challenges, unlock new opportunities, and turn your PLG motion into a resounding success.
__
Our PLG journey has been nothing short of thrilling. We've uncovered valuable insights, made some strategic pivots, and witnessed remarkable growth along the way. But this is just the beginning.
Let our journey serve as inspiration for your own PLG motion. Harness the transformative power of your product, delight customers with seamless experiences, and unlock growth and success. Embrace the adventure, learn from missteps, and celebrate victories.