A To Z Of
Product-led
Growth
A Forrester report of 2015 said that about 75% of B2B buyers admit that they prefer to buy via an app or website rather
than approaching a salesperson as they want to self-educate themselves.
We have now come a long way from the conventional sales-led and marketing-led growth scenarios. Instead, this is the
era of ‘product-led growth.’ For every business that wants to grow, it is becoming a basic necessity. Here, we will learn
everything about this Product-led growth and how a lot of companies have been employing it. But, before that, let’s give
you a brief introduction about how this term came up.
Today, every organization strives to offer the best product experiences to their customers, which has been made possible
with product-led growth. That changes the way people buy and use the software. In addition, product-led growth has
touched upon consumer demand and market supply.
The key to any business’s success lies in offering an exceptional customer experience. From the beginning, the customer
experience provided by the salesperson should help customers get the product they need. But, with the growing
popularity and usage of the internet, the buying patterns and customer behaviours have entirely changed in terms of
better acquisition and engagement.
To cope with market demands, businesses must refurbish their marketing, sales, and service strategy. With a completely
revamped digital market, consumers can now access an ever-growing products list to be delivered as per their
expectations. Now, let us talk about product-led growth and how it has helped bring about this massive change.
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What Is Product-led Growth?
Looking at the virtues of product-led growth, nearly every tech
company is eyeing upon the competition to adopt it. However,
when executed right, you will find that your product is being
sold by itself over time, leaving you with more time and
resources to shift your focus on the end-user.
Product-led growth strategy, by definition, is the methodology
that makes a product the primary growth driver for the
company. It can reach more people and has been proven
beneficial for B2B, B2C, and SaaS companies. As the product
is the core driver of growth, you need not invest in expensive
marketing campaigns. What makes it so popular is its
customer-oriented and sustainable way of product sharing and
attracting new customers.
Product-Led Growth Flywheel (Image source: productled.org)
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Though there are multiple ways to describe product-led growth, here comes one of the most
comprehensive explanations:
“Product-led growth (PLG in short) is one of those business methodologies where user acquisition, conversion,
expansion, and retention drive the product. It systematically aligns the teams from engineering to sales and
marketing, making the product the primary source of sustainable business growth.”
You will be astounded to know that Zoom had grown its user base to 10 million users in 2011 in a market full of
competitive products from companies such as Google and Microsoft with the product-led growth strategy.
Nowadays, customers demand and value personalization, and nearly 80% of people do business with a company offering
personalization. A Salesforce report even found that 52% of B2C customers look for better alternative brands if they
don’t get a personalized experience. Thus, it poses a challenge for all the business owners
to leverage their product so that people would love to avail it, and then comes the point
where you can retain those users.
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What Are The Characteristics Of
A Product-Led Growth Company?
Blake Bartlett from Openview Ventures has shared a few key distinguishing features product-led growth companies share
as below:
User Focused
Product-led growth companies consider the customer as their enduser. Keeping a focus on the person having the issue to be resolved,
product-led growth companies can evolve faster.
Effortless Sign-up
Product-led growth companies do everything to make the sign-up
process more effortless. This sign-up process involves a single sign-on
to ask minimum information to the user before getting his hands on
the product and delivering value from it.
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Delivering Value
Product-led growth companies have in-house strategies that deliver quick value to the users. Most product-led growth companies
attempt to grow their user base with social sharing; the users will probably spread the word about the company and make them go
viral.
Freemium Model
Most product-led growth companies offer users a free trial or freemium business model to receive value from the product before
buying it. Users are now willing to pay for the product if they know its benefits, and there are higher chances that they will be
communicating about it to their kiths and kins.
Amplifying
The growth of the product-led growth companies is propagated with word-of-mouth or by sharing with the product. The product-led
growth model lets many app users become their permanent users.
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How Can Product-Led Growth
Benefit Your Organization?
The conventional sales-led and marketing-led strategies
rely on each other. This is evident in the fact that a sales-led
strategy needs marketing, and a product to sell a marketingled strategy depends on the sales team for selling a product.
Thus, product-led growth, which is independent of anything,
becomes a more viable option owing to the below add-on
advantages it offers to the users.
• Economic: People spend millions in marketing their
products, creating endless content, and hosting webinars.
In product-led growth, the product speaks of itself. The
product-led strategy can help you save exorbitant prices
incurred on marketing the product.
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• Elongated Customer Journey: product-led strategy’s freemium model speeds up the customer journey to make them
know the product faster.
• Gain Product Feedback: You would likely want to get the people’s hands on your minimum viable product. A productled strategy allows you to gather feedback in the fastest way possible.
• Product Prioritization: A product-led strategy stages your product at the forefront of your business. It is capable of
driving resources towards making it more significant.
With these benefits in mind, many SaaS companies have been eagerly employing product-led growth.
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Why Are Saas Companies Opting
For Product-Led Growth?
Product-led growth fosters the future of growth for the companies, making many of them opt for it with changing market
dynamics and consumer behaviour. Customers expect to use software increasingly and derive value from it before
buying. Thus, a keen adoption of product-led growth becomes of prime importance to stay relevant over the long term.
For many years, SaaS businesses have made the switch from a sales-led go to the market to a product-led go to market
strategy to remain competitive. Many popular product companies such as Dropbox, Grammarly, and Slack have reaped
benefits of it. These product-led organizations lead with the product across every department.
The product team involved thoroughly in the business creates a seamless customer experience in every department. This
way, all the teams leverage the product to reach their goals.
A product-led go-to-market strategy lets the user self educate the company to cope with the rising acquisition costs and
enhance the product experience for the users. A product-led growth approach can amp up your position in the market
but implementing it is relatively tricky and comes with its own set of risks.
A successful product-led go-to-market strategy is not as simple as offering people to try the product before buying. It
demands the entire approach as an organization to shift. You are also required to ensure that every team is willing to
help every user. A successful product-led growth strategy can let your company reap phenomenal outcomes.
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Product-led Growth Strategy
No execution can ever be possible without crafting a sound strategy. For successful product-led growth, here are some
strategies.
3 Elements Of Product-Led Growth
Product-led growth strategy has proven successful in preventing
companies from hefty customer acquisition costs and has
increasingly made customers choose their products and deliver value.
Communication is also an intrinsic part of this strategy, as it plays a vital
role in the purchase between customer and company. The more you
know your customer needs, the easier it becomes to communicate and
deliver value to the buyer.
These three necessary elements of product-led growth overlap each
other in serving customers. Let’s look into the key aspects considered
when ideating a strategy.
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Understand
For executing a product-led
strategy successfully, we consider
Deliver
Communicate
To make your product-led
Communicating the value of
strategy work, you must believe
your product is an integral part
three outcomes that fuel the product
in delivering what you promise to
of a product-led growth strategy. In
purchase:
the customer. Unfortunately, most
addition, product-led companies are
companies do not deliver what they
unique because they keep up-front
Emotional: The way customers
promise. This is one of the main
pricing visible to the customers for
feel about the resultant functional
reasons why product-led businesses
their starter plans.
outcome
are growing in popularity. People like
•
Functional: The core customer tasks
the idea of trying before buying and
Product-led growth demands taking
•
Social: How others perceived your
experiencing their value proposition.
a closer look at your acquisition and
product
Thus, it is one of the great ways to
revenue model. A defined model will
build trust with the customer.
affect the number of people signing up
•
This aspect is the most important
for a free trial or freemium model.
for successful product-led strategy
If your delivered value aligns with the
execution.
promised value, the chances are that
Thus, by applying these three elements
40-60% of users who sign up for your
in your business: understand,
product will keep on coming back.
communicate, and deliver on
your value, you will build a strong
foundation for your product-led
business.
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Marketing and sales
Product-led growth can drastically change the marketing conversations. Marketing and sales used to operate
independently, but now these two groups need to work concurrently with the product team to leverage data for better
conversions.
Customer demand fulfilment
Companies rely on product features and their usage to grow faster with minimal investment to drive customer
acquisition, expansion, and retention. For sustainable growth, you need to communicate the features and usage to your
customers to access your products easily and use them effectively in a demand-driven growth strategy.
You need to ponder over the features customers usually demand and fulfil those in the market.
Diminishing frictions
Friction prevents a user from how he manifests the product. For example, an overly complex sign-up process can cause a
lack of onboarding experience or activation to get new users. Moreover, there could also be many unnecessary steps to
be followed in the process and other limitations.
For identifying the points of friction that customers face, make sure you have a customer team and analytics tools in
place for friction points in the customer usage patterns. Overlooking issues faced by users during the onboarding process
can hamper the growth of your product and the enterprise thereby.
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Misconceptions around product-led growth
Just because it says Product-Led, it doesn’t mean the Product team is responsible for entire product-led growth.
As we discussed earlier, the whole team including Product, Marketing, Sales, Customer Success, and revenue
needs to be in alignment to build and execute a successful product-led growth strategy.
Our product traveled too far from early-stage, and it is not possible to shift to a product-led company. This is
not true. Many companies that have been Sales-led have successfully transitioned to product-led companies or
incorporated product-led in their overall strategy.
The freemium and free trial models are not suitable for enterprise companies. [Insight partners] mention that
companies such as Atlassian, Twilio, Snowflake, AWS, and others have perfected a motion where their product,
pricing, and sales model work in sequence to convert leads to seven-figure deals through smart usage of productled growth principles.
Everyone thinks that you don’t need a sales team anymore because your product does all the magic. It is not
true. Products are inviting and are there to entrust people that this can solve the problem and add value to them.
In most cases, when the users are not able to reach the milestones, salespeople need to pitch in to help them
achieve the milestones.
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Real-World Examples Of Product-Led Growth
Every tech company today wants to adopt the product-led growth strategy. Products built by these companies seek to
grow through word-of-mouth or social channels.
Because of the product-led strategy, Salesforce brought its software to the cloud a decade before; Apple started offering
digital experiences with their first iPhone in 2009. For so many years, the market has been full of consumer and B2B
products for meeting every customer’s needs. Further, in the 2019 SaaS Trends report, the IT platform Blissfully found
that an average mid-sized company perceived a 39% turnover in their SaaS offerings.
Owing to the growth and the unlimited virtues it offers, some other biggest organizations have been employing this
approach in their products and business. Although the list is endless, we are mentioning some of them here.
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Slack
Slack is one of the most popular SaaS companies that has applied the product-led growth strategy. Slack allows users to
reach everyone in their organization in one place. With more people using Slack, the more value it offers to everyone. This
compound effect enables rapid user expansion.
This effect and viral growth model contribute to the exponential growth of Slack that it has enjoyed over the years.
In 2020, Statista said that Slack has 12 million daily active users. Nowadays, it has become the first choice for many
companies as everyone knows how to use it. Here are some key operations that Slack do for being a product-led
company:
Try-before-you-buy: The freemium model allows anyone to get hands-on with the product before buying it, building a vast
user base.
Product-orientedness: Slack’s approach is product-centric when the marketing team drives leads, the sales team qualifies
prospects, and the engineering team enhances retention with a quick time-to-value.
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Pinterest
Product-led growth strategy has earned Pinterest 335 million active users per month as of 2020. Here is how the
company managed to do this:
• User experience: Pinterest offers features that improve the overall product for the user.
• Goal-orientedness: Pinterest sets growth goals that the entire company aims to achieve.
• Collaboration: PMs, designers, and developers work in collaboration to add features.
Pinterest personalized their content based on the gender of their users with their product-led growth strategy. These
changes in the product made male users one of the fastest-growing demographics.
Calendly
Calendly is another company that employs a product-led growth strategy. Calendly was invented to solve many users’
issues of scheduling meetings. Here’s what made it go viral among everyone.
Calendly works on the collaboration of different users. With Calendly, a single user can’t do anything independently.
When a user sends their Calendly invite link to someone for scheduling a meeting, both of them get the value. This
collaboration ultimately creates a viral loop.
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Every time a user sends a Calendly link, both are actually using and promoting the product simultaneously. With this viral
loop, Calendly can go on acquiring new users.
Dropbox
Who doesn’t know Dropbox today? Nobody knows the strategy behind that makes it the popular choice; it is, of course,
the product-led growth strategy. Dropbox fulfills its user needs of file storage and sharing with a simple, easy-to-use
product and adds it with features encouraging sharing and collaboration.
Let’s take an example. Sam wants to share a file with his friend. He simply needs to upload it to Dropbox and send the
link to his friend. The friend will open the link, and they both now become Dropbox users. This chain keeps growing, and
everyone starts becoming Dropbox users without even communicating with the Dropbox user.
In less than ten years, product-led strategy has made Dropbox reach a mark of $1 billion in revenue. Surprising, isn’t it?
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The Facebook And Amazon Model
Both companies were getting millions of users during the initial years, but they weren’t monetizing them. As a result, the
business analyst communities doubted their strategies and business model because both tech giants were not making
much profit. However, what others didn’t see coming was that these companies were playing the long-term game.
They were first providing the value and making users dependent on their services. In simple terms, they were following
product-led growth.
Facebook spread by word of mouth, and millions of users went online to interact with one another. Amazon was
becoming one of the largest e-commerce retailers (by having a significantly lower profit margin). Both product-led
businesses went on to become some of the most profitable in their respective industries. Facebook began monetizing its
millions of highly active users by introducing advertising. While Amazon did so by pulling market share from millions of
other retailers and transferring it to its platform.
Survey Monkey
SurveyMonkey, a web-based survey company, has been actively opting for the product-led growth model as a survey needs to go viral
to work.
Today, every user would know the latest features of a product after being released, which is best found out with a SurveyMonkey
survey.
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Your customers will share feedback about your product with the survey you send them, and they come to know about the brand. As
they used the product to fill out the survey, they became SurveyMonkey *users*. This gesture of customer acquisition is one of the
core benefits of a product-led growth strategy making SurveyMonkey experience 20% growth every year even after twenty years.
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How To Transition From
Sales-Led To Product-Led?
Ashwin Gupta, the Founder of Reslash, says that if you want to transition from sales-led to product-led, you need to
understand that PLG cannot be a standalone solution to all the problems. And to solve that, companies have started
making the sales and customer success roles as strategic as possible because there
will always be something that we cannot solve by automation.
In Product-Led growth, we are trying to provide value as fast
as possible, which is the opposite of sales-led growth, where
you want to build relationships between the prospect and the
salesperson to get the conversation going in the right direction.
Before we get into deciding which one to go for, the very first thing
you need to think about is how do you make them realize that this product
is worth buying? Then, you will give them clear visibility on the business outcome they
can expect with all the information they need.
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Similarly, Rishi Gupta, the Chief Growth Officer (Product & Marketing) at Hubbler mentions that starting with sales-led
could be the way to go about it because when you go to sell someone, you will get questions like “How many users do you
have right now”? “What is your customer base”? Etc.,
To be able to answer those questions, you have to acquire the first set of customers. I’ll take the example of Swiggy. When
they started out, they targeted very limited societies. Then, people didn’t know them as a brand. They were not willing to
try it out. When they did, they recognized it with faces and promises they delivered. People started to trust Swiggy as a
brand.
I believe this applies to almost all industries where initially it has to be sales driven where you go to your audience with a
strong pitch. You don’t sell products, but you sell promises. Then with the freemium or free versions, you offer, if they see
the value, feel that you are delivering the promises, the sales happen.
Initially, that is why your Customer Acquisition Cost is very high. You burn a lot to acquire the first set of customers. When
you have customers coming in, trying out your product, you build on top of your success stories.
Especially for startups, I’d say, give it free of cost to everybody. Build a standard version that is free of cost. Exactly like
the model of LinkedIn right now. LinkedIn, with its free version, helps you connect and network with thousands of people.
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To use advanced search filters, expanded networking, or hiring opportunities, you’ll have to upgrade to the premium
version.
All of this happens without any physical interaction. The product keeps interacting with you and sells itself whenever
possible. So, the product in itself selling the value, and they have created the base (the free users) right. The base has
become their asset for the company. They keep building their premium users on top of that.
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Is Product-Led Growth Right for You?
A product-led growth strategy has been useful universally and driving enormous
revenues for so many businesses. The product-led growth model changes the way
users perceive your product. Being viral and social are the two main components
of a product-led growth strategy. Products are built keeping in mind the sharing and
collaboration for witnessing fast and explosive growth.
We hope that, with this ebook, we could comprehensively bring all the aspects of
product-led growth and what makes it gain more prominence every passing day. We
have also demonstrated some real-world examples of how they have been enjoying
affluence after incorporating this incredible growth strategy.
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About Zeda.io
Zeda.io helps product teams achieve maximum efficiency by helping
them to define, manage, and collaborate better on their products. We
are a one-stop collaboration platform for product managers who want
to improve their work efficiency and in turn go from idea to shipping
the product faster.