Before the SaaS revolution started booming, software companies used to be incredibly sales-driven, and the processes they focused on were plain old-school — aggressive engagement with customers and persuasive discussions centered around the product were known to be the norm.
Sales meant being entangled in a price war, spending more time trying to convince a potential buyer about the product’s features than actually proposing ideas and solutions.
Don’t get me wrong. There’s nothing unusual about a sales team wanting to sell a product, but this was certainly no silver bullet for any company’s feature-focused sales.
In a before-and-after scenario, the way teams used to approach customers closely revolved around the tendency to entertain every single feature request without truly understanding a prospect’s “job story” or any background on their business.
But let’s fast forward five years later, and get up-close with a totally different scenario, in which the SaaS world starts evolving considerably, and begins to re-invent its wheel by adopting inbound marketing as a core strategy.
That was the moment when a whole industry started striving to move the needle in terms of lead generation; but the real reason why inbound marketing made its legendary entrance was clearly because many companies saw between the cracks of a broken sales process — and chose to say goodbye to their old sales processes.
From then onwards, more start-ups started building their strategies around big buzzwords like “sustainability”, “education”, “awareness”, and “empowering customers”, however, the main questions were still very much along the lines of how long would this framework be successful for and, if not, why wouldn’t it be?
A really brief history of inbound marketing
Now, let’s pause a little and go back to the beginning. Even better, let’s head down the memory lane in the year 1,900 when the Michelin brothers dreamt up the Michelin Guide as both a customer service tool and marketing ploy.
To give some context, the Michelin Guide is known to be an authoritative voice for fine dining, but in reality, the guide was started by a French tyre company as a marketing tactic to sell tyres.
While tyres and content don’t seem to go hand in hand, and as strange as it may sound, that was, perhaps, the first time a company would use inbound marketing as a tactic to attract customers.
It just made perfect sense to create a guide for motorists, which included information about the best hotels and restaurants, because it would eventually encourage people to go on more road trips thus increasing the demand for cars.
As a result, the Michelin Guide was devised as a freebie (in today’s digital world that would be equal to a free e-book), which ultimately became a marketing gimmick that the company used for many decades to come.
Bottom line is that just because the company’s value proposition was to sell tyres, it didn’t mean they necessarily had to produce content for auto-mechanics and create guides on how to fix cars.
In a nutshell, a company selling a certain product does not define their overall image — and for that reason, the Michelin brothers really proved to be innovative to devise a successful growth strategy by offering useful content that strengthened their brand.
The product is only the starting point and the idea is to use it as a reference to identify your audience, understand how you can solve their challenges, and focus on adding value in their life — just like the Michelin guide did.
Inbound marketing as HubSpot’s brainchild
Inspired by the very same premise, two American entrepreneurs Brian Halligan and Dharmesh Shah started a company called HubSpot in 2006. In an era of digital disruption, HubSpot began as a marketing hub that had the purpose to identify potential markets and drive new leads for businesses.
The concept of inbound marketing phrase itself was coined by HubSpot’s Brian Halligan, co-founder and CEO, and with the dynamic expansion of the digital world, it only really started to grow in 2012.
Ever since, HubSpot methodology has inspired hundreds of thousands of marketers and businesses — becoming a pioneer in the field and driving countless companies to implement the same growth strategy.
To understand what inbound marketing does, here’s the definition as per the company’s website.
"Inbound marketing is about creating valuable experiences that have a positive impact on people and your business. How do you do that? You attract prospects and customers to your website and blog through relevant and helpful content."
Once they arrive, you engage with them using conversational tools like email and chat and by promising continued value. And finally, you delight them by continuing to act as an empathetic advisor and expert.
Unlike outbound marketing, with inbound marketing, you don’t need to fight for your potential customers’ attention. By creating content designed to address the problems and needs of your ideal customers, you attract qualified prospects and build trust and credibility for your business.
Unsurprisingly, this methodology has been adopted en masse by companies ranging from start-ups to SMEs to corporations. But in this day and age, has it become too noisy?
According to a Content Marketing Institute study, only 42% of B2B marketers say they’re effective at content marketing. That means there’s still a big gap between what content marketers want and what they achieve.
It’s true, traditional advertising doesn’t work anymore and it’s not because people have stopped buying products, but because the buying journey has changed dramatically.
It goes without saying that instead of consuming ads, digitally-savvy consumers in this day and age strive to make more informed buying decisions based on research and educational content — but the content has to be qualitative, innovative, and valuable.
Content, then marketing — why content matters
If we leave the credo aside and look at data, the numbers speak for themselves as well. In a NewsCred Insights article on content marketing in 2018, the author highlights that “people want content from brands, and according to Havas Group’s 2017 Meaningful Brands study, 84 percent of people expect brands to create content.”
On paper, the numbers really prove it. People are willing to engage with brands (and trust them) by consuming their content. But the content needs to tell a story.
And why storytelling plays such an important role in this marketing ploy is because, essentially, humans have been telling stories for millennia — so for evolutionary reasons, storytelling has remained ingrained in our DNA.
Recently I read Yuval Noah Harari’s trilogy (Sapiens, Homo Deus, and 21 Things for the 21st Century) and learned that historically, humans have always created myths and lived in dual realities to gain flexibility and cooperate in a sustainable way.
It makes perfect sense that evolution has taught humankind to live through stories — and that today, this process continues to be translated into our everyday lives, our work, and, ultimately, into the way we give brands a unique voice.
Our brains are wired to look for stories, which is why content remains the best medium to connect with your audience.
In the land of marketing, we can indeed see an astonishing number of companies that have taken over the Internet by creating content in every possible format we could think of.
And although this may be overwhelming, a content strategy built around thought leadership remains crucial for organisations to drive awareness and demand by educating target audiences on industry trends, new strategies, and tactics to make their business more successful.
But the tough question still remains: how do you stand out in such a crowded market?
But first, readers
In terms of building up the content from the grounds up, I am referring to Intercom, which is a great example — and has inspired content marketers around the world to craft a solid strategy centered around the following marketing principles:
- Content, then marketing
- Grow with editorial principles
- Be brand relevant (have an opinion)
- Never lose sight of the real goal
I personally appreciate this approach because there is an ocean of branded content available that can be unreliable and created only with the purpose of lead generation. As a consequence, if companies create content only for that sole purpose, it becomes difficult to gain the trust of your audience.
On the flip side, by focusing on quality content that adds value, companies can earn the trust of the audience and the media. But to stand out from the crowd and become the go-to source in an industry, the content proposition needs to be more of a concoction of journalism, storytelling, data, and thought-leadership.
Again, let’s look at how Intercom wins at content marketing.
We know for a fact that their content marketing is very much dictated by what Intercom’s product teams are doing, which makes them a product-first company.
Basically, the team at Intercom avoids phrases like blogs (to refer to individual posts) and e-books (a book is a book) as they feel they demean the value of what they’re offering.
John Collins, director of content at Intercom, says that if you “combine content with marketing, you further undermine what you’re creating.”
Apparently, the “phrase suggests the entire point of the exercise, or at the very least the primary one, is marketing. But if you want to attract people to your product, this is the wrong approach to take.”
So it becomes crystal clear that as opposed to inbound marketing, the product-led approach means you better have a killer product that solves many customer pain points, and your content should be dictated by it.
In the past, many of the top B2B software companies were simply sales-led companies. Decades later, marketing-led companies saw a huge success, but today, it’s product-led companies (PLCs) that have gained the momentum.
Why? Because a great product can increase a company’s retention and lower customer acquisition cost.
PLCs have a different approach to engagement:
- the product is the distribution medium
- the product is the competitive advantage
- the product is the driver of customer loyalty
As written by Maxime Lagresle in the article on Growth Acquisition Strategies, the 2nd Gen — GAS, also called product-led strategy, has emerged in the wake of this discovery to help growth strategists focus on the right outcome for any early-stage company.
Let’s say you’re an early-stage tech start-up and you’re confident that your product stands out from the crowd and is, essentially, a good product. While this stance doesn’t guarantee any success, what really helps in this situation is leveraging on that competitive advantage.
Because what a good product can ultimately do is increase a company’s retention while lowering the customer acquisition cost. And this is exactly why a product-led strategy has a different engagement approach. The product immediately becomes the distribution centre and at the same time the driver of customer loyalty.
To dive deeper into the topic, in their well-written book Mastering Product Experience (in SaaS) With Product-led Strategy, the team at Aptrinsic describes this strategy beautifully:
Product-led go-to-market strategy is an action plan that describes repeatable and scalable processes for how a company acquires, retains, and grows customers, driven by in-product customer behavior, feedback, product usage, and analytics.
Now let’s take a look at the ins and outs of a Product-Led Strategy (2nd Gen — GAS) in comparison of a Traditional Acquisition Model (1st Gen — GAS) based on the Aptrinsic team’s graphs.
1. Traditional Acquisition Model (1st Gen — GAS)
Companies that follow this approach involve three of their teams throughout their customer lifecycle. First, the marketing team is in charge of providing a certain quantity of leads to the sales team by using a variety of channels and various pieces of content. Among the quantity of leads generated, a first selection is made by the marketing team based on pre-defined criteria.
Leads that fulfil these requirements are then moved into the Marketing Qualified Leads (aka MQL) bucket which is the starting point for the sales team. The first step for the new team in charge of the MQL is to re-qualify them following new criteria in order to define with more precision whether they could become customers. This shorter list of leads is called Sales Qualified Leads (aka SQL).
The sales team is then in charge of closing a certain amount of deals from that list. It is usually during this last step that the SQL has a first glimpse of the product through a live demo made by the sales team. Eventually, the customer success team takes over to carry on with customers.
This Traditional Acquisition Model, still used by an important number of companies, had the merit of defining a clear process on how to internally deal with lead generation. However, the main problem with this approach is that it substantially omits the user experience.
This model fails to provide a positive user experience mainly due to the long period of time happening outside of the product. This “outside of product engagements” journey is a critical source of frictions for the prospect.
In the real-time world we are living in today, where immediacy has become a norm, it is very frustrating for any lead that showed interest for a product to not being able to have an immediate hands-on it.
Conversely, a lead that has downloaded an e-book (or any other piece of content from a company) for information purposes only and is being contacted by a sales person will also have this feeling of dissatisfaction.
In the prospect’s mind, these two points of frustration can be summarized as follows: “Don’t tell me, let me try!”
Lastly, this process also creates internal frustration and complains that are often created between marketing and sales teams with regards to the quality of the leads transmitted.
2. Product-Led Acquisition Model (2nd Gen — GAS)
In comparison with the Traditional Acquisition Model, the Product-Led Acquisition Model is shaped in a way to maximize, from the very beginning of the customer lifecycle, the time spent by the user inside the product rather than outside. Using this process enables companies to drastically improve the quality of their lead qualification based on critical in-product behavioral data instead of biased data from outside of the product.
Implementing this strategy requires the growth team to pay close attention to the customer lifecycle with the aim of reducing as much as possible the time it takes for their leads to access their product.
As observed earlier, the 1st Gen — GAS involved three teams throughout the customer lifecycle: Marketing, Sales and Customer Success. In the 2nd Gen — GAS, the product team is also involved in addition to the three others.
In a nutshell, the Product-Led Acquisition Model introduces a new notion as a replacement of the MQL and SQL seen earlier. The new way for qualifying the leads happens within the product and are called Product Qualified Leads (aka PQL).
A product-qualified lead (PQL) is a prospect that signed up and demonstrated buying intent based on product interest, usage, and behavioral data. — Mastering Product Experience (in SaaS) With Product-led Strategy
This change has a much bigger impact on the customer lifecycle and within the teams than it can seem at first sight. First, internally, this approach requires teams to work cross-functionally as their scope of action is not as demarcated as it could be in the 1st Gen — GAS, where sales and marketing teams owned their own part of the customer lifecycle. Defining accurately a PQL requires marketing, sales and product teams to work side by side.
Secondly, the customer lifecycle is highly impacted by this model. The time spent by the prospect outside of the product is significantly reduced as the main objective is to get him to sign up for a product or free trial as early as possible in his journey.
No more lead forms to fill out in order to be qualified subjectively by the marketing and sales teams. From the moment the prospect has signed up for the product, the company’s teams have the capacity to analyze his behavior and interaction with the product.
Thus, the subjectivity used by marketing and sales teams when defining whether a lead could be considered as MQL and SQL in the 1st Gen — GAS is replaced by an objective analysis based on behavioral data through PQL in the 2nd Gen — GAS.
And the bottom line is that a well-crafted 2nd Gen — GAS helps companies reduce their CAC and increase CLV whilst creating a frictionless customer experience.
Back to basics: get the story right
If I had to choose a marketing playbook, I think Intercom’s “Intercom on Marketing” really strikes a chord.
From it, you can easily conclude that no matter how good your product is, if your company doesn’t tell a cohesive story, it’ll be difficult to stand out from the crowd.
True, a product-first strategy might not be suitable for every company, but to cut through the content noise and typical sales-driven strategy, it’s important to take a few steps back and know why you’re doing what you’re doing.
So, do this. Start with why.
Craft a content strategy that tells a story. Understand how your product can help your audience.
Iterate from there. Experiment. Evolve. And never forget to address these questions:
- Who is the target audience?
- What challenges do they face?
- What product, service, or solution will solve their core problem?
- And how do I get the marketing and product in sync?
This article is part of a series which aims to map out the evolution of growth marketing. To learn more, zoom in on “The Three Generations of Growth Acquisition Strategy” observable since the beginning of the digital era.