It’s been said that the key to sustainable growth for businesses lies in the quality of their products. This idea isn’t new, but some companies don’t seem to get it – or if they do, they still struggle to implement it well.
The truth is that you focus on the product and develop strategies that your target customers are looking for. This will enhance your success and allow you to grow from there. Here comes the role of Product Led Growth.
To understand it in brief, we have discussed some of its benefits, what it means and how it has become the key to all future successes in your business. So, let’s get into it:
What is Product Led Growth?
A new marketing approach for product based organizations. Tech startups have dominated product-led growth, but big corporations are starting to catch on. Industry leaders such as Nike, Amazon, Whole Foods, Domino’s, and Spotify capitalize on product-led growth to scale their businesses quickly.
Let’s understand it in a simple sense.
Product-led Growth (PLG) is a business model in which user acquisition and expansion are driven primarily by the product. Software-as-service companies pioneered the approach because it was easier to start with a digital presence before moving into other business areas.
Product-led growth (PLG) is a type of business strategy in which a company relies primarily on its products to generate sales.
Why is Product-Led Growth the Future of Sales SaaS?
If you’re an entrepreneur who has built a SaaS business, you’ve heard of PLG. If not, it’s about time you did. We’ve analyzed a shift from selling by features to selling by value in recent years. Instead of getting someone to buy a large array of features in your product, you’re getting people to buy into your vision for how they can solve their problem(s) with your solution.
Instead of just focusing on growth, product-led growth focuses on building value within your solution and growing that value.
Unlike a sales-led company that aims to lead a buyer from Point A to Point B in a sales cycle, a product-led company flips the traditional sales model. This type of company achieves this by giving the buyer the keys to use the product and helping them reach a meaningful outcome with the product. At this point, paying for a subscription plan seems like a good idea.
In directing the product across an organization, Product-led businesses often gain from:
- Shorter Sales cycle: Having your prospects join your team will significantly cut down the time-to-value for them and the length of your sales cycle.
- Lower Customer Acquisition Costs (CAC): By making users upgrade themselves.
- Greater Revenue Per Employee (RPE): Less hand-holding results in higher profit margins per customer.
The Two Major Benefits of Product Led Growth
Dominant Growth Engine
Businesses that are led by their products tend to grow more quickly than rivals in two ways:
- A wider top-of-the-funnel. A free trial or freemium model opens your funnel to those who are earlier in the process of customer acquisition. This is a huge advantage as they’re now evaluating your product instead of potential customers making demonstration requests.
- A rapid global scale. In contrast, your competitors are busy acquiring new sales reps for every location instead of making your onboarding process more efficient to provide more customers throughout the globe in only a fraction of the time.
Significantly lower Customer Acquisition Costs
Conversion rates are crucial to your strategy for growth and these three factors are must to consider:
- Speedier time to market: Getting your customers on board will significantly reduce the time to value your prospects and speed up their sales cycle. The faster your users can get the desired result from your software, the faster you’ll be able to change your free users to paid customers.
- A high revenue-per-employee (RPE): Software has always been designed to be scalable financially; however, with a product-driven strategy, you’ll be able to accomplish more work with fewer people working on the team. A lower amount of handholding can mean higher profit margins for each customer.
- Better customer satisfaction: Since your product is designed to let users join, they can get value from your product without any assistance.
How to Implement Product Led Growth?
Getting product-led growth right requires some solid groundwork. First, you have to know your market—who are your customers, what do they need, and their problems that you can solve with a new product or service? Understanding your market will help you identify unmet needs and growth opportunities. But it’s not just about talking to customers; it’s also about listening.
Engage in conversations with potential users on forums like Quora, Twitter, and Reddit to get a sense of where they are coming from in terms of mindset, usage habits, pain points, etc. Stay in tune with industry changes, too – there might be an opportunity for your business to launch a new product based on key developments outside of your industry.
If you want to enhance the chances of your success, you need to make a strategic plan. The ultimate aim of product-led growth is not just to build another profitable product – it’s about how that new offering can become part of an ongoing stream of revenue for your business, leading to steady growth over time.
So as well as making sure your product has a solid market fit and solving real problems for your customers, think about how you will create sustainable value from day one. Think about what features are essential for making money, who will use them, and why they’ll continue using them in the future.
The key to implementing this process is to build a product that people will want, use it to attract new customers, and then optimize the product based on feedback from those early adopters.
Examples of Product-Led Companies
Think about some of your favorite products; chances are they were created by a team that had an obsessive attention to detail when it came to products. They cared about what customers needed, how those customers would use their product, and how to make that experience as great as possible.
As you think about your business model in terms of business model canvas or value proposition canvas (or other frameworks), be sure you’re spending time on putting your product first before moving on to distribution. Your product has to be spot-on before you can build anything else on top of it. The point here isn’t just to create something cool; it’s also to create something that people want!
- Calendly: The product addresses the problem of all users and is adored by 10 million users from all over the world. With a value of $3 billion, Calendly helps users organize and schedule meetings.
- Slack: It was founded in 2009. The team collaboration platform boasts more than 12 million daily active users, with 156,000 businesses using the service. By 2021 Slack generated $292 million of revenue.
- Notion: One of the most flexible tools for productivity, Notion has a 10 billion dollar valuation
- Shopify: Built to help business owners, Shopify allows you to make it extremely simple to sell products online. They were valued at $1.3B value when it announced an IPO in 2015.
Product-Led Growth FAQ
What is Segment CDP?
Segment functions as a Customer Data Platform (CDP). It centralizes your primary customer information and allows you to connect with various downstream systems, including CRM, customer service A/B testing, and even databases.
What is a Product-Qualified Lead (PQL)?
PLG provides a method for growth companies that focus on product development to determine their customers’ quality based on their products’ actions and behaviors. It’s a mark of quality that indicates that a buyer is getting benefits from the item and can convert.
What is a growth-driven product strategy?
In a strategy of growth based on the product, the product itself is the experience. The focus shifts towards customers since they’re using the product more frequently. Businesses offer access to goods earlier in the purchasing process through free trials or freemium versions, allowing them to personalize every user’s experience.
What is the main difference between sales-led and product-led companies?
If the only method to make a sale on a product is when someone speaks to you, then you’re employing the sales-led strategy. A product-led company offers the purchaser access to the “keys” to utilize the product and helps users achieve a positive outcome through the use of the product. After this point, upgrading to a paid plan is an easy choice.
How do I select my model based on the product?
When deciding between a trial-free or freemium model, you must be very careful. It’s not easy to Google for the advantages and disadvantages of each or consult your fellow SaaS founder about what business method is best for your needs.
To make the right decision, you must establish a process to determine if you should go with a trial, freemium, or demo model best for your company.
How can I find a product-led growth partner?
Product-led growth is something that startups need to determine during their initial work stage. A product-led growth strategy not only rerails and attracts customers but also helps you achieve the desired heights of success.
Hire an experienced and productive marketing and development company that helps you define a suitable strategy. It will also helps to enhance the customer experience and loyalty.
CitrusLeaf has years of experience and a team of talented and dedicated developers that build customized products to suit your business needs. Let’s be a partner to accelerate your business’s growth and power up the productivity of your business resources.
Reach us at email@example.com