Sagi Rodin - How product-led growth is transforming B2B
Sagi Rodin is the co-founder and CEO of Frontegg, a user management platform for B2B software as a service apps that helps companies adopt a product-led growth approach.
In this episode, we talk about product-led growth and how it's affecting B2B business processes. We cover the importance of focusing on user experience, key changes in sales and marketing tactics, and the impact of product-led growth in practice, with Frontegg as a great example.
Links & mentions:
“We used to think that virality is only important for B2C, for social networks, but this is not true. The virality actually becomes very important for B2B products as well.”
Welcome to the Agile Digital Transformation podcast, where we explore different aspects of digital transformation and digital experience with your host, Tim Butara, content and community manager at Agiledrop.
Tim Butara: Hello everyone. Thanks for tuning in. I'm joined today by Sagi Rodin, co-founder and CEO of Frontegg, a user management platform for B2B software as a service apps. In this episode, we'll be talking about product-led growth and how it affects digital product development in B2B. Welcome to the show, Sagi. It's great having you here with us. Want to add anything here before we jump to the questions?
Sagi Rodin: No, it's great to be here. Let's go.
Tim Butara: Okay, awesome. So the first thing that we need to clear up is what is product-led growth or PLG?
Sagi Rodin: Oh, wow. So it's been kind of one of the most popular topics, definitely, last year. I think that it was brought mainly by VCs and then kind of adopted by a lot of companies, probably misused or overused in 2022. But I think that as we're getting kind of towards the end of the year, we can already see some things that are leveling up and we can actually provide a better definition for PLG.
So I'll tell you what's PLG for me, right? So maybe it will be a bit different than what you will see as a definition online. But for me, PLG is concentrating on the user value within the product, as opposed to concentrating on the commercial value and the marketing value for the user. So basically what the product can bring to the end user. And this is what drives the real buying process. This is what drives the love for the product, for the brand that is being used. So putting the user and the product in the center of everything that is related to the business, that's, for me, product led growth.
Tim Butara: So it's basically based on user centricity. That's like the core thing.
Sagi Rodin: Definitely. So I think that there used to be times where we would talk about the importance of the user experience on onboarding, on communicating, even with the support, on communicating with the product, on the whole interaction between the user and the product and the company that runs behind the product.
And we used to say, and I remember kind of working in enterprises, it used to be, oh, it's not that important to invest in user experience because somehow we'll be able to sell the product to make the deal. And once the deal is sealed and the economic buyer, that's kind of one of the most important terms in sales. Who's the economic buyer? Right. So once the economic buyer signs on the deal, then basically the deal is done and we can celebrate success.
Well, these things have changed because the signature becomes just the formal part of the sale process. And the most important sale part is actually before the signature and after the signature. And it has to do with how the user interacts with the product before they buy, how the user interacts even once they just signed up to the product. The experience has to be seamless, the Aha! moment has to be immediate.
And once we have that, that's the real sell, right? So we sell through that experience, through that hook, through understanding the value quickly, and then afterwards we continue to sell or upsell or upgrade, or if it's usage based, and just increase usage and adoption by providing an amazing experience afterwards, by providing amazing support experience afterwards.
This is the actual sale process where the whole pitching on the demo, the whole kind of oiling up the buyer by the sales team, wine and dine, whatever, going to golf with the buyer, whatever it was kind of the right process for heavy enterprise sales ten years ago. That is kind of shifting. And I think that during the COVID the two years that we had when you couldn't actually meet with prospects, that even kind of emphasize more on the importance of this first interaction with the real value, with the real product. So yeah, this is kind of the things that have changed.
Tim Butara: And one other important factor is probably also just the general rise in popularity and adoption of digital. And with that we have much greater, much more and much more rapidly evolving user expectations, that kind of want and demand not just functioning digital experiences, but actually great, outstanding digital experiences pretty much on every channel they interact on, every brand they interact with. And I'm wondering how these rising user expectations and how all of the changes here are affecting B2B SaaS products and development of these products?
Sagi Rodin: Yeah, that's a great question. It used to be that the first experience with the product would be the sign up page. So you would sign up and usually you would sign up after you would already been given with the credentials, right? So somebody kind of opened an account for you. This would be the experience like ten years ago with the product. The sales team already kind of closed either a POC trial or even sealed the deal. And then the user, the first administrator in a B2B company would just get the credentials, sign up, look into the product and start using it. Right?
And then if an additional request regarding the account set up was required, like adding more users, like structuring the security policy within the account, like setting the roles and permissions and changing billing settings and stuff like that, then what would actually happen is that they would need to talk to their support person and make the request or open tickets. And that would be fulfilled.
And why it was okay, because the deal was already done, right? So the company already paid, and now it's just a matter of surviving through this digital product experience. And usually most of the efforts by the seller, by the company, the product company, would be before the renewal. Right? So before the renewal, suddenly everybody will be interested, how was your experience, whether you need more seats and so on and so forth. Just so we won't have churn or even maybe there's an opportunity to upsell.
But now the experience is different in two ways at least. So the first thing is that it's completely digital, as you said. So everything is on the product. Once I sign up, I want the full independence to get everything I need within my account setup done on my own, independently, right? So if I want to add more users, if I want to set their roles and permissions, if I want to enable multi factor in my account so nobody could log in without multi factor verification and then what kind of multifactor verification I use also up to me to choose – I want to achieve everything immediately on my own. Right.
So everything is digital through the product, and it's more continuous. That's the second thing. It's not only on the account setup part and on the renewal part, when they actually care to give you a great experience, but it's continuous. You always can get to the account settings section on your application, on your account, and basically set up everything. So you have the full independence to use the app, to configure it, to grow with it. So even if you need more seats, you just do that through the app.
And I think that great companies did that, that being able to provide that level of independence. Those are the ones that grew tremendously. Right? So today, if you want to add more seats in DocuSign, in Slack, for example, in Zoom, you don't need to talk to anybody, right? You just go there and you do that. And if I add my colleague and I want them to be a read only user, I don't have to talk to anybody. I just go to my account settings and I just set it up. If I want to export my audit logs, because I have a compliance check coming up, I don't have to talk to anybody. I just go into my account settings and I just export whatever I need.
And this is the true experience, independent user experience that allows me to grow with the app right seamlessly without talking to anybody. Because think of it that anytime I need to open ticket, anytime I need to wait for somebody, wait for an email reply, whatever, that adds friction to my experience. And we want to eliminate that friction. So this is just part of these changes in the digital experience that you mentioned.
Tim Butara: Yeah, I can imagine that this is definitely one key change for users. And it's great that as you say that you're seeing companies kind of already realizing this and already acting on it. And I suspect that if it's not the trend already for this field, that it will soon become kind of the default modus operandi.
Sagi Rodin: Definitely. And I can tell you that the change is very quick. So when we started two years ago, we still had to convince potential buyers, right, that they need more advanced stuff within their app. So what we would do, typically the best thing, and this is the best sales approach, we showed examples of different applications and we showed how Slack did it, we showed how DocuSign did it, Airtable, whatever, so they can see, but then they would say, yeah, but those are companies, those are huge companies. Those are products that exist for 6, 7, 8, 10 years. We still have time.
But then when those small startups started to onboard their first customers, they realized they don't have that slack anymore, they don't have this time. They have to provide these standard experiences immediately. And this is when they would kind of, you would see a phenomena where they would return to us and said, okay, how do I do that? How do I integrate a seamless account administration experience within my app? And this is actually what Frontegg provides.
So today it kind of became the standard. They start with the understanding, okay, I know that I will need to add user management and team management within my app. I know that I would have to add more advanced granular roles and permissions within my B2B app. Okay, how do I do that from the beginning so I won't be left behind on the standards behind my competition? So they already understand this is the new standard. Everybody has to meet this standard. Everything is self serve and there's no room for staying behind.
Tim Butara: Actually, since you already started talking about your platform, Frontegg, can you tell us a little bit more about what Frontegg does and how you're helping companies pursue this PLG approach?
Sagi Rodin: Sure. So, Frontegg is a user management platform aimed mostly at B2B companies. And we're kind of providing B2B companies with the ability to provide those seamless user and account management experiences within their own application. So there are not a lot of companies that can say that they're actually partnering up kind of with their customers to be a part of their application, just like Stripe does that for payments, for example.
And we can say that we are integrated and served as an integral and very important part of our customers' apps. And quite a lot of customers, small ones, mid market, huge Fortune 100 enterprises, we are there to provide their end users, their end customers, the best and most seamless experience within their apps. That's Frontegg, basically anything from the sign up to the account administration that you would have within a typical B2B application, we provide that plug and play with a few lines of code.
Tim Butara: Okay, yes, it does sound like one thing that's very useful and very much needed for these types of companies. Is there anything– what's the secret to how Frontegg functions? Why are your clients choosing to work with you over your competitors?
Sagi Rodin: Yeah, so I think that the beauty of my answer here is that you can just go and sign up and see by yourself. Right? So the idea is we have a sales team, they're very efficient, they're amazing in kind of closing the official parts of the deal. But when it's needed. We have a lot of customers that are just going to our product and signing and just paying on their own. Right.
By the way, we are using Frontegg as well for the whole self-service administration, right. So it's dog feeding of our own stuff, but basically you can go sign up, play with the product and just try on your own. So that means that on the demo, they always talk about demo decks and it's very important to have good demo decks. But that comes on more than 90% of our interaction with potential customers. It comes after they already understood the value of the product.
So when you're talking about the secret, I think that today, this is the expectation, especially, by the way, on developer platforms, developer tools, but not only I think that it goes into finance, it goes into security, cyberspace, for example, that's an amazing example of how this transition was so rapid because just five years ago, everything on cyber would have been sold by enterprise salespeople. And today, even in cyber, where the integration and the onboarding, think about it, it's a bit more complicated usually. Even their end users, they expect a self service experience getting to the Aha! moment like in 20, 30 seconds.
So, I would definitely say we stand behind this approach and we do that in two levels. First of all, ourselves, everything is product led. We have almost no stuff that are not organic. So most of the customers would find us online, get to us and kind of use the product and adopt it. This is definitely one thing.
And the second thing is that we see ourselves as enablers of PLG for others or enablers of seamless self service experience for others. That means– and why it's true, because I think that once a user signs up– so first of all, the first interaction with your customer, let's say tomorrow you're launching a product for businesses, right? So you're a B2B company.
First experience of a user with your product would be the sign up page. And the sign up page has to be first secure, right? That's the most important thing. The second thing, it has to be very appealing and frictionless. So today there's A/B testing being done on sign up page to increase conversion rates and stuff like that. So actually the marketing is kind of involved in this place where even three years ago it used to be something very functional. You would just get the two boxes, the input boxes of username or email and password and that's it. Today that's a whole marketing page because you need to convert.
And three has to be very flexible because each and one of your users, your customers, would want a different login and authentication experience, right? So some of them would want to go passwordless, some would go to a still user and a traditional username password. There are pass keys today, right? There's different types of multi factor authentication.
I think that giving that flexibility is very important. This is the first interaction of the user, usually, with your product, and then once they're in, they're playing with the product. And then there are two things that need to be done. The second thing is spreading. That's the virality part, right? We used to think that virality is only important for B2C, for social networks, but this is not true. The virality actually becomes very important for B2B products as well.
So actually we've seen that with every user that is being added to the account, you increase the chances to close the deal there by at least 60% each time that you add, that you have your customer adding more users to their account. So we want that in organizational virality. And there it has to be very seamless. They have to go to their account settings, add a user and just add their colleagues to their account. Has to be very simple.
And sometimes they don't want to add administrators, they just want to add read only users so they can see the reports. Okay, so no problem. Frontegg provides that out of the box and building those experiences when you're a small company and you're just trying to kind of get into the market, that's hard. But for bigger companies, we see that it's really hard to provide those experiences, especially after they kind of build a lot of stuff already in their app. So actually we see today that most of the companies that are coming to us are even bigger companies that are transitioning from old experiences, old solutions for users and account management.
And then the third thing that you have to do is you have to get paid, right? You have to convert. And conversion, that's the billing part where you can actually allow your customer to go and just put their credit cards and sign up. And if they need to upgrade, they upgrade, if they need to add more seats, they add more seats, all of those experiences are very important. So Frontegg is an enabler of all those experiences out of the box. That's how we see that we reduce the friction, provide a great experiences in all those key parts of the user, of the buyer journey, and enable a product led approach.
Tim Butara: These definitely sound like the key tenets of a product Led growth approach and I'm just wondering if you have any other– because from what I understand, you've been working in the software development for quite a long time. You have a whole range of experience in this area and in adjacent areas. So besides checking out Frontegg and kind of contacting Frontegg and relying on that, what can companies do? What advice would you give to companies that want to kind of transition to this product-led growth approach that we haven't really talked about or haven't really mentioned on this episode?
Sagi Rodin: Yeah. So I can say what to do and I can get to it, but I will say what not to do. Right. So companies think that being product-led means having no sales and having eliminate your sales, eliminate your presale engineers, eliminate your post sale, the people that help with the integration, eliminate support, eliminate marketing sometimes. So I would argue that all of that is just not true. Not accurate. Right.
So you need to find the right balance for your own product on kind of where you're removing some of the need for the asset, for resources. And definitely I can say that on the presale, for example. So most of the things have to be embedded within the product and kind of not involve so many people, right. That doesn't mean, for example, that you don't need to have presale expert, like a technical solution expert of your product to help with the larger deals.
Because we need to remember that there are big companies that are complicated that come with their own solutions. If you're a finance solution, for example, just think of the financial complexity within your customer’s organization, right? So if they run into trouble, you need to remove that friction and that could be done with people, that's okay. So that's one thing.
The post sale, for example, once they already paid for your product and they need to kind of increase the usage or finalize the integration, that's okay, that the product should help them and like 80% should come from the product, but don't just assume that they will not need any help there. Right, so you still kind of need that.
And I would also say that from sales point of view, right, getting to a place where you can scale tremendously and rely only on the self-serve payments, right, that happens to companies and we see companies that rely only on that. But on most companies you would still have a sales team that kind of is there to pick up the leads that the product can provide even more value to them and that would require a sales process. Right.
So you need to find kind of how you're shifting and managing this choice between getting a full product led process and getting a sales lead process, which is okay. And I think that the best companies today, they found the sweet spot on how to make both of those work, to be scalable, to have a good customer acquisition cost, good marginal values, but still being able to scale their traction with their revenues. So finding this sweet spot, that's the real thing here that we need to figure out.
Tim Butara: I think this was a key point here, Sagi, and the perfect way to round off this great discussion. Just before we jump off the call, if our listeners wanted to maybe reach out or learn more about Frontegg, what's the best way to get in touch?
Sagi Rodin: Yeah, so just go to frontegg.com or you can email me at email@example.com that's firstname.lastname@example.org and I would love to have a chat.
Tim Butara: Awesome. Well, you heard it here. If you'd like to give Frontegg a try, you know where to contact them, you know how to try it out. And Sagi, thanks again. This was a great discussion and I'm glad that we got you here to discuss this with you.
Sagi Rodin: Thank you very much.
Tim Butara: Well, to our listeners. That's all for this episode. Have a great day everyone and stay safe.
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