Of the various goals and measures of success SaaS startup teams may juggle, there is perhaps one overriding priority – growth.
If that’s true, then it should also follow that every team and function in the company should be thinking first and foremost in terms of what can drive maximum uplift in key revenue metrics.
However, such a way of thinking has been for the most part adopted only by go-to-market functions like marketing and sales.
Traditionally, product managers and their teams are goaled primarily on shipping features. But in the last 5 years or so, we’ve seen the emergence of “Growth PM” roles, centered more around optimizing products to drive faster retentive usage and revenue.
Some have analyzed this as a movement of product management towards specialization – as already well established in marketing, design, engineering and sales.
But in another perspective, growth shouldn’t just be the domain of some product managers – instead, it should frame the thinking of all product management work. This should be the case especially at Product-Led Growth companies – where too often, it is marketing and revenue operations teams that drive growth rather than product teams.
All product management should be about growth and growing products, instead of just building features and making sure we only build things that are going to be adopted by our customers or new customersPartho Ghosh, Senior Director of Product, Growth, Hootsuite
Partho Ghosh, who led growth-centric product teams over the past decade, and now does so as Senior Director of Product at social media management platform Hootsuite, advanced this view in a recent interview with us.
In this article, we dive into what this means and share Partho’s recommendations on how product managers can better focus their efforts on growth.
The foundations of growth product management
Thinking about how the product can better drive adoption and engagement is a core concern of growth product management. “The mindset has always been about evolving and getting adoption through our product, and that’s how we see success,” Partho underlines.
Accelerate movement through the customer journey
This starts, at the top of the funnel, with activation. A key part of Partho’s team at Hootsuite focuses on how to get users to an ‘Aha! Moment,’ in when users recognize sufficient value to want to keep using the product.
From there, the task of a growth PM is to figure out how to identify customer segments who may potentially upgrade and design the product experience to accelerate their movement towards higher paying subscription tiers.
Growth product management starts from that light bulb moment, and eventually ends up obviously in monetization, where you find the right customers that see value in your product and that you can upsell, to move them along your customer journey from a beginner all the way to a power user, as quickly as possible.Partho Ghosh, Senior Director of Product, Growth, Hootsuite
Throw out intuition, double down on data
In order to effectively drive such outcomes, growth PM teams need to develop an in-depth and highly granular understanding of what drives customer behavior at different moments in the journey.
This entails a combination of qualitative and quantitative research – through user interviews that dive into the nuances in customer context, goals, and challenges, and applying data analytics to usage data to identify how users are moving through the product funnel, where they are getting stuck and the features they use to achieve their goals.
One advice Partho has in the discovery process is to throw intuition out the window and rely only on what the data says. “Your gut is going to lead you astray,” he says. And your assumptions that things are going to work will often not prove true once you consider a different customer segment that the one you had on your mind when developing a hypothesis.
“We’ve learned and surprised ourselves with what we’ve learnt,” Partho reflects. “Some things we thought were super important were not and we had hard discussions internally to make hard calls, like maybe this is not supposed to be in the onboarding flow, and maybe that is something we should kill.” By building a data-driven view of how customers are using the product, rather than relying purely on intuition, growth PM teams are better able to drive optimizations that actually result in revenue uplift.
Always be experimenting
The best way product teams can learn about how to drive more efficient conversion and upgrade journeys is through experimentation.
“We ran probably a dozen different experiments – like A/B tests, or other controlled tasks to understand how can we get customers to adopt features as quickly as possible? And does that actually correlate to improved retention and long term health?”
Experiments will not only provide your team data to validate or disprove hypotheses on what works in your product, but also helps you zoom in on specific customer segments to understand what are the real drivers of value and retentive use.
Most importantly, tracking experiments against the right metrics will help you understand which features or usage experiences are really impacting the business bottom line. And of all the metrics you should be monitoring, there is one that Partho believes is most important.
PMs should build for CAC/LTV
Partho strongly believes that product managers should be paying more attention to the impact of what they are building on revenue metrics and above all, the Customer Acquisition Cost to Lifetime Value (CAC/LTV) ratio of different customer segments.
“I will often use the CAC/LTV ratio, and test it against a bunch of different user slices, whether it’s by customer segment, vertical industry, personas or even jobs-to-be-done, to see, are there areas that we should be focusing on? Are there areas we should be divesting from or investing in? It’s a great metric that I find a lot of product managers don’t use,” Partho says.
Paying attention to CAC/LTV helps product teams establish a healthy growth model for the entire business, by focusing on customer segments that offer the most efficient path to revenue expansion.
It’s the first thing I do in a lot of organizations – as I’m trying to grow the business, I want to grow it in a healthy way and find a healthy business model. And LTV to CAC really lets you do that quickly.Partho Ghosh, Senior Director of Product, Growth, Hootsuite
Some customer segments, for example, may seem highly valuable because they represent a significant potential contribution to ARR. But these same segments may in some instances have a CAC/LTV that is much less optimal.
Especially for product teams in companies who are trying to achieve higher revenue efficiency, prioritizing product development against CAC/LTV could serve as an important process to align product management with the broader growth strategy of the company.
Experiment with opportunities for self-serve
Growth PM teams should not only prioritize who they are building for based on CAC/LTV, but should also think about whether they can drive better ratios by finding opportunities to introduce self-serve motions in heavily sales-led segments to improve efficiency.
Identifying these opportunities and actively pushing to build such motions is a powerful opportunity for product teams to drive impact, especially in companies who are trying to become more product-led.
Partho shares one such initiative at Bananatag, an internal communications tool company where he previously headed up product and development. Although the company had more of an enterprise sales motion, selling to Fortune 1000 companies, a self-serve side product – a free-to-use chrome extension – helped drive virality within customer accounts and rapidly expand usage from one department to another. While the company’s overall revenue strategy remained sales-led, a self-serve component of its product helped drive much higher efficiency in the sales process and lower acquisition costs and build a much healthier, partially product-led business model.
If your company isn’t already considering building out a self-serve motion, there are many reasons to consider experimenting with one. As Partho highlights, many mature B2B SaaS organizations are gravitating towards a growth model that leans more heavily on self-serve as a growth-driver, alongside existing sales-led motions. “At Hootsuite, we’ve got a 50 percent self-serve motion and 50% more sales-led motion, and I think that’s going to change over time, because our product genuinely feels like it’s a great fit for an entire product-led growth strategy.”
Partho sees this as in line with a broader industry trend. He points to the inspiring example of Vimeo, the video management platform that hit $330m in ARR in 2021, and is growing at a phenomenal 56% year-on-year, as a company which has successfully built a powerful combination of organic self-serve and enterprise sales driven growth into its revenue model.
Driving change towards a more product-led revenue model will necessitate a stronger focus on growth within product teams. Partho highlights an inspiring observation by Pendo founder Todd Olson in his book The Product Led Organization that building a product-led team takes an entire village – sales and marketing teams alone cannot drive change without the involvement of customer success, product and design. “If you really want to be product-led, everyone has to buy in. Otherwise, it kind of breaks down,” Partho warns. And so product-led growth requires all product managers, just like all designers, marketing, sales and CS leaders, to orient their work around growth.