It’s a perfect example of Product-led Growth / Product-led Sales:

Upselling to your users without annoying too many of them in the process, let’s dive in

Substack now allows you to automatically message your most engaged users with a custom Email. It’s a feature built into the platform and there’s not a lot of configuration possible.

But it highlights exactly how to do PLG (product-led growth) right:

• We wait for a specific signal (customer success) to be triggered before we reach out → High conversion rates

But why is this such an uncommon feature to see in products even though it makes perfect sense? And how… do you come up with it on a regular basis?

It’s probably your system

Reading newsletters and LinkedIn feeds for cool ideas like this and then giving them into your team’s backlogs is one way. But it’s the wrong way. It doesn’t scale, especially as organizations become bigger.

You can do now two things:

1. Forward to your Product or Engineers a screen and say “hey, look at this, it’s pretty cool!”

2. You understand what’s behind it and set up a process that is capable of producing features like this

Two principles are at work in organizations like substack that continuously build products that are very customer-centric:

1. What kind of goals do you accept for your teams

2. How you define customer success very specifically

Let’s look at them individually

1. Being “product-led” is not just a concept. It’s a measured goal

If we think about maximizing conversions from a group of free users (in our example free newsletter subscribers) and we set that as a goal it could look like this:

“Key Result: Increase paid conversions from 500 to 700 in the next quarter”

It’s an outcome-driven goal, but a potentially bad one for product-led businesses. While monetization is important there is no quality attached to it. The effect of it is that the team will more likely come up with a feature like this:

“Convert your users by sending them reminder emails every 7 days to convert into paid users”

At first glance, it will even work. You will create more paid subscribers but at a terrible cost. People will start to unsubscribe because you’re constantly annoying them.

Specifically targeting the conversion rate is already a bit better:

Key Result: “Increase paid conversion from 3% to 4% in the next quarter”

This still doesn’t stop the spray and pray effort from above but at least we try to convert with a better ratio.

We can do better with an extra step:

We need to have a clear definition of what “engaged” means. A good example is slack: “An account that sent more than 2’000 messages in the last 30 days is an ‘engaged’ Account”

This allows us now to split up the key results into two:

Key Result: “Convert our engaged users from 15% to 20% in the next quarter”

Key Result: “Convert more free users into engaged users from 0.5% to 1%

This kind of goal setting is exactly what produces the above feature and much more ideas in the future to help drive it further. Our teams are now incentivized on customer success.

That’s only possible if you define and measure customer success. This is a company-wide exercise and the first step to doing anything product-led.

2. Customers success is NOT business success

Whenever you target a metric in your key results you can do a simple check whether it’s a useful one:

• Does the targeted metric (for instance Free to Paid) directly correlate with user success? Is it a clear signal that our users are successful?

  • In the case of free to paid that’s not necessarily the case, we could just gate our features more which is not customer-centric

• Does the metric really differentiate users meaningfully?
  For instance, you might define something like this as different stages of user success:

  • Setup Moment: The moment when a user uploads a file. → They are ready to go and interact.

  • Aha Moment: The moment a user modifies and downloads a file. → They’ve realized the value of the product.

  • Eureka Moment: A user invites other users to edit the file with them. → Not only did they realize core product value, but also additional in-built values like “collaboration”. This is an important signal that they are buyers.

  • Habit Moment: A user processes more than 3 documents/day over 30 days. → These guys are likelier to stick with you and become buyers!

  These different moments make only sense if they also segment your user base. If everyone lands at the aha and eureka moment then the metric is not meaningfully differentiated.

Customer success is not the same as a business success but it leads to it. The distinction is critical to understand.

Summary

1. It’s all about setting intelligent goals instead of depending on “product sense” to come up with cool goals.

2. You cannot be customer-centric if you don’t measure and carefully define what “customer success” means. → This is the most common mistake I fix in any org