For early-stage companies, there's nothing more important than developing a winning go-to-market strategy. In this series, we’re sharing hard-won advice from the Canvas Go-to-Market Council, developed from the lessons they’ve learned over the years. Check out previous posts about growth marketing, building out a sales team, positioning, and partnerships. To ensure you receive all the latest GTM insights, subscribe to the Canvas newsletter.

If you’ve ever used Asana, Calendly, Figma, or Gitlab, you’ve experienced the magic of product-led growth. But what does product-led growth (PLG) actually mean? PLG is when the product experience itself drives most of a company’s user acquisition, conversion, and retention. Typically, a user signs up for a free trial to test the solution, and eventually sees the value of paying hundreds or thousands per month to continue using it. Behind this funnel is a marketer, strategizing around the right targeting, messaging, and pricing to get you and your colleagues over that line.

LEARNING FROM THE BEST 

Canvas GTM Council Member Garrett Scott is one of those marketers, having built PLG motions at product-led organizations for over fifteen years. Garrett scaled the demand gen function at New Relic from $5M to $150M ARR before leading the marketing team at Quip. He's now the Head of Marketing Growth and Demand Gen at Calendly, where he joined as the first GTM Marketing hire in 2021.

In a recent Marketing Master Class with Canvas portfolio founders and marketing leaders, Garrett debunked some common myths about product-led growth and shared advice for operators looking to implement PLG in the most profitable way.

3 MISCONCEPTIONS ABOUT PLG, AND SMART TIPS TO LEVEL UP YOUR STRATEGY

You might think: We have a free trial. We’re a product-led growth company.

Think again: A free trial is table stakes. Long term, free trial users are only valuable if they lead to revenue.

A free trial is a critical part of getting users in the door, but that’s really only the beginning. Your real goal is to develop a deep understanding of your target (paying) customer and to build a compelling end-to-end experience for them.

While it might make sense at the very start to cast a wide net via that trial, you want to narrow in on who your ideal customer is. Do the research to understand who really needs your product—and is willing to pay for it. What are the features that compel them to pay? Once you have clarity on the audience you’re targeting and their pain points and use cases, leverage that insight to build a thoughtful experience to get those people to convert to paying customers. Ask yourself questions like, “How, in the free trial and the onboarding flow, can I encourage people to add their colleagues? How can I get people interested in the features that cost money and will get them to buy?” 

You might think: We see a hockey stick. We are on a great path.

Think again: User growth doesn’t necessarily translate to revenue; in fact, it can get expensive. Pay attention to “up and to the right” for the right people.

Don’t get distracted by raw growth. Having a huge number of users sign up for a free trial isn’t valuable if they never end up converting to paid or being long-term users. It requires marketing spend to find the free trial users to begin with, and precious engineering resources to maintain the free accounts. However, they’re not bringing a ton of value.

As a way to keep yourself honest when looking at your customers and their revenue potential, I recommend looking at things like net revenue retention and lifetime value. The metrics that matter will be different in every business, so invest the resources to identify what they are and understand how and why they impact your bottom line. And then once you’ve identified the right metrics, don’t just track if they’re growing and hitting your goals. Look at the who and the why behind that growth as well—developing a rich understanding of your target (i.e. needle-moving) customer will pay dividends over the long term.

You might think: We’re investing in PLG, so we don’t need to spend much on brand and content marketing.

Think again: Brand and content marketing are complementary and essential, especially for educating the managers who hold the purchasing power.

One key fact about PLG is that your power users are often not the folks making purchasing decisions. While your end-user may have gotten hooked on your solution from a free trial, they’ll eventually need to get their manager to sign off on buying the subscription. Additionally, the stickiest PLG products are ones that span several departments and budgets. For example, Figma is commonly used across design, engineering, and marketing teams; Calendly’s stickiness comes when it’s shared outside of your organization. 

Conversion becomes a lot easier if a manager is already aware of your brand, and can easily access educational content to learn more. I call it “air cover.” So, invest the resources into raising brand awareness, and have content ready.  This is especially important when targeting enterprise customers, who are used to a more traditional sales process and often have multiple stakeholders involved. One classic way to do this is to showcase your existing happy customers. Build your influencers and advocates who are relevant to your ideal customer, and have them highlight the product’s paid features.

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The Canvas Go-to-Market Council is a select group of marketing leaders sharing their hard-won expertise at early-stage companies. Subscribe to the  Canvas Newsletter to stay in the loop.