Previously published on Crunchbase.
Not all companies have been exactly sailing through the pandemic, but those that are have something in common. Products like Zoom and Slack are surging in popularity not by pouring emergency money into paid ads (when is the last time you saw one of their ads, if ever?); the fuel to their fire is the fact that users are so excited about the product that they’re pushing into new markets. Otherwise known as product-led growth.
But there’s a right way and a wrong way to encourage users to spread the word. Today’s startups are having to reassess how they build trusting relationships with consumers with shrinking wallets and all-new demands, and who, like all of us, are particularly vulnerable emotionally.
Many founders seek quick solutions by diving headfirst into “growth hacks,” such as flash messaging or misleading promotions. While these might get people’s (annoyed) attention, they don’t create long-term, loyal customers that will stick with you through the recession. Aggressive tactics ultimately devalue a company’s brand as users associate it with the wrong qualities. Businesses have to offer a real solution, not just the promise of one.
If those invasive strategies ring true to your company, the likelihood is you don’t know your customer–or your product–as well as you should. Growing your business with your users’ wellbeing in mind, rather than your bottom line, means connecting with the genuine value you’re giving people and evolving alongside them.
Here are four tips to drive product-led growth in an ethical manner:
Building your product for a small user group
Founders often go too broad with their target markets, which leads to overspending, generic messaging, and high acquisition costs due to low retention rates. While thinking big is tempting, it will stretch you in too many directions at this early stage, without building value for consumers. However, if you start by honing in on a small user group, you’ll connect intimately with them, understand what they want from you, and how their behavior may be changing.
Start by identifying a small batch of people who are using your product regularly. Spend time creating a personality profile for them, which gets to grips with their pain points in day-to-day life, how they’ve been affected by the pandemic, what their desires are, and what needs aren’t being met.
If you successfully tailor your product to them you can turn them into power users who will enthusiastically promote your product to others; they’ll be emotionally invested because the product invested in them as a person. For example, Dropbox’s file-sharing tool quickly saw early traction in its targeted tech communities of product and graphic designers who found it easy to sync and share their visuals using the software. By 2008, Dropbox users were recommending the product to others via a referral system so effective that it saw the company grow 3,900 percent over 15 months, and eventually conquer the cloud storage world.
This process may take longer, but its returns are far superior. And on the way you will understand the true value your product can give people, and stay honest to those users.
Focus on listening to users
As your initial user base feeds you data on how they’re using your product, when, why, or why not, listen. Building value doesn’t mean pushing your ideas down people’s throats; let them tell you what your product’s value is. If what your users get out of your product is not what you had planned–for example, it’s a minor feature rather than the main event–pivot and optimize your offering for their benefit.
For instance, one of the tech startups in our accelerator program had a number of different features to help students with tasks like organizing their planners and decluttering email inboxes. In the early days, people were downloading the app but then losing interest, so we pushed the startup to study their metrics and really see what people were coming to them for. The one thing really users valued turned out to be the declutter email function. The company focused on gathering client feedback on that function and it became their unique selling point.
The key takeaway here is to spend time with people before you develop a product for them. Yes, look at the granular data, but also interview them, send out surveys, and ask for honesty. Above all, if the time comes, discard your preconceived notions of what you wanted your product to be (which is tough but necessary for founders).
Showcase your value early on
Once you have an idea of where your product’s value lies, your users need to be able to clearly see it on first contact, without having to implicitly trust your brand to get there. Onboarding is a tightrope, and if you can’t showcase solutions to people’s problems, users will quickly fall off.
Still, immediate value doesn’t mean sprinting them through the purchase or subscription; quite the opposite. Not long ago, businesses would prioritize seamless onboarding with little more than an email needed to create a user profile. Now, the journey is more conscientious and drawn out in order to educate the user and give something back to them. That doesn’t mean educating the user about the product, but rather about themselves and the problems they face: Remember, consumers always come to a product to seek a solution to an issue. For example, a health care platform’s onboarding could lead the user through a quiz about their eating habits and then attribute them to a dietary category, without producing a pay wall first.
You could also let users experience your tool free of charge. Companies doing this include business productivity tools Airtable and Notion, which offer users basic pre-built templates. This saves users time by guiding them through the functionalities of the product before they decide if it’s right for their company.
A more in-depth onboarding allows you to establish a relationship with users straight away. Over the subsequent days, you can nurture that relationship with exclusive offerings such as emails with expert tips, free 1-month subscriptions to partner businesses for paying customers, or online community events. These simple techniques will give you invaluable data on what sticks and what doesn’t, helping you construct your brand from the ground up. These early adopters will also not be shy to recommend your product because it focuses on giving rather than taking.
Curate a diverse team
A diverse team is the foundation of a people-oriented product. Product-led growth is all about responding to your users, and you can’t do that unless your company is a reflection of the society in which those users live.
By actively driving diversity as you grow your team, each area of your business will be equipped to create an accessible, inclusive and scalable user experience. Even if your product is less consumer-facing, such as deep-tech startups, having a team from all walks of life is essential to avoid damaging scenarios like biased artificial intelligence (remember when Amazon had to abandon its AI recruitment tool because it discriminated against women?).
Your customers will reward you if you make the effort. Consumers care about company culture and products that are representative of everyone involved in building them. In fact, customers will actively change how they buy based on these criteria, so diversity makes sense from both an ethical and business standpoint.
Ethics are at the core of today’s societal movements, and businesses are just as much under the spotlight as governments. Companies must acknowledge the need to move away from aggressive or misleading tactics towards consumers, see them as people, and put them first. Those people will grow to love you, and become willing ambassadors for your brand.