What’s the one thing every organization is trying to achieve? The answer: growth.
It doesn’t matter if you own a plucky SaaS startup or manage a fortune 500 company; you’re always trying to grow brand awareness, customer satisfaction, sales — and your bottom line metric. That’s why the product-led growth flywheel approach has become so relevant to today’s business landscape.
Here is what the product-led growth flywheel is and how to implement it for your company.
What is the Product-Led Growth Flywheel?
Before we can answer that question, we have to ask, “what is product-led growth?” Without this vital piece of information, the product-led growth flywheel is meaningless.
According to the Product-Led Growth Collective, product-led growth (PLG) is:
“A business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself. It creates company-wide alignment across teams — from engineering to sales and marketing — around the product as the largest source of sustainable, scalable business growth.”
In other words, PLG is about harnessing the power of your entire company to create better products and, ultimately, experiences for your target audience.
The Flywheel Methodology
Think about the traditional marketing and sales funnel. Potential buyers start at the top as strangers, filter down into leads, and eventually become paying customers. But then what happens? The answer, in most cases, is nothing — your customers become an afterthought.
To have your customer become an afterthought is a major problem. We have known seemingly forever that 92% of people say they trust recommendations from friends and family — more than all forms of advertising. Modern companies need to engage their current customers so that they spread the word about their brand and products.
The flywheel spreads the good news.
The flywheel spreads the good news, and it happens because it encourages organizations to view their customers as a vital piece of their future growth. When customers become promoters, company growth is almost inevitable.
The Product-Led Growth Flywheel
Whew, we’ve come a long way! We now have a shared understanding of what product-led growth and flywheels are and why flywheels are beneficial. But you may have noticed; we haven’t actually answered our original question yet. Don’t worry, we’re about to tell you what the flywheel is and what it does.
The product-led growth flywheel is a business strategy that prioritizes amazing product experiences in order to generate customer advocacy and, in turn, company growth.
The product-led growth flywheel is made up of four user segments and four journey stages.
4 User Segments of the Product-Led Flywheel
The four user segments in the product-led growth flywheel are evaluators, beginners, regulars, and champions. Let’s take a quick look at each:
- Evaluators: These folks are interested in your product, but not yet ready to commit to it. They’re still weighing their options, researching competitors, and wondering if your offerings can truly solve their problems. If you offer a free trial, an Evaluator might be using it. But they aren’t fully invested in your solution at this point.
- Beginners: People in the Beginner segment understand how your product can help them — and they’re pretty jazzed about it. These users may or may not be paying customers. Either way, they’re spending a lot of time learning the nuances of your offering and integrating it into their workflows.
- Regulars: A Regular is someone who uses your product on a regular basis and views it as a key component to their success. They may not have the same enthusiasm for your offering as they did in the beginning. But they have no desire to use a competing solution. This is because your product gets them results and they know how to use it.
- Champions: The final user segment is made up of Champions. Users in this elite group are your company’s ultimate fans. They don’t just love using your products, they feel invested in the success of your company. Because of this, Champions take the time to refer their friends, family, and colleagues to your business.
4 Journey Stages of the Product-Led Flywheel
The four journey stages in the product-led growth flywheel are activate, adopt, adore, and advocate. Let’s take a quick look at each:
- Activate: Evaluators become Beginners when they activate. While the activation process will vary for every company, in general, it’s when a user realizes that your product can solve their problem(s). It’s important to note that a purchase and activation aren’t always the same thing. Plenty of people buy products and never use them.
- Adopt: To get to the next user segment, a Beginner needs to adopt. Successful adoption happens when a user integrates your product into their workflow and builds habits around its use. They no longer question if they should use your offerings, they just do. In other words, they’re fully committed to your product.
- Adore: Users who reach the “adore” stage don’t just use your product; they love using it and are constantly looking for new ways to use it. These folks have passion for the things your company creates and are more than willing to provide feedback. Your job in this phase is to remove friction, so they never grow tired of your offerings.
- Advocate: This is where things come full circle. Up until this point, the flywheel might not seem that different from a standard funnel. But once you get Champions to advocate for your brand, everything changes. Just remember, Champions might not do so without a little nudge. Don’t be afraid to ask your top customers to spread the word.
How to Implement the Product-Led Growth Flywheel
Now that we have an in-depth understanding of the product-led growth flywheel, let’s talk about how to implement it. Simply follow these four steps and you’ll learn how to be product-led.
How to be Product-Led
1. Create Top-Quality Products
If the growth of your company is going to center around the quality of its products, you should really make sure that said products are absolutely amazing.
Ask yourself, “what major challenges do my customers need to overcome?” Then do what you can to ensure your products solve them with as little friction as possible. Easier said than done, true. But if it were simple, everyone would already be doing it, right?
Once you’ve created a top-quality product, you need to address the way you talk about it to potential customers. Lead with pain points and how your offering solves them. Showcase social proof pieces like positive reviews, testimonials, and case studies.
But never exaggerate. You know how you can’t stand a braggart? Well, your customers can’t either. The initial stage brag and exaggeration might help you secure initial customers and users. But it will hurt your flywheel in the long run because it will set your users up for disappointment. Disappointed users won’t advocate for your company, which is the ultimate goal.
2. Make it Easy to Become a Customer
If people don’t use your product, you’ll never get your flywheel in motion. That’s why it’s so important to make things easy for potential customers. Remove as much friction as possible between them and becoming a user of the things you create.
Many SaaS companies do a great job of helping customers have easy adoption. Take a company like Slack. You don’t even have to pay a monthly fee to use their service. You just sign up and start messaging colleagues.
How to eliminate friction for your customers.
- Use the Freemium Model: The freemium model allows customers to use a product for free, albeit with limited functionality. This model works for product-led growth strategies because customers can try product features with zero financial risk.
- Offer Free Trials: With a free trial, customers get access to all product features for a limited time — usually, 7 to 14 days, though 30 days is common. The free trial model also removes financial risk for customers, making it a great strategy for product-led growth.
- Simplify Your Onboarding Process: It doesn’t matter how amazing your products are. If customers have to fill out a myriad of forms, install complicated software, etc., they’ll bail. Make sure onboarding is a piece of cake. And provide customers with an easy way to contact qualified support representatives if/when they have questions.
Note: some people worry that a freemium model will reduce sales. While it’s true that some folks will remain on your free plan forever, if you’ve built a quality product, plenty will upgrade to paid plans. Freemium is just a way to “get them in the door,” so to speak.
3. Prioritize Time to Value and Virality
Once people start using your product, you need to make sure they experience its value as soon as possible. By delivering quick wins, you’ll build excitement for your offerings. Quick wins can be done in a few different ways:
- In-App Directions: If you sell a software product, consider adding a “tips” section that highlights the most important features for new users.
- Welcome Sequences: Once a new customer has been onboarded, send them periodic emails teaching them how to use your products.
- Customer Support: Make sure your customers always have access to someone on your team. That way, they can ask questions about your product when they have them. Then take it a step further and provide your support reps with ways to improve the customer experience. For example, you could equip them with a visual communication tool like CloudApp that includes simple screen recording, GIF creation, and screenshot features. That way, they can provide answers to customers in more personal ways.
Time to value isn’t the only thing you need to prioritize. You also want customers to share their love for your products with their friends, family, and colleagues. To encourage this, try:
- Asking: Sometimes, all you have to do to encourage virality is ask your current customers to spread the word. If they like what you do, they will.
- Special Offers: Other times, an incentive is needed. For example, you could offer customers access to premium features if they refer someone else to your company.
Ultimately, you want to make sure your new customers experience the value of your products quickly. Then give them ways to share their positive experiences with the world.
It can help to manage all of your information in one spot. For businesses, all information held in one place could be a tool like Asana or Trello. For the legal field, you may want to look at Filevine case management software or other software that performs these tasks for you.
4. Measure the Right Metrics
You won’t know if your product-led growth flywheel is effective until you measure it. This means you need to track a few key metrics during your product management efforts. Here are three we recommend:
- Customer Engagement: You can measure customer engagement by tracking KPIs like time spent on products, number of features used, interactions with support reps, and referral activity. There’s no standard “engagement” metric to track. You’ll need to come up with your own criteria to monitor and make decisions around.
- Product-Qualified Leads: A product-qualified lead (PQL) is someone who has used your product, experienced the value it creates and seems likely to become a paying customer. Product-qualified leads will look different to every company. Study your customers and develop key characteristics to track for your PQLs.
- Time to Value: Earlier, we said that you need to prioritize time to value (TTV). To do that, you need to measure it. Time to value is the length of time it takes a customer to reach activation, i.e., the first journey stage in the product-led growth flywheel. The goal is to get your TTV to as close to zero as humanly possible.
There are plenty of other metrics you can measure as well. Choose the metrics that correlate best with your company goals. Then do your best to track your progress and improve the metrics.
Companies that use the product-led growth flywheel put their products at the center of the customer experience. By doing so, they’re able to encourage greater customer advocacy and business growth. To adopt this approach for your organization, follow our four-steps:
- Create Top-Quality Products
- Make it Easy to Become a customer
- Prioritize Time to Value and Virality
- Measure the Right Metrics
If you can successfully take a target audience through the four user segments and journey stages outlined above, your company will be successful. Good luck!
Fintech Kennek raises $12.5M seed round to digitize lending
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Fortune 500’s race for generative AI breakthroughs
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
UK seizes web3 opportunity simplifying crypto regulations
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!