Grow Faster With $0 CAC with Kyle Poyar, OpenView

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Startups when we look at the acquisition sources for the top PLG businesses versus everyone else, the number one acquisition source is organic or SEO. This is about 40% of signups at a PLG company. This is the best place to start. It's where your investments are really going to pay off long term because you're not paying per click. This is a really great ongoing channel that can even grow faster as you scale. I need some traction. You need some traction. Let's get some traction.

Hey what's up innovators, entrepreneurs, visionaries and disruptors. This is your Traction podcast host Lloyd Lobo. We're a community of over 100,000 people just like yourself on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana, and many more.

Who doesn't want to grow faster with no cost, right should apply to everyone Setting the stage here. We've talked a lot about product led growth. Right now it's almost impossible to avoid the term. Everyone's thinking about a product led growth strategy for their business, launching free products, free trials, thinking about self service strategies to essentially automate a lot of the sales process. And in fact we're seeing that about 60% of software companies now have some sort of PLG motion. And according to Gainsight, 90% of software companies plan to increase their investments in product led growth. Oh, I think that's a great thing. But making the math work is really hard. And when we survey PLG companies in our annual product Benchmark survey, when you look at the journey of 1000 website visitors for a company with a freemium model, only 60 decide to try out. The only 3 become paying customers and they tend to spend somewhere between 10 and $100 a month. So with that kind of funnel, you really can't spend very much money on marketing. You can't spend much money on ads at all. It's really hard to make the math work to make this business take off and become the next slack. Free trial businesses are a little bit more efficient when it comes to the funnel. They get fewer folks signing up for the product, but they're better at convert. But they also tend to have more sales touch points, which adds to the cac, which again, how do we take the CAC out of growing, especially growing at a really fast rate? Your guide on this journey is to think about the user journey, right? So we're trained in in software to think about the B2B buying cycle and awareness and doing the demo and getting a negotiation. That way of thinking might have worked really great in typical B2B SaaS. Doesn't work so great in PLG companies. In PLG companies you want to focus on the user's journey and their interactions with the product. So they discover products when they're experiencing pain. They get to the website, they decide to start, try them out for themselves, they reach value, ideally really quickly, in minutes or hours. They decide to convert and start paying, and then they scale across their team or their organizations. And so to win, your goal is to make your product discoverable by users. And what does that actually mean? When we look at the acquisition sources for the top PLG businesses versus everyone else, the number one acquisition source is organic or SEO. This is about 40% of signups at a PLG company. This is the best place to start and where your investments are really gonna pay off long term because you're not paying per click. This is a really great ongoing channel that can even grow faster as you scale. Sounds great in theory, but how do you actually make this work in practice? First key point for you is to focus your marketing on user pain, not buyer pain. Traditionally in SaaS we really target that top level, above line decision maker, that C level person, that VP person. The problem is all of your competitors are going after them. It's really expensive to reach them and get their attention. And also they don't actually want to try out your product for free. They don't have time for that. And so you want to actually need to think about not just what problem do you solve in terms of the executive, but what is the end user that might decide to try out your product and make a case for it from the bottom up. So if you think about sales teams, for example, the CRO cares about managing their pipeline or hitting their number. The rep cares about more everyday pain points, right? Like they hate having to do expense reports, right? Especially after they travel, so they want to just download an app and take photos of their receipts. That's Expensify's model. Or they hate the back and forth of scheduling meetings, so they want to just use a tool like Calendly, which is another open view portfolio company, they, they hate actually syncing their notes to Salesforce at the end of the week. So you see companies like Dooley here in Vancouver and there's thousands of these people for every one buyer. And so it can be extremely scalable to reach them, but you don't reach them in your typical ways. And I think Grammarly is a great case in point. So Grammarly is essentially grammar checking software. And they realize that everyday users do the same thing when they're writing, that they want to sound smart and they don't know, hey, is no one spelled two words or is it one word? There's so many of these questions, they're going to be the first hit on Google in these really common questions that a lot of people have but have not traditionally been something that a software company is going to be trying to rank on from a content perspective. So Grammarly gets found in the moment folks are experiencing pain and then they get to this aha moment that hey, hey, I could actually have it checking my writing in the context of what I'm working on. So Grammarly scaled to 30 million users and growing extremely efficiently. And this doesn't just apply to the Grammarly's of the world, this applies to more traditional B2B software companies as well. One example I love is Safety Culture, which is essentially safety checklist Software companies based in Australia, they sell to blue collar industries like manufacturing, construction and so on. And they realized that users who might be in the field aren't searching for safety checklist software. They have their pen and paper checklist that's worked pretty well. They don't even know software exists for this problem. But they might have a problem in their work that they want to solve for. They might need to find a new template, for example, for a new kind of safety checklist they don't have access to currently. So what Safety Culture has done is they built a library of almost 100,000 checklists from really commonplace ones like First Response, Incident Report to hyper specific ones for specific industries. And then this is what you see when you land on those landing pages. You can just start filling out the checklist for yourself and then you can even actually print it out as a PDF, which is like anathema to using their software product. But why would you, if you could just save the data in one place, send it to other people to record their answers and have a software solution to, to make this work in an ongoing basis. And so the idea is meeting users where they are Using marketing to really solve their problem and then getting permission to take the relationship further with them. We call this product led marketing. And other examples that work really well are programmatic how to landing pages. Zapier is a great example. Zapier is an app to connect other apps. Most users aren't going, hey, I need to app integration platform. But our use case at openview was I've got a contact and type form. How do I send that to HubSpot without doing it manually? And Zapier's built out landing pages for every app to app connection and every specific task that you're trying to do between those apps. And they outrank the apps themselves, as you might expect. And then it's really easy to try that for yourself straight from the landing page. And then once you've solved that initial problem, you tend to realize there's a lot more ways that you can use automation to grow your business. Another example that applies to a lot of companies are free sidecar products and HubSpot. Actually before they leaned into product led growth, they had something called a website grader where you could put in your website URL and they gave you a score from 0 to 100, maybe a bunch of feedback of how to improve performance, security, marketing and so on. And this was a free product that they offered, but it was amazing lead gen because it made the case for why their customers should buy HubSpot. So a marketing manager would fill this out and send that to their boss and say hey, we are doing these things wrong and here's what happens if we fix them and we can use HubSpot to do that. A final example is thinking about product education and documentation as part of your marketing. So a lot of developer oriented products, for example have amazing documentation, but they might not even expose that to search to be found by users. One example that I like that's just accessible for people is Ahrefs, which is SEO analysis keyword research product. And they have really in depth guides teaching you how to do things like keyword research, which a lot of people want to learn how to do. And they dog food their own product as part of that. So you subliminally are exposed to doing this with their product and it's a no brainer. If this is the problem you're trying to solve, why don't you just get started and solve it using their product so that's organic at SEO. And then once you have that initial base of users, how do you scale beyond that? Well, a really effective channel for PLG companies Is using your products driving product virality product referrals? And it turns out this is about 16% of acquisition for top PLG companies, but 1% for traditional sales like companies. And again, this isn't something you have to pay for. Once you have that initial user, they're going to invite more users. All right, what are some examples of this? Mention Calendly, know them, love them, they're a portfolio company of ours. Calendly isn't a product that you can even use in a single player mode. Like you're not gonna schedule a meeting with yourself if you are probably a masochist. And it turns out that this is actually really social beyond just the product loop. People write on Twitter and threads that go viral about the naked power display of calendly etiquette. Right? Most products, unfortunately or fortunately are not calendly. They don't necessarily have that inherent viral loop. But there's other ways to incorporate virality. An example that I really like is Figma, which is design collaboration software. Traditionally, design software focused on the designer, but the insight from Figma was that there's a lot of people involved in the design process. You've got to get feedback from product managers, marketers, executives. Designers don't want that feedback, but they have to get it better to have that in one platform and have the editing be collaborative. And so Figma is extremely viral inside of an organization because the product gets exposed to more and more people who end up becoming users and ultimately pay. For Figma, your first step is to see, hey, are you actually viral? And you can't really improve what you can't measure. And the classic textbook way to measure this is called the K factor. How many additional users does one existing user bring in? This is broken down into two pieces. Invites. So how many people do your product users invite or expose to the product? And then the acceptance rate. What percentage of those are accepted and become users themselves? This sounds really easy on paper, but the reality is a lot more complicated. So if someone was sent a Calendly link three months ago, but then comes to Calendly's website and signs up, is that part of the K factor? Was that because of a marketing campaign you ran? What happened there? The. The rule of thumb is that all viral products or all products that have managed to improve this viral loop see a lot of direct traffic to the website. People just going straight to your website. And so instead of worrying too much about K factor and attribution, you might want to just focus initially on direct traffic as an indicator of Whether you're able to drive virality and how do you improve this? Three steps. I love things that go in threes. The first is to think about how to add and promote social features in your product so that people use the product in multiplayer mode. And Calendly is well known for that viral loop and people inviting other people to meetings. But what you might not realize is that Calendly has added and promoted a lot of social features to make it go from a single user signing up to a team or an organization is now using Calendly and they do that. When you go to set up a new meeting type, they ask you, hey, is this a one on one meeting? Is this a group meeting? Is this a collective meeting? Is this round robin? There's a lot of different kinds of meetings. If it's a group meeting, say, hey, I'm a sales rep. I've been using Calendly with customers, but now I want to bring in a solutions engineer or a CS person. I want to bring in my boss. You would otherwise have a really complicated email exchange, but instead you could just create a group meeting type in Calendly and just plug in the calendars of these other people that you want included. So they're exposing you to social features without you necessarily realizing that you've just essentially expanded Calendly inside of an account. You're just solving the problem and you realize, oh, wow, this is a way that I can do something I didn't realize. Second step is to remove friction from being social. So once people are thinking about ways to expand the product for you, there's a lot of things that you're probably doing that are stopping that behavior from happening or, or really limiting it. One example of this is Loom, which is essentially Async video collaboration product. Loom is an inherently viral product like Calendly in that you send Loom videos to other people, but inside of an account. Loom used to have two types of pricing models. You were either a creator, which means you could create videos that was a paid product, or you were a viewer, which was free. In June 2021, they launched what they call the creator light tier, which allowed viewers to actually test out using Loom themselves so they could do up to 25 videos with a five minute time limit. So this way, if Loom maybe started as a sales use case inside of a company and other people, like product managers were watching the sales videos, they realized, hey, maybe I could use this for X use case in product. These folks didn't have to go to their admin and ask for a user license when it was a totally different use case and maybe the sales team, it was their budget, they could just start using the product as this creator light user. And this is a really great way to go get much more penetration inside of an account. Another example is that some companies will actually just block you from being able to add a user to an account if it exceeds the number of people that you've licensed. I'm a fan of doing quarterly true ups and so letting people come into your product and then if they exceeded the number of people they license for the then have the conversation about what's the right license count. Turns out that loss aversion's a real thing. People don't like to give up something they've been using and seeing value in. And that effect is a lot more powerful than giving someone access to something that they've never tried before and really can't advocate for becoming a user finally. So once you've done that, you want to add social elements outside of your product now. Full disclaimer I'm a millennial. I'm not Gen Z, so I'm not on TikTok, but I see TikTok all the time because I'm on Instagram and I know that it's from TikTok because of TikTok's watermark at the end of every video, which makes it clear this video was made on TikTok. Now, most B2B products aren't TikTok, but there's ways that you can actually expose your brand to a lot of other people outside of your product. I think Slack integrations are a great way because folks push notifications, things that happen in Slack to things that happen in your product to other teams inside of your organization. So it gets a lot of product exposure. And then analytics and reports are also extremely viral because those are things that people want to share back with other teams. So how are you actually either doing that inside the product or exposing your product when people are doing that? And the final thing to end on is that it turns out another powerful way of adding virality is through community. Community is essentially just virality that happens outside of your product through. Through user talking to other people, promoting it through word of mouth. My favorite examples of community is webflow in the web design web hosting space. And webflow's audience are freelancers. And these are people that work by themselves. They want. They're really hungry for a community to exchange notes with their peers, solve problems together. And using webflow and webflow's community feature, folks can hang out, provide support for one another and show off their work with which also helps them generate business. Now, community was actually an afterthought at webflow. It was something they added days before they launched the product because they've had this aha moment that their users would be really hungry for it. But it's turned out to be extremely successful and a huge pillar behind their growth. They now have a million plus designers in their webflow Showcase community product. And that's where folks can show off what they built with Webflow and and this has a library of over 100,000 design assets. And it turns out this is great for SEO because all of this is user generated content that helps bring in new users. It helps their existing users show off what they've done to attract business. And this is something that is extremely low cost because it's not something that after webflow builds it once, they don't have to keep paying for it on a cost per lead basis. Now, community's a buzzword right now, and I'm gonna be a buzzkill about it. You're probably thinking about community wrong and that's fine. It's not just another slack group. It's not a forum nobody asked for, it's not swag, it's not a webinar. Community has to be built for and with the people that you want to serve. And so here's a few tried and true strategies that might be a better starting point for your organization. First is start by asking yourself, where do my users already hang out? Odds are that there's probably existing communities that they're active in and it's going to be a much more successful and lower cost effort for you to be active within those communities before you start one from scratch. Now, if you're starting a new category or you're a real thought leader, your users might actually be struggling with doing the thing that you're trying to get them to do. So you can play the role of connector. One example I love is Pocus and the product led sales sponsors which actually built the community around product led sales before they had a full product that they could sell. We also used to really tightly control B2B brands, but now our users actually are the brands and we want to enable that and help amplify their voices and so find your power users and help give them a platform to promote your product. And then finally, turns out content is sort of the poor man's community. Content is something that actually starts a conversation that people want to talk about and share with others, but it has to be really high value, really thoughtful content. And one example here that I personally love is Substack. I write a newsletter on Substack called growth unhinged, and 80% of my subscribers come from the Substack Network and come from recommendations from other Substack writers. And there's a really great way of essentially creating community around that content experience. And my key takeaway to end this is to optimize these marketing campaigns. Look at product activation, not signups. So activated signups should be your North Star, and this signals that you not only attracted that user, but that user has actually seen value in the product. And that's going to be a great North Star to double down on what's working and actually even see what's working in the first place.

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