Product-Led Growth for B2B & B2C SaaS by Canva Product Lead, Anshul Patel
Let's Unpack Growth
Growth can mean different things for different companies
What is Growth?
For Saas products, growth is usually tracked in terms of revenue and/or user base.
Business valuation is the main driver of growth.
Market capitalization, business valuation - those indicators that influence decision-making at the board level. But they don't work very well in the short term, so we take as a basis what is the basis of profit and cash flow, on the basis of which companies are valued. In companies where profit or cash flow does not exist, users look at other indicators. This is something that can be influenced quarterly or yearly.
Companies typically look at engagement, user size, and revenue to drive operational growth. This is basically what product or marketing teams get together to do.
Growth is a Sum of Parts
Growth, if we're talking about revenue or engaged user base, is one of the three broad categories of metrics, acquisition, which is an indicator of the influx of new users into a business.
Retention is perhaps the most important metric that gives insight into how many metrics are being returned.
Acquisition may help you gain momentum, but holding will ensure that your company scales.
Monetization decides whether users can generate income or not and whether the business is viable.
Product-driven growth also needs to be seen in terms of these core principles. If we meet all three of these challenges together, we will achieve sustainable long-term growth.
Measuring What Matters
Growth is the continuous improvement of quantifiable indicators that measure business performance:
Choose a “north-star” to define your growth.
Active user base and/or Revenue metrics are common candidates/
Identify inputs that are actionable and measure them.
North star metrics are not actionable. Identify drivers you can influence
Setup guardrails that keep long term health in check.
Ensure that no long term harm comes to business or product health to get short term growth.
Principles
What rules do you need to play by and what kind of tactics can you apply.
Acquisition
Acquisition is the process of exposing new users to your product and showing them value
Products adopt to channels and not the other way round
Focus your effort on channels where your users are
Customise your message to fit the channel
Don't sell protein smoothie at a cocktail bar.
All acquisition channels are not equal. Some have compounding returns
Setup acquisition channels that grow with the company
Referral and viral channels scale well with the company, paid channels don't
Acquisition is not a single touch process, enable your advocates to sell.
In most B2B products, decision making is multi-layered
Create assets that make it easier for users to sell the product to their org.
Retention
Engagement is the single largest factor defining a product's growth prospects
Most users leave you fast, invest in making their initial experience super smooth
We live in an attention deficit world, most users won't come back a second time
Reducing friction isn't always the answer. Sometimes add friction to customise their experience
User workflow has multiple products, adoption doesn't happen in isolation
Organisations and individuals use multiple products and have an ecosystem
Integrating with their platforms (data storage, communication etc.) will make the product stickier.
Low frequency products are forgettable, layer use cases over time to stay top-of-mind
Habit formation happens when users use your products frequently
If you don't have a high frequency use case, layer more use cases.
Monetization
Monetization is the necessary product friction that allows companies to continue creating value
Show value before capturing value
We've moved away from managed pilots to instant activation products
Users want to try what they're getting before they pay for it.
Create a monetization model that scales with your users.
Best monetization models organically scale with higher usage
Create upgrade paths in your model to ensure that you're not running on an acquisition treadmill. It is easier to expand an existing user than convince a new user to pay
Match your selling motion to the value.
Selling 20$ annual plans with a sales assistance team will hurt your economics
Selling 1M$ annual plans without a sales assistance team will hurt your conversion and expansion
Creating a “Growth” Culture
Culture eats strategy for breakfast – Peter Drucker
Create top-down buy in to run a growth program
Growth programs are multi-functional by design. Silos don't work
Leadership buy-in and sponsorship is critical to their success
Speed > Perfection
Growth processes work well when hypotheses are tested fast
The faster your team can validate a hypotheses, the sooner your company can realise growth
The faster your team can test, the more ideas they'll be motivated to bring to the table
Data is your friend
What users say should inspire hypothesis, what users do should inspire decisions
Data is a great equaliser. It will help transcend organisation layers and cut through opinions that might misguide decision making.
B2B VS B2C
How do you modulate the principles of Product-Led-Growth (PLG)
What is B2X?
B2X is a product that sells itself to a business or institution, and it is distributed to users who are employees of that business.
There are no business layers in B2C, and each user buys a product for their own benefit.
PLG Applied in Multiple Context
Product-driven growth actually applies to the entire universe of these companies, and companies that have done so will fall into one of those categories.
The Target Audience Differs
Although the PLG is applicable in both of these cases, it needs to be modulated in terms of the target audience.
B2B or B2K are usually limited in volume. You will have fewer businesses and business users compared to consumer businesses. For each person, this is a separate account, the type of decision making is slightly different. Consumers value simplicity, speed of decision-making, as a rule, have low budgets for payment.
In B2B, there may be fewer expensive accounts, but the income from one account is high. Unlike a B2C solution, a B2B solution is relatively more rational, logical, and focused on very profitable value propositions compared to over-indexing simplicity in a consumer context.
But Lines Between B2B And B2C are Blurring..
Business users want the simplicity and design of consumer products
Decision making for software procurement is getting decentralised, empowering end users
Business apps are no longer siloed, they interplay with their peers and competitors
Companies are moving away from large software procurement contracts to lighter simpler implementations.
… Making PLG Non-Optional
The PLG is getting much more powerful.
The Approach Needs To Be Tuned
The principles of the GLP need to be applied regardless of the context in which they are found, but they need to be tweaked a bit.
Plus, the approach to monetization should be different, whether you're applying the B2B or B2C PLG tutorial.
Recap
Define and measure what growth means for your product and business
Break growth down into actionable input drivers and run programs for each.
Understand and apply principles that drive each lever of growth
Enable your growth teams with right culture and platform
Fine tune the PLG approach to your market and business model
Anshul Patel, Canva Product Lead