Product-Led Growth in Commerce: Is it Different?
So many trends have led to the explosion in API-first companies. One of the biggest is the rise of end users as buyers, particularly software developers. OpenView Ventures aptly calls this trend the “end user era.” In response, product-led growth (PLG) has emerged as a go-to-market (GTM) motion at these SaaS software companies, which in turn have become some of the largest companies in enterprise software. In case you’re not familiar with the term, PLG uses the product as a primary customer acquisition, conversion, and expansion channel.
Of course, PLG throws a wrench into the traditional purchase processes, which relies on enterprise sales representatives engaging with procurement gatekeepers who facilitate complex product buying decisions. One of the most interesting questions for me personally is the potential role for PLG within the commerce market, where the end user dynamics of PLG are an important element of a multi-person decision process. With several stakeholders in the picture, does the typical PLG pattern apply? Let’s explore this trend more.
The Typical Commerce Buying Pattern
In the commerce world, the business decision maker (usually someone on the merchandising side) initiates the process to investigate a new technology based on some pain point they’re feeling. From there, this buyer poses the problem to be solved to a technical counterpart, whose role is to evaluate one or more available product offerings based on these pain points. Given the level of effort to evaluate new technologies and initiate a traditional enterprise procurement process – the pain threshold is set pretty high. More than once, I’ve heard users say they’re willing to suffer a little longer rather than engage in a procurement process.
In contrast, the typical PLG play targets the end user directly. Companies like Atlassian, New Relic and Twilio (for technical users) and Calendly, Expensify and Slack (for business users) have grown exponentially using this strategy. These companies prove that the end-user era is real, but how does it play out in multi-stakeholder customer journeys like commerce?
In short, commerce companies must focus on the needs of both business and technical users in parallel. That means thinking holistically about the product experience, so that both technical and business evaluators can discover the product’s unique “A-ha! moments” quickly. Let’s dive into how.
Can PLG work in commerce? It already is.
Today, one pattern that we’re seeing is that many technical buyers exploring commerce options for their business start with a PoC on Shopify. Given the overwhelming preference for a hands-on experience, Shopify offers an option to get started quickly and think through some of the unique challenges their use case presents. However, these technical buyers inevitably reach some sort of limitation with Shopify, or a need that exceeds the capabilities of the Shopify platform.
When they hit that boundary (be it creating dynamic bundles or managing variations with unique price points) the technical buyer then seeks out alternatives, informed by the hands-on experiments from the POC. Their experience has made them a more informed buyer, taking control of the process away from procurement.
I’ve seen this pattern before when I worked at Acquia; developers would start with Wordpress, but hit limitations and switch to Drupal, as it provides a more robust suite of tools to address complex enterprise requirements (I’ll cover the similarities of this market to commerce in my next post).
At Elastic Path, we often see the limitations first hand with technical and business personas alike. Sometimes it's the business’ unique requirements and the inflexibility of the commerce catalog. Other times companies may be seeking new capabilities as they branch out into new channels or onboard new brands.
That’s what happened with Elastic Path customer, Paro. Paro wanted to launch a portal for their freelance experts to self-serve transactions surrounding placement and financial services. However, the company was hitting limitations with their previous product catalog, as team members constantly had to create variations on their menu of services in order to meet the needs of prospects. After switching to Elastic Path, the team increased both the ease and speed of variation creation within their product catalog. Elastic Path’s Product Experience Manager (PXM) will significantly impact Paro’s ability to scale their products and services, without adding lift to their existing teams.
Tomorrow: Give the evaluator what they want
A hybrid approach provides a unique opportunity to deliver the appropriate engagement pattern to each stakeholder. For example, a developer will think something is wrong if they can’t quickly set up a store as a PoC in their development environment. If you don’t give them the chance to use your product as a free trial or freemium version before buying, something seems suspicious. On the flip side, for business buyers, it’s important to establish trust and a 1:1 relationship through an enterprise sales motion, combined with a technical presales/support team, as the needs of these buyers are often highly customized. In other words, it’s about solving problems and teaching.
Don’t be surprised if PLG looks slightly different for commerce, given the stakes are high when downtime is measured in dollars per minute. Many of us software industry veterans understand that expectations of the evaluation and purchase process are changing. The most successful vendors will appeal to both the technical end user and the business buyer by leveraging the best of PLG (hands-on experience with the product) combined with a relationship-based engagement with the business buyer. For Elastic Path, we’re embracing this blend wholeheartedly; it’s all about solving problems and enabling these two teams to work as partners.
We have launched our own product-led growth initiative. Try out our product and let us know what you think.