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Are the stars aligned? (13 reasons your PLG efforts will fail)
(or at least be much more difficult)
This post is presented by Amplitude. Get data you can trust and insights you need to take action and drive growth. Over the years, I’ve relied on Amplitude to support the PLG initiatives I’ve led. But putting product-led growth into practice can be challenging - so Amplitude asked the experts to create a guide with advice and best practices from over 30 industry leaders on how they implemented PLG at their companies across industries and sizes. In the guide you’ll learn:
PLG tactics for acquisition, retention, and monetisation
Metrics to track your product-led initiatives
Real-world success stories from businesses like yours
When PLG is working, it can feel like a magical thing.
But it’s rarely something that happens as a happy accident - at least not sustainably.
PLG is usually the result of a massive and consistent amount of commitment and intentionality.
You need the right ingredients, and you need the right timing.
In this post, I’m going to highlight 13 signals that you should pay attention to if you’re considering starting with or layering on a PLG motion in your startup.
If you observe any of these things, think about how - and when - you can overcome them.
Every item in this list is a warning sign. Some more foundational than others, but none should be ignored.
Let’s dive in.
1. No Product-Market Fit
We’ll get the big one out of the way first.
If your product hasn't achieved strong product-market fit yet, PLG will fail. In fact, all GTM motions will eventually fail without PMF.
Focus on understanding your target market and building a product that retains users/teams first.
2. Lack of internal alignment
PLG isn't a quick win; it's a long-term commitment.
Without support, sponsorship and alignment from the highest level in the company and across every team member, success with PLG will be near impossible.
Ensure everyone understands their role in a PLG GTM motion with clear, aligned goals.
Remember that in fast-growing companies, new faces are joining regularly (while I was at Snyk, 50-70 new hires joined every single month), so evangelism and alignment are neverending priorities that you can’t neglect.
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3. Complex use cases
If your product is solving for complex use cases, getting customers to succeed will require human intervention.
Things that make use cases more complex include when users don’t have the ability or permission to get to a point of value and habit.
In these situations, a zero-touch PLG motion won't work.
Instead go sales-led, or adopt a hybrid motion if you can find adjacent simpler use cases to solve as a self-serve onramp to the primary use case.
4. You rely on paid growth loops
If your product doesn't have built-in viral or content loops and instead you rely on paid funnels or loops for new user growth, PLG can't succeed.
Seek to identify/establish viral (personal, financial, word-of-mouth) loops and/or content (user/company/supply generated) loops.
Caveat: Paid funnels or loops can be important fuel to kickstart other self-sustaining loops in a PLG motion.
5. Your price is too high
If your pricing is above credit card limits (hard spending limits and willingness to spend limits), then a pure PLG model with self-serve monetisation will not work.
You'll need to rely on sellers to convince the buyer of sufficient value of your product to their company and negotiate contracted billing.
6. Your user is not your buyer
The user of your product might not be the same person making a purchasing decision.
If your buyer isn't a user of the product, self-serve monetisation models won't work.
PLG can still drive usage growth, but you'll need to lean on marketing and sellers to reach buyers and close deals.
7. Inadequate analytics
PLG success demands you understand user and team behaviour.
Comprehensive user and account-level analytics are a pre-requisite to track key KPIs, better understand usage, and inform day-to-day product decisions as well as strategic direction.
8. Your org is buyer-centric
PLG requires a shift in mindset and a maniacal focus on user adoption, engagement, and success.
If your company has historically served buyer personas (most sales-led companies), then it's a huge but necessary cultural shift to pivot to become user-centric and succeed with PLG.
9. Usage retention is a second-class citizen
A common side-effect of a buyer-centric organisation is focusing on revenue retention but neglecting usage retention.
Usage retention is the cornerstone of PLG.
Poor usage retention will make even the most efficient of acquisition efforts worthless.
(See also PMF).
10. Poor definition and tracking of activation
One of the main inputs to usage retention is activation.
If you don't have a solid and actionable definition of activation and aren't measuring and improving it, PLG at any meaningful scale will be difficult.
Don’t strive for perfection on the first pass, as you’ll always be iterating here.
But do find a definition that is simple to understand and predictive of medium-term retention.
11. Poor definition and tracking of engagement
The other main input to usage retention is engagement.
It’s essential (but surprisingly rare) for product-led companies to track engagement well.
Understand that engagement is a spectrum and strive to define engagement states that are actionable and predictive of long-term retention.
12. Your onboarding sucks
Onboarding is the first real experience a user has with your product, and the best (if not only) chance you have to help them quickly realise value on the path to establishing a habit (activation).
Ill-conceived and ineffective onboarding will doom your PLG efforts.
13. Your COGS is too high
PLG uses free trials and free plans to get users and teams to realise value before asking them to pay.
If your COGS (Cost Of Goods Sold) is too high, it means that providing a way for new users and teams to experience product value before a paywall is likely to be cost-prohibitive.
What now then?!
So there you have it. Thirteen reasons that PLG will fail - or at least be much more difficult.
Think about all of these carefully as you consider embarking on a product-led journey.
No Product-Market Fit
Lack of internal alignment
Complex use cases
You rely on paid growth loops
Your price is too high
Your user is not your buyer
Your org is buyer-centric
Usage retention is a second-class citizen
Poor definition and tracking of activation
Poor definition and tracking of engagement
Your onboarding sucks
Your COGS is too high
In most situations, most of these things won’t be hard blockers - but will require you first to observe and acknowledge them before being intentional and committed in your efforts to solve them.
However, some will be so hard to overcome that it means PLG, in all its glory, might fundamentally be incompatible with your product and company.
Despite that, there are always likely some product-led elements that you can absorb - be that improving your core user experience to drive increased retention, to establishing free sidecar products that drive demand and awareness for your core offer.
Ultimately, PLG exists on a spectrum and in many shapes.
Finding the right place on that spectrum (and at what time) for your product and company is half of the battle.
If you think I missed something in this list or want me to follow up on anything in more detail, I’d love to hear from you - let me know in the comments or drop me an email.
Inside Figmas GTM motion with Claire Butler on Lenny’s Podcast
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