Embedded PLG
Designing a playbook for product led growth and AI's role in the future of PLG
With Mario Araujo

Link to full episode

Jason Tissera | Upmarket: great Hey, everyone! Welcome to another episode of Embedded PLG. My name is Jason Tissera, and this week I'm excited to invite Mario Rjo to this conversation. Mario was a B2B growth adviser and interim product leader. He was previously the head of growth at softr and an early employee of Outsystem as a sidekick mostly while his daughter's sleep he runs productleadstack.co. Thanks. So much for joining me, Mario.

Mario Araujo: Thank you. My pleasure. happy to be here

Jason Tissera | Upmarket: awesome. So the big question is, should companies invest in product led growth? Considering this economy right now, is this the right strategy for SaaS and software companies to take.

Mario Araujo: I can't give you an answer that is valid for all companies, but I'll say that in this climate, investing in plg can be a wise strategy and wise strategic move for B2B companies. So for those of you know, majority of people will know what plg is, but for those that don't - It's an approach that prioritizes essentially creating exceptional products and user experiences. And if you anchor on value, your product will only be better, and if your product is better, you get more value. So I truly believe, and I've been saying this even yesterday, to one of my customers. I was telling them they were asking this exact question, and I was like the question is not whether or not you want to move or transition to Plg. The question is more one of whether or not you want to increase the focus of your company's resources in getting more value to users faster and better. So that's the the, I guess the ultimate goal of this whole thing. If you do this  my hypothesis is that like, if you focus on value my hypotheses is that you'll get better at acquiring customers, because value starts also the way you do marketing. Also in the way you provide an experience on your website when they evaluate so more efficient customer acquisition number 2. better customer retention, and a consequence of this is also you'll upsell more and because of all of the the infrastructure. I would say I would call it that like that, that you need to build to be an efficient plg company. You'll also improve your scalability and adaptability to whatever change comes your way. So I guess I guess this is it. If you're willing to optimize for value and get these 3 benefits. Then yes, plg is is right for you.

Jason Tissera | Upmarket: That makes a lot of sense. So if a business has made the decision to start. What goals? And you talked a little bit about goals? What goals should they highlight and focus on

Mario Araujo: it's a good question again, if we anchor on value. and this notion that transition to plg is not the goal. The goal is to achieve some sort of business outcome. What I hear from my customers. when I'm talking to them, are 5, typically 5 things, one they come to with the idea that they want to expand their total addressable markets, either up market or down market. But normally down market bottoms up is the most common pattern. As I work with heavy B2B companies that have been a while for a long time. The other thing that comes to mind is reduce the cost of sales. They want to reduce the cost of sales. In other words, they want to reduce the sales cycle length. So sometimes I get 1 one of these 2 objectives. The other 2 are capture the markets faster than the competition. So they're launching a product. They want to take the mark the right storm, and and free and self service offers less friction, more virality, etc., and the the last. But, in my opinion the most important one is some customers, very few, actually, that I talk to. They want to reduce the time to value. and to me, that's the one goal, that should actually be the first one to list because it encompasses all, all of the others in a way.

Jason Tissera | Upmarket: when they make this decision? How do they set up for success? When we last spoke we talked a little bit about team alignment not being siloed thinking about things from a culture perspective, especially as you move from sales to product led, could you touch a little bit upon some of the success, for is that you've seen and how you seen companies set up for success when they've set a product led growth sales process in motion.

Mario Araujo: Yeah, it's funny. It's funny that you ask this question. I actually run a podcast. On the opposite. which is almost always, almost always, before succeeding, they will fail. And so I run this series of plg fault starts which explores how many failures there were, or what types of failures happened and successful plg companies before they can become a success case study. So a lot of it. A lot of it is precisely that you will fail. You do not restructure a lot. Your founding team, your Plg founding team because that team will be core to improving all based on what they learn. So really make sure you you you set up for for You're set up for failure and learning. Well, first and and foremost, the other thing. The other thing that I would say is cross functional alignment. It sounds like a beautiful bullet point to put on a slide. But what I mean by this is not just cross-functional alignment is true cross functional alignment. The difference is what I often find is everyone is committed to this, everyone is supporting this. And then I ask how many people are actually out of all of these teams that you mentioned. They often mentioned that we have marketing. We have sales, we have pre sales. I'm like how many people from each of those teams are fully dedicated to making this a success versus and and that to me versus nothing actually, and that to me is the asset test of are you truly aligned in the sense that you have people really focused on this. What happens most often than not based on my experience is that everyone claims to be aligned. Everyone's happy. And they're talking about plg and whatnot, but they do it on top of everything else they're doing. And so, in fact, if they have to prioritize they'll prioritize everything else. that is more urgent, that is part of the job. So you do this by revisiting the teams, objectives, the team Kpis and and not being afraid of moving people. For to this cross functional team even if you have to break reporting lines. And this team is very flexible. So in in in the quarter, it can be that you're focused on acquisition, and the second quarter you may be focused on on retention, and so you'll have to shift resources

Mario Araujo: again. Keep the core founding team there. Second thing is managing expectations. So we talked about cross-functional alignment. Then I like to talk about managing expectations. It's If your CEO, your Co. Thinks that by launching a Plg initiative you'll be able to triple the number of leads that come through your funnel in 2 months. Don't do it. They're not. They're they're they either don't understand what plg is or  they don't they? They don't understand the investment required to make up the transition work. and unless you're a new product, shiny product transitioning from to additional business model to plg can take sometimes 18 months and then, you know, or more the other. The final one is, if you after one and 2. If you decide to move forward My recommendation is that you start small without disrupting current operations. The worst thing that you can possibly do is create this expectation in the organization that this is the most important thing. And then everyone wants to help and potentially and tries to help, and they start. They start Changing their ways of working unnecessarily. They do it with good intention, but it's too soon for them to help. But the problem and and so, yeah, make sure you don't disrupt operations. Specifically sales those are the. I guess the 3 things that come to mind.

Jason Tissera | Upmarket: It's interesting that you touched on early goals that a company should have so obviously, you know, increasing the amount of acquisition in 3 months, or increasing your your revenue in 3 months is probably not the right type of goal. But what are some goals that you would? You've seen companies put in place that made a lot of sense, and that we're good to try to achieve.

Mario Araujo: So it it's more or less connected with with the the one of the questions before. So I think one of the ifs if we want to talk, if we want to talk about metrics. If we're talking about increasing value, we're reducing time to value one it. Referring to this conversation I had yesterday for heavy B2B companies It normally goes like this, sales cycles are 6 to 9 months long. and time to to value like once the customer buys. Then it takes another 6 months for them to actually use the product. They need to train people and all of that good stuff. And so if you

you think about it, 6 months plus 6 months. So it's like a year since they first engage with you all the way to the end of getting value. It can take a year. That's a long time.That's  as almost as saying, Hey, Mr. Customer, you're gonna invest a ton. You'll invest further when you buy, and you'll see your return on investment starting to show you signals of being positive in a year. So this is I, I, for a transition of a B2B company to PLG, this is, these are the 2 metrics that I would start with. You start to measuring the time it takes for them to the thought that the the the time to value as far as the priest, the sales cycle is concerned, and the time to value as far as the post sale cycle is concerned, and you should aim to reduce that aspirationally by 50% at least in the first quarter or 2, and then learn whether or not you were to aggressive in your objective or whatnot. But directionally, if you start improving these things. Even if you succeed transitioning to Plg or not, your product will be better. Your team will have learned a number of things that will be extremely valuable for you to improve the business overall. Because, you know, you're talking about sales on one end, and you're talking about adoption.  On the other hand, And so if you do good job in the first, you'll sell more if you do, or  faster, at least you do a good job in a second you'll probably expand more, so you'll start seeing shifts of your nr, later, if you're if you're not shifts increases on nr  If you do things right.

Jason Tissera | Upmarket: Excellent. Is there a playbook that you'd recommend for teams to get started and get going?

Mario Araujo: yeah. So first and foremost, get clarity on the goal like, if you are successful, what I'd like to ask is 2 years from now, if you are successful.  where will we be? What  will happen in our business? That may make us think that this was successful. What what changed is it, you know, whatever time to value like sales cycle we need, we need the we have shorter sales, cycles, we increase the Acv or whatever it might be so. What? What? We'll say we have more customers. There's you know, Nps goes up. Whatever it might be. We need to get clarity on that goal. And so that's that that that clarity I would highly recommend you. Write it down in a document 1, 2 pages that it's not a slide with 3 bullets, but maybe the bullets and the reasoning behind the bullets. Because, you will. You will want to. You will want to anchor everything you do to that, and a very tactical advice. Every meeting you have once this thing is started, and normally there are many. You start that with it you start articulating what's in that narrative, and you do that until you're sick and tired of hearing yourself. If you're the leader of the initiative. Everything starts there. then audit your funnel end to end in order to know what metrics you currently tracking, but oh, how you are performing You know how, how and how fast are you acquiring customers, retaining customers, monetizing customers? You look at conversion rates for all of these things. Also time to achieve these milestones. And just by. And the, it's also good to think about. Okay, if sometimes obvious opportunities bubble up like one of my customers? I asked all these questions, so I send them list of things that I want them to answer as far as metrics are concerned. And you realize, oh, we don't have like 80% of these. So first step was to let's implement these, and now they're working on it for like 2 or 3 weeks. Now to get that up. So get that snapshot of where you are that will help you paint the picture of where you want to be and that leads  to the third thing, which is if we were to be somewhat successful in the next 3 months, what of these metrics would have moved. and thatwe'll tell you what essentially inform what to do in the next 3 months, and the and for that you'll need the resources to get there. But I guess this is I would not advise going for like you know, let's build a 5 year plan for this, that that that will unlikely be a useful usage of the time.

Jason Tissera | Upmarket: I mean, a lot of this is just really around experimentation and retention. You know, you get a group of users, a cohort, and you understand how they're accessing the software if they're gaining value from it. And then you keep trying to improve that process over time.  And so the type of metrics that you're talking about the timeframes that you're talking about. They make a lot of sense as well as the amount of focus that you have from a select group of people over a long period of time, not changing that up too much, keeping the team dynamic the same. I think these are really great points. So with regards to the metrics that you're measuring and really checking how? How you know it's working! What are some early signs of success that companies should be looking for once they've rolled out their strategy? 

Mario Araujo: so if you if you just if you look at the end to end. if you're if you decide to focus on

acquisition, for example, I would look for signs of sign ups. number of sign-ups, but also growth of those sign-ups. And a couple of the devil is in the details here. So what percentage of these signups are relevant? So they are within the definition of your ideal customer, profile or ideal customer, ideal user profile. Sometimes these users will not be the buyers. So what percentage of these sign ups are relevant. And then the the and I learned this with Early on with the Lynn of this definition of relevant user. You may be celebrating that you're acquiring a bunch of users, and your traffic is through the roof. But is it? Is it traffic that is, gonna make that is, gonna make an impact to to the business or to your goals, then, conversion rate to first value again, focusing on acquisition. You don't want to just focus on sign ups or relevant sign ups. You want to look at the percentage of those they get somewhere inside the product. I'm defining this as first value, say, like a typical example for Zoom would be, you're on a call with more than one people within your first week, or something like that. So that's value. And then the time it takes to get there. So these would be the 4 things that I would look at if you focus on retention.

Mario Araujo: I would measure time to value and monitor if it's trending down, but also conversion rate to engaged user whatever the retention metric that that you have in some very complex scenarios Well, in some very complex products, and a very early sign a

an area where people can start playing with is with the evaluation of the product. Then some companies, can't afford to create a trial version, or they don't want to create a trial person and because it's too expensive for them. But they can definitely figure out if there's  if there's a way on the website to offer value even before someone touches the product and and the you'll, you'll eventually see changes in the dynamics of the sales process. For example, this is more qualitative. Like the types of questions people are asking types of people that engage time. It takes to close deals and whatnot. And the improving your website to make it easier for people to evaluate the product is gonna essentially essentially have a immediate impact on who they start to evaluating. First, that makes sense. So normally, they have a short list. You want to be the first in that list. You want to be the easiest because if they start with you and you do a good job nurturing them, the the likelihood of you closing. The deal is is higher And then this last one is sort of a bonus, if it like. Oh, plg is not for me. and then we look at their site, and their site is just impossible to impossible to get value from without. you know Well, they some websites have this probably have this internal metric. I joke about this, that within 2 clicks at most, if possible, even less. We should capture people's email for nothing. And so they hide everything about their product. and and so they make it harder for people. It should be easier

Jason Tissera | Upmarket: that makes complete sense. you know, as we're now getting into this world of 2 clicks to get emails being the thing that doesn't work. So providing more and more value. providing a more personalized experience and helping people to understand exactly what you do. Faster. I think a big piece that's gonna come into play is chat Gpt, providing the necessary technology and the necessary way of having some of these conversations.

Jason Tissera | Upmarket: What role do you think Chat Gpt will play in rolling out and executing on pog strategy in the months to come.

Mario Araujo: So in preparation for this conversation, I actually asked Chat Gpt that question and what chat you be told me is essentially I'm sorry I cannot predict that. So it was funny, at least I up, but the jokes aside. I think some interesting areas where AI will help. And I I'm seeing

give you an example of a tool that's doing a lot in this space of analyzing, making analysis and prediction really easy. it's a tool called very small, very small startup called graphext.com

ou can add to the show notes if you want, just for people to explore. But the the idea is that if you analyze customer feedback like I, I'd love to see a place and someone from graphext which I'm interacting with. Show me how they can look into open questions that users answered on surveys or comments from intercom, or from whatever all interactions if you want, if you have them all somewhere and cluster them by topic, by sentiment, by whatever it might be. And it's extremely helpful. I I I am one of those people that reads all, surveys. all answers top to bottom, even if it takes me like a week to read all of those so helping to analyze and create areas of improvement proposed areas of improvement based on customer feedback. That would beawesome. Obviously, you need customer feedback for that. and it's fun to see tools like the one I mentioned. making that easier for all of us. And then oh, second thing, I would say, analyzing Funnel the analyzing the funnel and the and and the funnel data and behavior data. To propose metrics to improve. and then, you know, a dream come true would be would be like they could even propose experiments for you to run in context of your product. so yep, that would be. There are some tools now that claim to do this like loops but I haven't played with loops yet, so I don't know if it works or not I play with graphext but not with loops.

Jason Tissera | Upmarket: Thank you. Thank you so much for for giving us the time and speaking through a lot of the things that you've learned over the past years and supporting companies to figure out their product. What strategies, Mario. We really appreciate it. And I'm really grateful that you're able to share where you think product lead is going to grow with chat gpt involved. So thank you so much for your time. It's been great chatting with you

Mario Araujo: likewise. Thank you. Have a good one.

Jason Tissera | Upmarket: Take care