Product Experience

Product-Led Flywheel for SaaS: A Proven Framework to Grow With Your Customers

May 31, 2022
12 min read

I believe we all know Slack right? Slack is a SaaS product that operates on a free model for most users - and sells paid subscriptions to a very small number of its worldwide users. Still, it secured $250.6 million in FY2021 with 32% year-on-year growth.

How is that so? The reason for Slack’s growth is the new Product-Led Growth Flywheel model.

It helps you cut down the influence of marketing and sales materials like whitepapers and brings the product into action.

At Salesmachine, we believe it is high-time SaaS businesses adopt the product-led flywheel framework and grow with their customers.

In this blog, we will cover the meaning and features of a product-led flywheel along with solid reasons why you should replace funnel with a flywheel.

Content:

  • What is a Product-Led Flywheel?
  • Features of a Product-Led Flywheel
  • Why Should You Replace Funnel with a Flywheel?
  • How to Propel Your Flywheel?
  • Using Salesmachine to Track Customer Behavior


What is a Product-Led Flywheel?

A Product-Led Flywheel is a growth framework that allows the product to attract and retain customers. The flywheel model aims to invest in user experience and focus on customers’ overall happiness to increase their advocacy for the SaaS Product.

Customer behavior has evolved with time. They expect educational content instead of orthodox marketing materials. And they’d much rather use the product to determine its capabilities.

The product-led flywheel focuses on the customer's happiness and growth, leading to referrals and, thus, more sales. The Flywheel model keeps spinning, which forsters your product and customers’ growth.


User-Segments of a Product-Lead Flywheel

The Product-Led Flywheel focuses on your existing users while keeping an eye out for new ones who may not be of the same archetype.

Most companies have a set idea of their ideal customer, sometimes closing doors for newer, more interesting people. Here are four user-segments that you need to consider while devising customer acquisition strategies.


Evaluators

Evaluators are the people who’ve heard about your product from their network. There’s no point showing off your product’s features as all they care about is solutions.

Characteristics of Evaluators:

  • Evaluators are at the earliest stage of the flywheel. They’re trying their hands on everything your product has to offer. Treat them as if they have zero experience as they know nothing about your product.

They know your product can help them but don’t know how — they’re here for the confirmation. So if you’ve a freemium model, they’re probably going to try out more than one SaaS product to see which one is a better fit for them.


Beginners

Beginners like your product, and they want to explore all its features. They try to integrate your product into their workflows and link it with their company growth.

Characteristics of Beginners:

  • Beginners are excited about the new product and they’re showing early signs of commitment.
  • They're pretty analytical as they compare different products at this stage.
  • They will have initial doubts, which you must solve actively. Asking questions means that they’re willing to learn about your product and want to use it more.
  • Beginners start associating your product with specific tasks — it happens subconsciously. Help them build a habit, and they'll adopt the product.

A point to note here is—beginners want to see a quick ROI. So you’ll have to provide them with easy access to your support and all the educational materials they need to learn more about the product.


Regulars

Regulars are your go-to customers, and they've fully incorporated your product into their workflows — they depend on it. In the funnel arrangement, this is where SaaS companies miss the mark; regulars demand extensive support, but the customer success team often focuses on new customers.

Characteristics of Regulars:

  • Regulars demand the most engagement; they want instant customer support. Since their work depends on your product, slight friction causes damage to their business.
  • They keep digging to extract more value from your product. Regulars want to know how the product can make things easier for their business.
  • They will have opinions about your products and give directions for refinement. They are your first-hand source for customer insights and use cases.
  • They may or may not show excitement now because your product is like a body part of their workflows, and they're used to it.

Get them to Adore Your Product.

Be proactive with customer support — analyze their pain points and suggest solutions. Regulars have adopted your product, so it's your job to keep them excited about it.

Use educational content to keep them on track about any updates and promote trials.


Champions

Champions are customers who've already bought into your vision. They want more from the product and advancements you have to build in. It's important to welcome these customers with open arms.

Characteristics of Champions:

  • When you manage to sustain regulars, they become champions.
  • They actively recommend your product to everyone.
  • They suggest improvements in your product to make their tasks easier, boosting product quality.
  • They’re quickest to jump to better subscriptions if it solves their problems.

Get them to Advocate

Champions connect with evaluators in their network and promote your product to them. When you make these advancements in your products, you’ll be able to quote better prices, tap into a better market, and onboard more exciting customers.


Replacing Funnel With Flywheel

SaaS businesses and startups have been using funnels for decades. As the name rightly signifies, it’s a funnel - where people enter as visitors and come out as customers, and that’s the end.

Funnels project customers as the outcome of the sales journey, but it doesn't work like that anymore. Customer habits have changed, and they don't rely on the sales team to explain how the product works.

Customers believe in self-educating. They read blogs, case studies — and other content formats to observe your product and its position in the market before swiping their cards. They have a vast network of marketers, product managers, and other SaaS companies for suggestions.

According to the HubSpot Research Trust Survey, 81% of customers trust word of mouth more than business advice. Let’s understand why a growth flywheel is better than a funnel.


Funnel vs. Flywheel

Customer Support

Funnel

In the funnel system, a customer is considered an outcome that’s left on the shelf after pushing them through various sales processes.

Sales teams move on to new leads to finish their quarterly goals, and customers are shifted to the support or CS team, which means new people with no other relationship with the customer.

This creates a communication gap between customers and the team because they didn’t have any prior context about the customers as the sales team used to handle them.

Flywheel

The customer is always at the center of the product-led growth flywheel. Your organization  attracts customers with educational content and engages them with personalized emails, lead nurturing, and multichannel communication.

The whole process delights the customers, and they buy the product and promote it among their peers.

Sales and Marketing Alignment

Funnel

Sales and marketing teams work separately in a funnel arrangement. At any given time, the customer is either in the sales funnel or in the marketing funnel with no correlation whatsoever. It causes friction in the customer success journey, reducing Customer Lifeline Value (CLV).

Flywheel

LinkedIn surveyed sales and marketing leaders—78% of them believe collaboration between both the teams can increase business growth. There are no sales vs. marketing in the product flywheel, and the investment is more on customer advocacy than marketing materials and sales scripts.

Continuous Accountability

Funnel

A sales funnel has a beginning and endpoint. Marketing responsibility ends with lead generation, sales responsibility ends with conversion, and customer support ends with problem-solving. The customer jumps from the marketing funnel to the sales and support or CS funnel, and there's no space to build relationships.

Flywheel

There’s no end to a product-led growth flywheel. The customer always stays in the center while all teams continuously try to channel its growth. With combined continuous efforts from your team, the customer becomes a promoter.


How to Propel Your Flywheel?


Customer Experience

81% of organizations in America believe customer experience must be the top priority for all businesses. Customer experience drives the flywheel model — the more you focus on a frictionless experience and implement feedback quickly, your flywheel keeps on spinning.

Use Product-led Management Platform like Successeve for customer behavior trackers, in-product engagement trackers and surveys to tap into customer’s perception of your product. Use this data to make adjustments in your overall product strategy to satisfy customer needs.


Sales

Your sales team knows your product; it highlights the strengths and defends the weaknesses — but in a product led growth model, things go further than mundane tasks. Sales reps must learn about the market perception of your product. Understand why customers don’t want to buy or scale — when you show genuine concern, customers provide valuable feedback.


Easy Onboarding

Reduce your Time to Value (TTV) so customers start deriving value and ROI from your product ASAP. To achieve this, you must constantly monitor the time it takes to deliver value in each step of the onboarding process. Remove all friction in the sign-up process by adding educational materials and in-app engagement strategies so the customer can jump to product usage.


Replace MQLs with PQLs

Product Qualified Leads (PQLs) are the customers who've reached a particular stage of product usage and are ready for an upsell or a conversion. For instance, Slack considers a person an active lead when they’ve sent 2000 messages on the app. Product Qualified Leads are more likely to convert into loyal users as they’ve shown signs of interest in your SaaS product.


Fast Releases

Don’t keep fixations on hold - once your customer raises a ticket, get on right away. Fix the bug, push it to production and return it to the customer. Quick reaction works wonders in the long run. Customers know problems arise, but your proactive approach converts them into champions.


Wrapping Up

Your Product-Led Growth Flywheel spins on a smooth customer experience. Track customer behavior with Salesmachine to improve CX on your SaaS product. With whole customer’s usage data under a single profile, your surface PQLs, track KPIs, manage touchpoints and track customers’ health to find who needs help and who’s ready for upsell. Supercharge your growth flywheel with Successeve.

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