Product Led Growth
If you have used Slack or Dropbox chances are that you have already experienced a product-led go-to-market strategy. Product Led Growth is fuelling the growth of some of the fastest-growing SaaS brands globally.
What is Product Led Growth?
Product Led Growth is a go-to-market strategy that relies on using the product to acquire, activate, and retain customers.
PLG helps you to grow your business without spending tens of thousands of dollars on paid advertising or getting your sales team to constantly call the leads.
What makes Product Led Growth so unique?
Traditional sales-led strategy relies on moving customers from point A to B in the sales cycle. Product led strategy allows the user to experience the product and derive meaningful outcomes. Thereby making it easier for them to upgrade to a paid plan.
If you have used products like HubSpot and ZenDesk you have already experienced this firsthand. Companies that use a PLG model experience a shorter sales cycle, lower customer acquisition costs (CAC), and higher revenue per employee (RPE).
Rising PLG Adoption Among Companies
The 2020 SaaS Benchmarks Report by Open View Ventures product-led businesses grew at a faster scale. Today, there 21 public listed companies that use the product-led model. PLG has already created $200 of market value and will continue to rise as more brands embrace the model.
How PLG Works?
The PLG model works by putting the product at the forefront. At the core of the PLG is uniting everyone in the organization under a common understanding.
The core tenets of product-led growth include a shorter time-to-value, simple adoption, real-time data collection and analysis, and a focus on adding features that delight customers.
Key PLG Frameworks
Companies can choose from a multitude of frameworks to help with their PLG strategy. PLG frameworks help companies to become more customer-centric by delivering products that customers love.
Over the years, several product-led growth frameworks have emerged from industry experts like Nir Eyal, Andrew Chen, Intercom, etc.
PLG frameworks help product managers to make better decisions by removing bias and setting priorities.
Growth Loops are closed loops where the inputs, via some process, generate more of an output that can be reinvested in the input.
Hook Model uses a four-phase process – trigger, action, variable reward, and investment to create high-frequency engagement.
Fogg Behavior Model
Fogg’s Behavior Model sees the convergence of three behaviors – Motivation, Ability, and a prompt at the same movement.
Rice Prioritization considers four factors: Reach, Impact, Confidence, and Effort to help product managers evaluate their efforts.
Key Drivers of Product Led Growth
PLG requires a strong, fluff-free messaging targeted at the end-users which needs to be consistent across different channels.
Users should be able to see the value of the product either via free trial or freemium model before actual purchase.
Product-led approach needs a self-service and transactional products that allow friction less sign-up ad easy on-boarding.
After the user is onboarded your business has to quickly demonstrate the product value and establish stickiness to drive retention.
How is PLG different from the traditional Sales or Marketing-led Model?
Sales-led or marketing-led model relies heavily on outbound sales, personal relationships, and one-to-one meetings. Product led model focuses on putting the product quickly in the hands of the end-users.
The product adoption begins at the user’s level, enabling them to see the product’s value and thereby allowing the sales teams to close the leads faster.
How to Implement a Product Led Growth Strategy?
The implementation of a PLG strategy begins by getting executive alignment from your company leadership. Once you get your leadership on board, you can break down functional silos and focus your energy on the core goals identified.
1. Setting PLG as a goal
PLG goals will enable you to have a continued cross-functional focus on growth. Leverage OKRs framework to achieve your product-led growth goals.
2. Define Role & Responsibilities
Set clear roles and responsibilities by identifying a cross-functional team including product managers, designers, engineers, marketing experts, etc.
3. Product Audit
Conduct regular product audits to access your conversion metrics against industry benchmarks. Assess opportunities to prioritize based on ROI.
4. Analytics Tracking
Data is critical to make decisions in the PLG model. Consider solutions like CDP, Data Warehouse, BI, Data Piping, Event tracking tools, etc.
5. Conduct Experiments
Prioritize your experiments using the RICE method and follow best practices to set expectations with timelines to improve key metrics.
6. Measure, Learn & Repeat
Measure and document your feedback using Trello or Notion. Using the learning to make sure you improve the experience for the end-user.
Discover PLG Strategies from World’s Best SaaS Brands
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Product Qualified Leads
Learn how to identify product qualified leads for your SaaS business. Align your cross-functional teams to be product-led.
Product-led growth frameworks can help your business to deliver faster time-to-value and higher profitability.
What do Dropbox, SurveyMonkey, Hubspot have in common? Learn from leading SaaS brands that are product-led.