Okta’s VP of Engineering, Monica Bajaj, and Senior Director of Platform Product Marketing, Priya Ramamurthi, share Okta’s playbook to PLG, developer experience, and Enterprise ARR. It all boils down to one thing: you have to be able to work with other teams within your organization to understand what the customer requires and how to execute and deliver it.
Let’s start with product-led growth (PLG). PLG has been a buzzword for some time, and it’s becoming more important in the current macro climate, where you have to spend more dollars to get Enterprise customers. Why are we talking about PLG?
Product-led outperformers generate ten percentage points higher in ARR and 50% higher in valuations than sales-led growth outperformers.
PLG ensures your product is doing the work for you in terms of customer advocacy, acquisition, and retention. There are three facets to consider to achieve this.
- How do you scale PLG?
- How do you build a stellar developer experience and continue to scale when the user base skyrockets overnight?
- What does scaling Enterprise ARR mean?
Okta’s PLG Playbook
For PLG, the product is the driver. For sales-led models, the salespeople are essential. Why are companies focusing on PLG today? The traditional SaaS model doesn’t always scale, and not every company has all the bells and whistles to fund marketing, sales, and customer success teams.
So, let’s look at PLG and how you can scale it.
Benefits of Scaling a PLG Motion
- As you get to know your users, they will provide and measure your product’s value.
- Lower customer acquisition costs. You can do this as your users become your leads… if they love the product and become its voice.
- The realized value grows as users derive value from the product, increasing engagement, retention, and stickiness.
By scaling your PLG motion, you can achieve higher revenue per employee because you aren’t investing as many dollars in messaging, marketing, and building the big sales teams. Your PLG motion can lead to higher customer satisfaction because you’re empowering the user in this journey.
The Drawbacks of Sales-Led Growth
There is limited customer feedback because the salesperson is always interested in closing the lead in the shortest amount of time. Communication between the customer and companies isn’t as great as it should be because you have to throw a lot of teams in sales, marketing, and customer success at it, leading to higher customer acquisition costs.
With sales-led motions, you run into perceived value vs. realized value. Realized value is the actual value a user gets out of the product. Perceived value is the subjective assessment from the user about what value they get as they work on a project. It’s not realized at this point, and you risk overselling.
Companies must decide which model best suits them. In the current economy, the PLG model can lead to faster growth if done correctly.
The PLG Orbit
PLG is all about the product you’re building, making it frictionless, and creating a great user experience across the board for it to be a success. Let’s look at a customer’s journey with PLG for developer-focused products.
- Assess
- Activate
- Adopt
- Amplify
Assess
At this point, the user is a stranger and wants to know three things.
- What is the product about?
- How does it differentiate?
- Is it easy to use?
Activate
Now, the user is getting into the weeds. They love the product, are trying the bells and whistles, and are incorporating it into their journey. As they reach this stage, they become explorers and no longer strangers.
Adopt
At the time of adoption, the user starts to feel confident about the product. It meets the needs of their business and applications. From here, you start building trust, and those explorers become pioneers.
Amplify
What is the user doing now that they feel good about? Do they want to try some complex use cases? In this journey, they are trying and amplifying the product’s capabilities. As a product company, they teach you how far the product can go, so it’s becoming a sharing and learning experience where users become experts.
The Enterprise Funnel
Finally, it’s time to scale as your experts become advocates and champions. This is where magic happens in the funnel. Typically, in an Enterprise funnel, you go from awareness to consideration to hopefully buying the product. For most sales funnels, the ability to close a deal depends on the salesperson’s abilities and whether the customer sees the product’s perceived value.
For PLG, people can play with the product because it may be free and have a variety of features. Then, you offer the next set of products and start charging for them, even if they are much more nominal than Enterprise ARR.
After that, some customers will continue to use the product and say, “Yes, my company is expanding. I need this.” They’ve played with it and are willing to pay full price.
An important part of the Enterprise funnel, whether free self-serve or premium Enterprise, is tracking and encouraging a healthy funnel. For PLG, you keep it healthy by providing users with realized value and the ability to play with your product throughout the lifecycle.
Selling to Developers
Let’s look at software developers as your target customers, as users and buyers. Most software developers are skeptical. The first thing they think when someone is selling something is, “Show me the value.” Why should they care? Is it going to solve their problems?
If you’re a developer, you likely think, “I can do this myself.” So, a developer product needs to be significantly more efficient and really solve a problem because if it’s not better than a developer building it themselves, why would they buy it?
As a developer in a larger Enterprise, you have many other considerations.
- Does this integrate with all the other tech my company has invested in?
- Can it solve a larger-scale problem rather than one piece within a larger area?
- How do I learn about this product?
Developers are skeptical and learn through their community, so you want to build neutral advocates. Developers are much more likely to listen to a neutral person than a sales or marketing person.
Finally, developers will only adopt a product if they can try it first. How does that happen?
- Free self-service
- The right level of documentation
- Being able to learn about the product without getting on a call with someone.
How to Actually Scale PLG
This is a lot easier if you have a PLG model in place. Tacking it on as an afterthought is very challenging. No matter the stage of your PLG model, you have to understand the value you’re bringing in. It’s not a one-time thing but a continuous cycle of aligning with the user base as market needs, user journeys, and behaviors change.
Understanding your users’ needs is the first step to continuously aligning with them.
A Compelling Product
Step two is the messaging that comes across. It has to align with the value of the product itself. If your messaging isn’t correct and the purpose isn’t explicit, the product goes nowhere.
Another aspect of a compelling product is user satisfaction. Do users feel good about the product? Is it solving their needs? As their needs are fulfilled, confidence and trust build, and the product’s perceived value goes up.
How Do You Monetize?
Step three is monetization. The realized value has to turn into customer lifetime value (CLV). When activations start, magic happens. When building developer-focused products, usage can skyrocket at any point, so you have to ensure your systems can handle it.
Channel
The last step to consider when scaling a PLG product is channel. Channel increases as users start talking about how awesome the product is. Those people become your leads.
Another channel is in your product. You’re providing people with the capabilities to integrate with third parties. If someone wants to solve an identity issue, they work with Okta. At the same time, if they want to integrate with Stripe for payments, you need to have that. So, an API-first mindset helps in building that external channel.
Building a Developer-Focused Experience
There are three pillars for building a developer-focused product.
- Usability
- Findability
- Credibility
Fast
The goal is to build a stellar developer experience sitting nice and tall on these three elements. How do you do that? By understanding the acronym FEW: Fast, easy, and works.
You want to do a few things that are really good and solve critical business use cases rather than spreading all over the place. And when someone touches your product, it should be smooth, fast, and frictionless.
There are three developer personas to know about.
- The no code, one-click developer.
- The low-coder with some tweaks.
- The pro-coder who wants to customize it to meet the needs of their workflow.
All three personas are looking for a flexible product with quick integration capabilities.
Easy
The three elements of making a product easy for developers are:
- Stellar documentation
- Great support
- Established patterns
Why do you need stellar documentation? Because it helps in customer-first teams so they can sit tight and focus on customers rather than dealing with incorrect documentation. That documentation must be quick and easily searchable, a live document that’s constantly updated.
Great support comes through documentation and within the product itself. When a customer-first team gets stuck, they can support their customers through the product rather than opening all the tickets for engineering.
Established patterns are things like reusable code snippets. It can provide a starting point, making it easier for users.
Works
Your product has to work, especially when you’re selling to developers. Can your product handle the system if disaster happens? If you want a stellar product, make sure you’re measuring all the SLAs around uptime.
Your product must also be predictable and have solid observability mechanics in place. Can a user see insights on how the product is being used? Be proactive with predictability.
Finally, for a product to work, it has to be scalable and secure. You need to build a product that considers scale from the beginning. Security is critical from the beginning when planning and designing the system. It hurts badly if you touch it later, especially the compliance pieces.
How to Scale From a Sales Perspective
We’ve touched on PLG, the developer experience, and now scaling into Enterprise ARR. When considering scaling PLG and Enterprise ARR, know these two funnels are not mutually exclusive.
Hopefully, you have a PLG funnel that can lead to Enterprise ARR, but sometimes, you have a separate funnel that is purely Enterprise ARR running simultaneously as a PLG motion. If you’re thinking about going Enterprise, what should you build?
If you want to become an outperformer within PLG, this chart can help align that.
- You need value-added features that drive up usage. To figure that out, talk to customers, do surveys, and pay attention to what’s happening in the competitive market. You want to see adoption.
- How do you ensure that what you’re selling is mission-critical rather than nice to have? Usage might be high, which is great, but you need to keep it that way. One way to make yourself mission-critical is by creating a product that generates revenue for the customer.
- Pay attention to who the important players are in the Enterprise. That might be the VP of Engineering, the CTO, and maybe even the CISO, CIO, and CMO.
Focusing on point number three, each of these folks has different incentives within an Enterprise company. A VP of Engineering is focused on time to market, integrations with existing tech investments, and performance and scalability.
The CISO is looking at security, compliance, and data residency. The CIO might be a good partner across the business, so how are you helping them? And finally, if you have a feature that enables the CMO or CDO, that becomes a game-changer.
A CMO or CDO always looks for ways to grow and retain their customer base. How can you help them achieve that? There are a variety of other potential players. But, no matter what, the FEW model works when looking at Enterprise ARR.
It needs to be fast, easy, and work.
Key Takeaways
Whether you’re PLG or sales-focused, listening and empathizing with customers and users across the board is important. That brings the product’s value proposition to life. By listening and talking to customers regularly, you can share and learn what’s important for the user and align with them throughout the journey.
You can’t do it all, so pick what you sell, how to sell it, and how not to sell it. Collaboration is important. Here are the key takeaways from Okta’s playbook.
- Remember, the user is the key, and value is the muscle. Without that PLG function, it won’t work well.
- The product is the driver, and you should constantly get user feedback to make data-driven iterations.
- To build a strong and stellar developer experience, use the FEW model: Fast, easy, and works.
- Enterprise ARR means you need more influencers and voices in the sale.
- The product is vital, so expand on realized value and pick the right battles.
