Each company’s evolutionary path is unique. Though there may be common threads, the specifics of the journey vary based on each organization’s culture, mission, and trajectory. In this series, we invite SaaS leaders to share stories of transition from a traditional to a product-led go-to-market strategy.
The way people buy software is changing. When our company, Vidyard, was first founded, software purchases were almost exclusively made by the CMO. The process was a classic sales pitch: Here’s the problem our software sells. Do you have this problem? Would you like to buy our software?
Those days are long gone. Today, software is appraised by the day-to-day users, and they want to be able to try it before they buy it. They want to test drive software with their team, and if it delivers value, they will consider bringing it on board.
In Vidyard’s case, this evolution of the buying process inspired us to change the way we build and sell our software. We have begun transitioning from a primarily sales-led enterprise model to a more customer-centric product-led model that includes a freemium product. The launch of our freemium product was a response to the fact that our audience often turned to YouTube as their default video platform because it is free and fast. We wanted to provide a similarly accessible solution that would introduce businesses to the superior experience and value of Vidyard.
A product-led freemium model gives us a powerful way to make that first connection. From there, we can grow with our customers as they grow.
This transition from a sales-led enterprise model to a product-led freemium model has done more than change the way buyers experience and purchase our software. It has also transformed the structure of our company and the way we work together internally. The journey was not without its challenges, but the final outcome has been extremely positive for both our users and our business.
The first question: freemium or trial?
The first question that comes up when you’re considering a product-led approach is: freemium or trial? Vidyard actually experimented with a full-platform trial a long time ago, but it didn’t work out. In retrospect, it’s easy to see why—we dropped trial users into a big, enterprise solution that wasn’t designed around a self-serve mentality. They were overwhelmed and we didn’t make a great first impression.
Based on that experience, we knew we had to take a step back. Before we could make a second attempt, we needed to evolve our product so it was better suited to a self-serve model.
Once we had done that work, we launched our version 2.0 freemium offer (versus a trial) in stealth mode by launching it under a different brand name. This undercover “cheat” allowed us to test the waters and work through the best way to build and operate a free solution that we could scale up to support larger accounts as well.
This second test was much more successful than the first because we had reengineered the product to enable self-serve. Also, the freemium product seemed a better fit than a trial offer, so this experiment also solidified our decision to take the freemium route forward.
The second question: limit features or usage?
When figuring out how to segment our features into individual products, one of the most important first steps in creating our freemium offer was answering another critical question that’s core to any freemium product or trial offer: Do we limit features or usage?
To find our answer, we did a fair amount of research—reading product-led growth articles, looking at what competitors were doing, digging into our market, and talking to as many people as we could. It wasn’t a super sophisticated process, but it was an effective one. Ultimately, we determined that the best option was to offer unlimited videos with a streamlined set of features. We chose this route for two reasons:
Simple solutions get users to the aha moment faster.
Having learned from our earlier trial failure, we were ready to embrace a less-is-more philosophy. Our objective was to create the “minimum solution” that included only the features and functionality a new user needs to get started and experience the value of the Vidyard platform.
Your free offer should deliver sustained value.
This approach also aligns with our firm belief that if a user can’t stay on your free offer forever, then it’s probably not a good enough free offer. This isn’t to say that we don’t want to upgrade people (we do!), but if the functionality of your free offer is sufficient to meet a user’s ongoing needs, they should be able to stick with you for the long term.
Our freemium offer is now part of our overall tiered product offerings, which are separated on our website by use case—sales and marketing—plus a custom option for corporate comms. The sales and marketing use cases both include a free forever option that users can sign up for using only an email, no credit card required.
Speedbumps, challenges, and discoveries
Sometimes, you have to take things apart and put them back together again to get them to work the way you want. That’s okay. The process might be a little messy, but that’s to be expected with any kind of change, even positive change. We came up against our own set of roadblocks and challenges, but we kept our eye on the prize and worked through them.
The most common challenge to a freemium product is pushback from people within the organization, usually sales. It’s not surprising, since adding freemium to the mix has direct ramifications to your sales process. People will have questions. They want to understand what it all means—is product taking over, how will freemium change their day-to-day?
In addition to this issue, our team had two additional factors that exacerbated the situation:
- Our product team was still relatively new, so internal folks didn’t yet fully grasp its role or potential. Prior to building out our product team, our development team built based on feedback coming from the sales cycle, customers, and CX. Bringing new people on board shook up the status quo.
- We’d already had some notable success selling to larger enterprises with our sales-driven model. Some people might have wondered why we were trying to fix what wasn’t—in their minds—broken.
What helped us to get through this transition gracefully was proactively and intentionally changing our individual and collective mindset about product-led growth. We made it really clear from the start that product-led isn’t just about the product team. It impacts—and involves—all our teams, working together in a coordinated way around the product and, ultimately, our users.
As an example, while most organizations anticipate that a freemium product will directly affect sales, they may not expect it to affect engineering. But, at Vidyard, the addition of a freemium offer led to a complete overhaul of our engineering organization.
Before bringing on a product team and launching the freemium offer, our engineering team was structured around technical verticals. We had teams that worked on different pieces of our platform: the video player, analytics, integrations, and so forth. When we adopted a product-led model (which is intrinsically a customer-centric model), we had to transform the way we built products to focus more on who we were building for.
Our engineering team is now organized around different tiers of customer types. We have separate engineering “squads” dedicated to each customer category: the free squad and pro squad which focus on our freemium strategy, and the business and enterprise squads.
We also evolved the way we assign product managers. Initially, product managers were split based on use case (sales and marketing), but today they are embedded in the engineering teams and able to focus on a very specific customer rather than having to cover all the different customer types (free to enterprise) within a single use case.
This organizational shift wasn’t without casualties. We did lose some people in the process because of the switch in focus from technology to customer type. The benefit of aligning our people around specific customer types, however, far outweighs any downside. Now, each engineer and product manager gets to become the expert on that specific customer and be hyper focused on that customer’s needs 24/7. Viewing our product through a customer-centric lens is better for our customer and for our business.
KPIs – individual responsibility, collaborative effort
Each of our customer-centric teams focuses on a specific KPI:
- Acquisition is owned by marketing whose job it is to bring as many people to our door as possible.
- Activation is owned by the free team who works to get people signed up and then guide them to the aha moment.
- Conversion is owned by the pro team who focuses on getting our free users to level up to the paid tier.
- Account Growth is owned by the business and enterprise teams who work to add team members and integrations so they can grow customers into larger packages.
While each team has its own lane, we collaborate way more than we anticipated when we separated into distinct squads. We do a lot of joint projects, and there is a lot of overlap.
For example, even though my jurisdiction is technically the pro user and product, I still have the ability to add PQL prompts into the free product, which is owned by another team. To drive conversion from freemium to pro, I need to be able to message free users. Or maybe my conversions are down because of a drop in top-of-funnel traffic. In that case, I might switch gears and team up with the free squad to help them improve their activation numbers (because that will ultimately give me more opportunities for conversion).
So, the squads allow us to have focus and become experts, but the structure is also flexible enough to allow for overlap and partnership in a common overarching cause.
A whole new way of working together
Transitioning to a product-led growth approach didn’t just change the way we structured our teams, it also changed the way these teams work with one another. Our day-to-day is now full of opportunities for cross-functional learning and collaboration.
Sometimes, these opportunities come about organically. For instance, when our VP of marketing asked for a breakdown of our success criteria, and I realized (as I shared it) that what I was giving her wasn’t what she was looking for. I addressed her request from a product perspective, but she was coming from marketing, where they did things completely differently.
Once I realized there was a disconnect, I teamed up with a marketer on my team to get the lowdown on what kind of information would be useful to the VP. Working together, we were able to provide exactly what was needed. The bigger impact of this incident was that I wasn’t just learning more about how marketing measures success, I was also learning how these different perspectives impact the whole view and help with overall company communication about our shared progress.
These types of conversations and collaborations are also driven by intentional changes to how we work. Taking a product-led approach has quite literally changed how we do things from one end to the other—from how we kick off projects to how we ultimately decide if something was successful (or not).
All of our teams are becoming more open and collaborative. I involve marketing much earlier in our product process, inviting them to kick off meetings with engineering to talk about the problems we’re trying to solve. I’m also pulling marketing into conversations about things like onboarding flows (a dialog that was typically only with design in the past).
Likewise, I am now included in meetings that were once the exclusive province of marketing and sales. Now, I have not only visibility into conversations about big-picture strategies and pipeline, etc., I have a seat at the table. And what I’m learning goes way beyond new terminology. I’m learning how what our product teams do affects sales and quarterly marketing plans and the overall business.
In support of this way of working, we have defined clear processes around who gets to make the final call in certain situations. For instance, if we’re dealing with onboarding, design and marketing will work together. When a final decision needs to be made, it falls to design for in-product elements and to marketing for anything outside the product.
In essence, the relationships we share have evolved into two-way conversations. Each of us understands much more clearly what the others do and how all of it ripples out across the organization. We each have our defined territories, but we are excited to be able to collaborate closely and learn from one another.
The sales benefits of product-led
Circling back to the conversation about the sales motion, our sales team has become really creative around how they are using this new freemium movement in their process. They have also been, in the spirit of collaboration, really open to testing things and sharing how different approaches are working.
What our sales team has come to realize is that they don’t have to be afraid to push a customer toward the free product if the free product is what’s best for that customer. We’d rather help a person with our free product than sell them something they either don’t need or won’t use. As you can imagine, this mindset changes the sales conversation quite a bit.
The other way a product-led approach has really changed the sales conversation is that our sales people are no longer talking about hypotheticals. Many of the prospects have already been in the product, using it. They already know how Vidyard is helping them, and they know what they want to do next. Sales people don’t have to start at the beginning by asking what problem needs solving. They are able to dive right into specifics about what features a customer needs for their unique situation. Having this context makes for a much more effective sales conversation and also helps buyers feel more comfortable and confident throughout the process.
Building off of this, we’re experimenting with a hybrid role of a salesperson who focuses exclusively on coaching people who are thinking of moving from our free product to our pro tier. This person would basically be helping them decide if leveling up is the right move for their situation. The buying process itself is still self serve, but the customer would have the benefit of someone to guide them through the decision process.
Product-led: It changes everything
There’s an assumption that freemium products are just for small business buyers. We held that belief ourselves at Vidyard, until we realized it was completely wrong.
The fact is that even people at large enterprise organizations want to try software before they buy it. They want to be able to get started for free, experience the product first hand in their own organizations, and then make their decision. Product-led freemium is a much more widely applicable growth strategy than you might imagine, so don’t fall into the trap of assuming the market is narrow. It’s not.
Our transition to product-led changed the way we build products because the self-serve notion doesn’t work unless people can learn to use your products on their own. You have to have the right user experience, but you also have to have a complete and comprehensive knowledge base so people can find answers to their questions. There are a lot of elements that need to come together to deliver product-led success.
At the end of the day, product-led isn’t about forcing people to use your products. It’s about building products people want to use—products that are powerful, super simple to understand, and delightful to use. People underestimate the value of delight in a product-led model, but when you can make someone feel good about using your product, it gives them a sense of proficiency that makes them want to stick with you for the long haul. And to create that kind of delight, you really need all your internal teams working together from a customer-centric perspective. When you achieve that, magic happens.