Building a product-led business where product usage drives user acquisition, retention, and expansion, is known as product-led growth. It requires strategic decision-making, data analysis, and seizing key behavioral analytics to drive growth.
To maintain your accelerated growth as a startup or even a mature company, you need to increase the expansion rate of your customers, while also decreasing the time it takes for those customers to expand.
How can you most efficiently drive this product-led expansion within your organization?
Watch the video below or keep reading to find out!
Data Analysis in the Problem Space
Product-led expansion depends on strategic decisions that fuel growth and retention. A huge part of making those strategic decisions is looking at relevant data. Data is vital to inform decision making and helping you to define problems within the ‘problem space.’
I know what you’re thinking, what on earth is the ‘problem space’?
Put simply, the problem space is a framework for defining a problem before you consider the solution. This is obviously crucial for product-led companies who must understand what the problems are that they want to solve before they can effectively come up with the solution to solve those problems.
You also need to consider user science data, which is a field of product management that can be split into two different types:
Once you have the right data, you need to use it in a problem sequence.
Here is an example of a problem sequence from 7shifts (from left to right):
If you create a problem sequence, you will end up with insights that help to refine the problem. From there, you can create a detailed breakdown of the problems. Having this information at your fingertips allows product managers to pinpoint what problems to tackle in the current iteration and what problems to tackle in future iterations.
Define your Scope & Iterations
The next step is to use behavioral analytics to define your scope and iterations.
An example of this from 7shifts was their realization that some existing paywalls were hidden from some of their most engaged users, however those users had no purchasing power. This meant that these highly engaged users could not see multiple features that they could have, and worse yet they had no path to purchase! This key insight was identified using behavioral analytics, and the team at 7shifts were able to quickly identify their project scope for their planned iteration.
One of the key problems they needed to address was all of the hidden paywalls. Paywalls are visual. So, when specific features are hidden to the end-user, it poses a very real problem that must be rectified. 7shifts needed to make users aware of these features, without being too pushy.
So, they worked on building a more consistent experience that had minimal (if any) disruptions. To make users aware of features that may have gone unnoticed, 7shifts effectively came up with a way to bring the features and the value of those features to the user’s attention in the context of where the value is achieved for the user (as opposed to low-value settings page paywalls).
Let’s take 7shifts’ budgeting tool as an example…
Using a blend of illustrations, context on the feature, and emphasizing the value in this way, it helped to make the user aware of the feature (and increase their interest and engagement with this, and other paywalls). But these engaged users had no purchasing power, so they devised a simple solution that leveraged their existing messaging tool to streamline for the user a call to action (CTA) that opened a preloaded message to communicate directly with the buyer persona in their organization. Once released, 7shifts discovered that this user behaviour was the most correlated analytical event with an actual upgrade event within their product. Amazing!
Contextual Paywalls to Drive Expansion
7shifts has a hybrid free trial along with a free plan option that allows users to ‘test drive’ the product without commitment pre or post conversion. However, they discovered that the behaviour of customers on their free trial version and their free subscription option were very similar in how customers behaved within the product, vs. how a paying customer might behave within the product.
Upon further analysis, they found that their free plan offered a lot of value and were not seeing the upgrade behaviour they had anticipated. After all, if users get the same level of value from a free version of a product as they would receive for actually paying for that product, why would they ever choose to transition to a paying customer?
To deal with this problem, the product management team decided to remove certain features from the free version. However, they didn’t remove the features entirely. They still let users click on the features and see what they would allow them to do, but this time, the features included a paywalls to inform them that this feature is not available on the free plan.
As you can see in the image below, the banner effectively tells the user what the disabled feature does. In this example, this is a feature that allows users to track and record notes for individual shifts but if you want to get value from this feature, the banner clearly states that you must upgrade. From here, the user can view upgrade options and learn what other benefits they will receive if they decide to become a paying customer.
Yes, you want users to get value from free options of your product. But you need to be careful that you don’t give them too much value. Otherwise, they have no reason to upgrade and they may never become a paying customer of your product.
How to Create Contextual Plans that Convert
Convincing users to move from the free trial to signing-up for your product and becoming a paid member requires more than great prices and special offers.
Consistency is so important. 7shifts uses and reserves use of their trademark blue color throughout the product to indicate a paid feature and within their contextual plans. While users engaged with the free trial and came across a feature that could only be unlocked by upgrading, the eggplant blue shade was used repeatedly in banners and CTA’s (see an example of this below).
You should also try to remain as consistent as possible when the user moves onto the payment plan options for your product.
The key is to create contextual plans based on what feature most interested the user. 7shifts does this effectively by highlighting the payment plan that includes the feature that the user showed the most interest in.
As you can see from the image below, there are four different plans to choose from. However, only one of these plans is highlighted in the same eggplant blue shade that has been used throughout the user’s experience with the product. The feature that the user showed the most interest in is highlighted, and 7shifts recommends the plan that the user must choose to unlock that specific feature.
It’s a fairly simple tactic, but any way you can remove friction from a purchase experience has proven results to increase your upgrade and expansion efforts.
Here is a sneak peek at 7shifts free plan expansion results following their efforts to intentionally dive product-led expansion using the methods discussed in this post:
Steps to Scale
Using certain data points and behavioral analytics, 7shifts was able to take that data and build an AI Machine Learning model to determine which customers were at the brink of upgrading. They considered everything from what copy was used to what illustrations lead to engagement, and so on.
They then took all of that information and data and used it to create a ‘hitlist’ of sorts. This hitlist scored the most likely customers who were close to upgrading. Their team was then able to leverage this data to talk with the right customers at the right time to help them see where they can receive the most value from the product and ultimately upgrade.
This data also exposed which paywalls different users engaged with and showed interest in. They were then able to reach out to managers and restaurant owners on a much more personal level. 7shifts was even able to observe consistent and repeatable ‘ah-ha’ moments within the behavioural data, where engaged users would message the buyer persona in their organization, the buyer would view the same paywall, view the plan page, and then upgrade - usually within a very short time frame!
It soon became clear to 7shifts that they had a massive opportunity to scale product-led expansion, which led them to come up with a ‘what’s next’ game plan:
Driving Product-Led Expansion
So, how can you drive product-led expansion?
The first step is to dig into behavioral data for insight to cut the noise and define your scope.
Next, you must actively empower users to be your expansion advocates. In other words, you need to ‘sell them the vision of the feature and provide streamlined workflows to convert themselves’.
Another great way to drive product-led expansion is to push for contextual ‘ah-ha’ moments. You also need to grasp the concept and understand how you can find a balance of showing a user value, without disrupting their core experience.
Finally, you must capitalize and scale what is working, and throw away what isn’t.