If you haven’t noticed, product-led growth methodology is having a moment. It’s the bold idea that some products shouldn’t need to be sold by salespeople.
Slack, Airtable, Calendly, Datadog, and Dropbox; instead of hiring sales people at the start, these companies grew into unicorns by making their product do the user acquisition, expansion, conversion, and retention.
Beyond creating highly profitable unit economics, the best part about this methodology is that you can develop strategies that are more customer-friendly. Notably, product-led growth can completely eliminate the concept of a “decision” from the sales process, which creates a vastly better customer experience.
Why we hate making decisions
Humans hate making decisions. We are so hard-wired to defer and avoid making decisions that we’ll often make sub-optimal choices just to avoid them. For example, researchers at Cornell found that sports teams prefer strategies that defer immediate decisions and results, even if they’re less likely to win by taking the “slower,” less decisive option.
Two well-observed psychological phenomena support our decision-avoidance:
Omission bias is our tendency to prefer harmful inactions over harmful actions. Even if it would be better to take some action, people bias towards inaction. That seems to be because people would rather not have to take responsibility for the side effects and consequences of taking action.
A common thought experiment that shows this is “the Trolley Problem” Amidst a runaway trolley approaching a fork in the track, you find yourself with two options:
(A) do nothing and the trolley will careen into a brick wall, killing all five people aboard, or
(B) pull a lever and switch the trolley onto a safer track, killing one person who was standing on it.
Most would agree that Option B is the most morally sound. But confronted with this decision, many would actually prefer option A because it involves taking no action and taking less personal responsibility for the consequences.
In software sales, this bias is what prevents people from trying new things — for fear of taking any responsibility for the negatives. Even if the current way of doing things stinks, it can seem like a better option not to make any decision and possibly introduce newer problems.
This is what drives many teams to stick with their current solution. A new product could be vastly better, but it introduces the possibility of new downsides. A customer might wonder: What if the product malfunctions and deletes all my data? What if I get in trouble for using an insecure product?
Faced with the risk, many still prefer the suboptimal route of doing things the way they always have and avoiding a decision altogether.
People also really like to defer decisions. We tend to believe that with more time and more research, clarity will come.
This is one of the reasons VC investors rarely outright say “no” to a company. Even if the company doesn’t meet the investor’s criteria, it’s always a good idea to keep the option open and defer. After all, things can change.
When it comes to purchase decisions, the same psychological phenomenon is at work. We just want to wait and see.
In fact, our desire to wait-and-see is so strong that we’ll work harder on making the decision if we get the opportunity to defer it. Cutting edge research published this year shows that consumers who get to delay making a decision are then more willing to make efforts to make a decision later. In other words, if you let people defer a decision, they’ll be more willing to make one later on.
How traditional sales strategies magnify the decision
We know that people really dislike making decisions. I guess that’s why traditional sales processes place so much importance on the “decision.” But in doing so, some sales strategies make the decision seem bigger and scarier than it might need to be.
Everything in the sales process builds to the decision. There are discovery calls, intended to identify the decision-making criteria. There are efforts to understand BANT: a buyers budget, authority to make decisions, need-level, and timeline for making a decision. Some methodologies seek to understand MEDDIC: Metrics, Economic buyer, Decision criteria, Decision process, Identify pain, and Champions.
All of this is to understand how the decision will be made and by whom it will be made. The traditional sales-led strategies magnify the part of the process we all hate the most: deciding.
According to sales training lore I’ve been told, the capital-D Decision is the moment in time right after the decision-maker, sitting atop a marble throne of wisdom, carefully weighs their options. They review whitepapers, testimonials, master service agreements, special pricing, and even the charm of the salespeople on each side. They consider the opinions of all the various internal stakeholders. And at one precise moment in time, stress-sweat dripping from their brow, they do something remarkable.
The earth stops spinning. The birds are silent. The heavens burst with light and singing cherubs. The time has arrived! With a few digital scribbles on a virtual paper, the esteemed decision maker does what they’ve been entrusted to do. They decide.
It’s the climax of the sales process. After hours of calls, questions, objections, negotiations, and explanations, there is this one single moment. Precious. Fleeting. And then it’s gone.
The decision has been made. “We’re going with Inotech.” Everyone sighs in relief. Hooray.
Docusigns fly like Nike, the goddess of victory, down from craggy Mount Olympus. Money transfers electronically. Slack emojis fill the channels on both sides. Congratulations all around. The sales process is done. The future is certain. A decision has been reached!
Some complicated products and services definitely need a process like this with a definitive decision. (We can’t really eliminate the decision from buying a new car). But many products can deliver value without requiring a major decision. And when those products place more emphasis on the decision than is necessary, they create a stressful buying experience for no good reason.
How product-led growth strategies eliminate the decision
Therefore, it should come as no surprise that eliminating the most dreaded part of a new software purchase is a great way to improve customer experience.
But how exactly can you eliminate a decision from a purchase?
To eliminate the decision, you break it up into thousands of tiny micro-decisions that are so small — and have a reward associated with them — that they cease to become decisions at all. They become more like tiny investments, each with some return on investment. A giant cliff becomes a sweeping, gradual incline of investment and return. It feels more like playing a video game than buying a product.
At Visor, one of our main onboarding goals is to keep driving the user deeper into the product to achieve greater-and-greater value. In fact, we take advantage of an arbitrage opportunity in how people value time vs. money.
It’s the “Time vs. Money Value Paradox.” People tend to over-value their money and under-value their time. We see that people will gladly spend hours exploring a free solution, even if they’re unwilling to pay just a few bucks.
Freemium strategies make the most of this, replacing an upfront commitment of money with a less “costly” commitment of time. As you spend more time with the product, ideally you’re getting more value.
Not all product-led growth strategies do this, by the way. Products with a free-trial inevitably force some decision; you either pay and continue or you don’t and you lose access. It’s a perfectly valid strategy for some products, but it puts emphasis on making a decision at the end.
At Visor, we’ve implemented a freemium strategy, and we’ve obliterated the decision. Yes, we do charge users. But we’ve refined our billing plans to only ask users to pay when they’re getting value from the product. When the product prompts them to begin paying, there really is no decision to make anymore; Visor is their product.
For this strategy to work, you have to be very confident in your product. You can’t use time-pressure to create false urgency. You can’t rely on charming salespeople to compensate for product gaps. It’s all out there; you need to be confident that users will use the product enough that when the time comes to pay, it’s not even a decision at all. Success means that users will view payment as a minor hurdle to continue using the product. It’s not a decision; it’s just a little more investment.
Product-led growth does NOT mean you spend less time with users
Despite what may be implied, a strong product-led growth strategy still requires extensive direct user engagement. As Wes Bush describes it, team members can serve as “bumpers” that help users reach their goal, just like bumpers in bowling help the ball reach the pins. Rather than having a sales team helping users to make a decision, we have a success team that helps users get value.
Our success function has two crucial objectives:
First, the success team’s goal is to engage with users and help them get value. The process shares a lot in common with a sales process, except for the explicit conversation about a decision. Instead, our success efforts centralize on understanding the users’ needs and getting them solutions that work. This strategy thrives on the belief that we have to give value first before we get value.
We avoid having our success team engage in talk about a decision or payment; we leave it up to the product’s freemium limits to ask users to pay. This creates a much more trusting relationship between our success team and the customers they serve.
Second, the success team’s secondary goal is to surface customer learnings to the rest of the team. Success becomes the “eyes and ears” of the product organization. By spending time helping users get value, they establish an understanding of where the product can improve. And they funnel these ideas directly to the product team to build into the product for future users. Combined with quantitative analysis, this directs the product team and overall strategy.
The decision-free dictionary
If you’re thinking about how a product-led growth strategy differs from a traditional one, I’ve made this handy dictionary:
|Sales-led term||Product-led term|
|Trying Visor||Exploring Visor|
|Considering Visor||Setting up your workspace|
|Trial license||Courtesy booster pack|
A freemium strategy, let alone a product-led growth strategy, isn’t necessarily the right strategy for all businesses in all markets. However, for those businesses that can take this route, we find that it results in happier, stickier customers.
How will you know if a freemium, decision-free experience is right for your product? Check out Wes Bush’s great quiz.
It’s also important to note that many companies that start out with a product-led growth strategy do hire very effective sales teams later in their life. There’s still a very important role for a real sales process as products get more complicated and deals get larger.
The question is then: what strategy will you decide on for your business?