Amplitude’s PLG MBA
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I want to start with a personal story. ❤️
Once upon a time, in the pre-COVID days, I was working at Ansarada, an Australian Sales-Led startup with a mission to make M&A, IPO, Acquisition, and Audit events as simple and smooth as changing a lightbulb.
To win, we decided to go PLG.
This required a mindset change and a product change, and it wasn’t easy. It was a long journey, and Amplitude was part of it.
Amplitude’s office was 500 meters from ours. I remember their team spending days in our office, setting us up for success in our PLG adventure.
Eventually, Ansarada went IPO on 2020. And Amplitude had a part in it.
(The amazing view from Ansarada Sydney office - sometimes between 2017 and 2019)
Why should you care?
Amplitude’s strategy is simple.
If you know how to do PLG. You will need Amplitude.
Hence, Amplitude empowers product leaders to create actionable and slick guides. And not just any Product Leaders but the crème de la crème.
Moreover, if we talk about PLG, who is better to listen to than those who paved their own way from sales-led to product-led?
Amplitude layered on the PLG motion on top of their SLG one in late 2023.
They walk the talk.
Who is this writeup for?
CEOs, Founders, and CPOs at early-stage and scaleups.
So, you get your PLG game up before you spend $15,000 on a PLG advisor.Growth and Core PM.
So, you save $1000+ on a PLG cohort.Marketing and Tech Leaders.
Because PLG is a team sport.
What do you get?
20 PLG insights about:
Evaluating PLG Fit
Building an A-List PLG Team
Nurturing a Winning PLG Culture
The Unpleasant PLG Facts
Pulling (a) Acquisition, (b) Retention, and (c) Monetization Levers
🎁 [Bonus] My Top 10 Free Amplitude Playbooks! Your mini-PLG MBA
Let’s start.
➜ (1) Evaluating the PLG Fit
1 - No Marketing OR Sales predictability, No PLG!
PLG is about your Product generating and capturing demand.
So, if you are struggling to close the gap between what the company thinks users want from the Product and what users really want.
This means that you still can't generate and capture demand with marketing and sales.
PLG won’t fix that for you.
It will just make everything more complex.
2 - Low use-case frequency. No PLG!
You can’t monetize customers if they are not retained, and you can’t retain customers if they are not activated.
To create a habit (= activate), you need your customer to experience value frequently.
No frequency, no habit, no PLG.
3 - High complexity. No PLG!
If the product friction is too high, and the pain the product solves is not 11 out of 10, the self-serve experience will fail.
And no fancy product-led onboarding will solve it.
Reduce complexity first. Otherwise, no PLG!
4 - The farther the user is from the buyer, the harder the PLG!
You are unable to get the first in the door before someone OKs it.
For example, if a user can’t experience freemium / trial before some form of a buying decision is made by someone else.
This happens in heavily regulated industries, such as Legal, Defense, Healthcare, Constuctions, etc.
➜ (2) Building an A-List PLG Team
5 - It’s not only the onboarding!
The PLG team's mission is to uncover, validate, and pull all the growth levers across the user journey.
The entire user journey is fair play.
Avoid limiting the scope of the PLG team to only the first session, or just the AHA moment.
6 - Report to the CPO, not the CMO!
You are product-led, not marketing-led.
Reporting to Marketing will overfocus the team on the Acquisition goals. It’s a bad practice.
You will likely layer on the marketing motion, but the PLG team remains a Product team.
7 - There are only three levers to pull!
Acquisition, Retention, and Monetization.
Start with one, as each lever is a different ball game.
And here is a cheat code.
In 90% of cases, you start with Retention (the hardest one).
Because, no Retention, no PMF!
Closing deals != Retention
8 - PLG is as much about Psychology as about Quant!
Having a product designer and a data person on your PLG team is non-negotiable.
It might sound obvious, but 50% of Series A or B startups that run “PLG” miss either or both functions.
Aspire to create data stories and delightful experiences, NOT dashboards and mockups.
➜ (3) Nurturing a Winning PLG Culture
9 - Sales teams will hate you (at first)
PLG does not cannibalize sales teams' revenue.
Yes, the ACV will dip. It's true.
But pipeline quality and volume will go up.
More advocates, more usage data and a better win rate.
Remember, Product Qualified Accounts (PQA) convert for up to x5 better than PQLs. Love restored!
10 - No data, no PLG!
PLG is crafted through experimentation.
Running experiments requires you to fully understand your business and product fundamentals, such as CAC Payback, Activation Rate, 90-day Retention, etc.
Without data, there are only HiPPO (Highest Paid Person's Opinion), and PLG can’t survive HiPPO.
11 - Self-serve analytics rocks!
Self-serve analytics won’t entirely replace your need to go deep with SQL.
But! It will make your experince of writing and telling a data story much more delightful and accessible for all.
It’s not either SQL (Non-SS Analytics) or SS Analytics.
It’s both.
➜ (4) The Unpleasant PLG Facts
12 - PLG takes time!
Going from Sales-Led to Product Led?
Align expectations on WSLL (What Success Looks Like).
The chances that your PLG pipeline will account for more than 5% ARR in 12 months are slim.
PLG is a long-term play that pays back with dividends.
However, don’t start PLG if you are in for a 12-month ARR fling!
13 - You will fail a lot...
Get used to a 50% to 80% PLG experiment "failure" rate ( = not proving your experiment hypothesis with stat sig).
It’s about deep and actionable learnings and building on top of those learnings.
If you do that, you win.
➜ (5a) The Acquisition Lever
14 - You can’t fake network effects (NE)!
If the value for a single user is not amplified by inviting other users to the product, a shiny invite/share button won’t spark virality.
Your product simply lacks the NE DNA (Network Effects DNA).
So, if no NE DNA (Network Effects DNA) is the case, and unless you are revolutionizing your niche with a 100X WoW experience, you better focus on other acquisition tactics.
15 - Treat content as a product!
Content is how you package and transmit value through marketing channels to generate demand.
It can be pure product-led content, such as templates and pre-products, or mixed plays, such as lifecycle or even programmatic SEO content and UGC.
Content is how you tell your product-led story. Master it.
➜ (5b) The Retention Lever
16 - Building a habit takes time!
If you want to kill your activation ( = the heart of Retention), focus your PLG team only on the first session.
Why? Because activation takes weeks in most cases, even for “simple” products such as Canva and Figma. It’s a multiple sessions game!
The PLG team must own the journey until the Habit to Win Activation.
17 - Activation goes beyond tactics!
Activation is about knowing, every single time a user lands in the product, who this user is (ICP-fit, Role, Pains), what they want to achieve (goals), and crafting a personalized experience that will help them to accomplish the job faster and more delightful than they expected, so they come back.
Activation isn’t about pop-up X or tooltip Y!
➜ (5c) The Monetization Lever
18 - Reverse trial rocks!
But what about freemium?
Assuming your product fits freemium, reverse trial still offers the best of all worlds.
An opportunity to experience the full product capabilities (the trial period), a conversion to a paid decision point (when the trial ends), and a freemium experience for those who don’t convert. Try beating that!
19 - Hybrid pricing rocks!
Your PLG team should experiment with adding additional monetization layers, such as one-time add-ons and usage-based pricing.
Relying solely on seat-based pricing is too risky and too light on expansion.
We all learned this the hard way in the last 24 months.
20 - You win by NRR! (Yes, it’s still the case)
A common mistake of a PLG team is to focus on new revenue while not giving enough love to expansion revenue.
NRR is where most of your ARR growth comes from (at least for scaleups). If you lose the NRR game, you go belly up.
Driving NRR requires you to experiment and plan your way ahead!