What is Product-Led Growth?
Product-led growth, or PLG for short, is a business approach in which a company’s product primarily gets new customers and keeps old ones. When you take this approach, the product is at the center of all decisions. Improving and teaching people about the product are more critical than standard marketing and sales methods.
To grow your business through a product, you should focus on making a product that people love and getting them to spread the word. SaaS (Software-as-a-Service) businesses are good examples of companies that can use this approach well because their main product is what they sell. In the end, product-led growth puts the quality of the product above all else to boost growth.
Synonyms
- PLG
- product-led growth marketing
- product-led growth strategy
Pros of Growth Based on Products
You can get a lot of benefits from using a product-led growth plan, like:
Less expensive to get new customers
A product-led growth business plan is all about focusing on making a great product that people will want to buy. This means getting new customers costs less because the product acts as advertising. This also means that customers are more likely to be happy with their buy and keep using the product, which means fewer customers will leave and more will stay.
If the product is exciting and famous, people will also tell their friends about it, which can help the company grow even more naturally.
More people reached
When a business works on making a good product, it naturally reaches more people. These goods bring in customers seeking answers to their problems, which helps the brand get a more significant market share.
Improving the product often also gets it covered by the media, which helps it reach even more possible customers.
More ability to grow
It can be challenging for a company to grow if its growth plan is based on products. Focusing on making a valuable and new product will naturally lead to a desire for that product. Instead of depending on marketing to bring in customers, this approach often leads to long-term growth that makes money. It also makes it easier for businesses to move into new areas because they already have a strong base of customers who like the product and are willing to tell others about it.
Companies can also adapt quickly to market changes and keep growing without hitting any problems because they keep their eyes on improving their main product.
Less customer turnover and more loyal customers
Customers are more likely to stay with a company with a product-led growth plan because it focuses on giving customers value through the product itself. Why? Because people keep finding meaning in the product.
Higher retention rates come from happy customers likelier to stick with the product and keep using it. Focusing on constantly changing and improving the product can also keep customers from looking for alternatives, which leads to lower churn rates.
The company can make customers need the product, be more interested in the brand, and be more likely to stay loyal over time by putting a lot of money into the customer trip. This makes customers more likely to stay with the business and makes them more loyal.
One crucial thing about PLG is that it focuses on knowing what the customer wants and giving them a unique experience that meets those needs. By giving customers options that they want, you can make the user experience more fun and exciting. Companies can also ensure their products meet customer needs by asking for feedback through surveys or user tests. This way, they can keep improving their products to meet those needs.
Building ties with customers is also very important for product-led growth to work. Businesses should talk to their customers about their goods and services and teach them about new features or updates to build meaningful relationships with them. Giving rewards or deals to current customers is another way to keep them interested in your brand and encourage them to stay loyal.
Higher retention rates come from happy customers who are likelier to stick with the product and keep using it. Focusing on constantly changing and improving the product can also keep customers from looking for alternatives, which leads to lower churn rates.
Less time between sales
If the growth model is based on the product, it might offer a free trial or freemium version so that potential buyers can try it out and decide if it’s worth the money. This hands-on method can help shorten sales cycles because customers can see how helpful the product is and then decide to buy it more quickly.
But companies must also choose whether to use a freemium account or a free trial. Remember that research shows that freemium accounts have better conversion rates than free trials. The research from Product Led says that freemium accounts have a “12% conversion rate, which is 140% higher than free trial conversion rates.”
Product-led growth also lets businesses focus on making valuable products that solve specific problems instead of depending on discounts or pushy sales tactics to bring in new customers.
More details on how the product is used
When customers come to the product independently, instead of being told about it by someone else, the information gathered about how they use it and what they like about it is more correct. This can lead to better ideas for making products and making them better and more focused marketing for a truly unique customer experience.
To sum up, a product-led growth plan not only naturally brings in new customers but also gives you a lot of information about how those customers are using the product. This gives companies a considerable amount of data they can use to help them grow and learn.
Better experience for users
Companies can keep improving the user experience by putting the product at the center of everything they do. This way, choices about new features, capabilities, and improvements can be made with user behavior in mind.
When making a product-led growth plan, user experience (UX) is significant because it affects how people use the product. PLG means making a fantastic experience that makes people want to buy and use the goods. Companies need to be able to make user interfaces that make it simple for people to understand what a product does and how to use it. They also have to make sure that the design shows the product’s value in a way that the intended audience can understand.
When companies make user experiences for their goods and services, they need to think about speed, personalization, ease of use, and convenience. When companies create these experiences, they should also use data about their customers’ wants and needs to ensure they are relevant to the target audience. This will increase engagement and loyalty over time.
Ultimately, this makes the product better and easier to use, so it meets users’ wants and solves their problems. On the other hand, a plan led by sales or marketing might not always put the user experience first, which could make customers unhappy and cause them to leave.
Focusing on goods that customers like can also help companies make the signup and buying process more accessible, which often leads to higher conversion rates. If the product always meets customers’ wants and solves their problems, they may be likelier to stick with it.
Get the goods ready to go on sale.
A product-led growth strategy can help get a product ready for launch because it lets you try, iterate, and improve the product repeatedly in the early stages of release. This approach can help find bugs or other problems before the launch by using customer feedback and data analysis. It can also help find new features or ways to improve things after the launch.
Aside from that, product-led businesses help spread the word about a new product by giving interested customers early access. A product-led growth method can help a product be ready for launch and give it the best chance of doing well in the market.
What Product-Led Growth Can Do for You
Many businesses that want to grow faster now use product-led growth as their primary growth approach. Many have asked, “What is the return on investment (ROI) of product-led growth?” as the idea has grown.
To begin, product-led growth can help a business lower the cost of getting new customers by putting more emphasis on the user experience than on more traditional marketing methods. Users who can quickly solve a problem or finish a job are much more likely to keep using the product. This means that instead of spending money on marketing or ads, the focus can be on improving the user’s experience, which will pay off in the long run.
Product-led growth can also make customers more loyal and keep them from leaving. Customers are more likely to stay with your company and like your products if they are easy to use and get help. Over time, this means more steady sales because customers stay interested in the product and use it regularly.
PLG also helps businesses learn more about their target market by letting them collect real-time information about how users behave and what they like right inside the product. This lets them change their products to fit the market and stay ahead of trends so they can stay relevant in a market that is constantly changing. Because of these benefits, businesses will make more money in the short and long run compared to traditional growth strategies.
Growth Based on Products or Sales
You can grow your business in one of two main ways: product-led growth or sales-led growth.
In product-led businesses, the product team is in charge of driving growth by making the products better and always coming up with new ones. This could mean studying the market, getting customer feedback, and making changes to the product’s features over time.
On the other hand, sales-led businesses focus on getting new customers and making sales through targeted marketing and sales efforts. Both strategies can help drive growth, but depending too much on one could be harmful.
For instance, companies that focus too much on making new products might lose touch with what their customers want if they don’t listen to what they have to say. On the other hand, companies that focus on sales might find it hard to keep people if they don’t keep providing valuable goods or services. When it comes down to it, for businesses to grow in the long term, they need to find a good mix between making products better and getting new customers.
Growth Strategies Based on Products
Different businesses can choose from several different product-led growth plans.
The freemium model is a popular choice. In this model, a simple version of the product is given away for free, hoping that users will pay for a version with more features or benefits. Personalized onboarding, which offers experiences tailored to each user’s needs and preferences, is another approach.
Marketing pipelines are also crucial for product-led growth because they help potential customers make decisions and turn them into happy users. Businesses can use a product-led method to drive growth by trying different strategies and seeing which ones work best for their product and market.
Other common product-led growth strategies include putting product managers in charge of getting new users and keeping old ones, making it easier for new users to get started with the product, and adding new ways to make money, like payments or extra features.
But keep in mind that product-led growth isn’t a one-size-fits-all method. What works for one business or field might not work for another. To drive growth successfully, it’s important to ask customers for comments and keep improving the product.
Problems with Putting Product-Led Growth Into Action
Product-led growth is a new way to sell that helps get new users, keep old ones, and get them involved. But putting PLG into action can be challenging because keeping track of things like price, customer experience, product features, and other optimization strategies is hard.
Finding a good product-market fit is one of the most complex parts of putting PLG into action. It can be hard to make intelligent choices about product development and user experience if you don’t have a clear idea of what success looks like and what measures should show that the product fits the market. To ensure the product has the right features for customers, you need to do a lot of study and ask users what they want and need from the product.
Another challenge of using a PLG strategy is developing a suitable pricing plan that will keep customers interested and bring in money for the business. It’s essential for pricing models to find a mix between what customers are willing to pay for value and what the business needs to make money. Also, price algorithms must be constantly checked and improved so businesses can make the most money without losing customers.
Finally, it’s essential for companies that use PLG plans to have access to advanced analytics tools that show how customers behave across various user groups. By collecting this information, companies can quickly change their strategy to reflect how specific changes may affect customer engagement, either in a good or bad way.
What PLG can do to make more money
Using the power of a company’s products to drive revenue growth is an excellent way to do product-led growth. Businesses can increase customer involvement and brand value by developing new products that improve the customer experience. This leads to higher sales.
PLG is based on the idea that product development and improvement are more critical than standard marketing methods. Companies keep coming up with new ideas this way because customers use the updated and new features of the products, which leads to more buyer engagement and product improvements that lead to more usage and income.
For instance, many software companies use PLG methods to get ahead of the competition by putting a lot of money into making apps with many features that are easy for users to adopt. They always add new features and release updates based on how their customers use the app to make it more exciting and valuable for users. This iterative method ensures that customers can always get changes to the app that help them be more productive or efficient. This leads to more sales because happy customers will buy again.
PLG can help a business develop new goods and improve the ones they already have. For instance, businesses can use information about how people use their present products to find chances to make new products or services that meet unmet customer needs or enter new markets.
Product-led growth can be a solid way to bring in more money through new ideas, better customer satisfaction and retention rates, and the chance to open up whole new markets or sources of income. Businesses are increasingly focusing on using technology and data to give customers better experiences. As a result, PLG will become an even more critical tool for business growth.
Tracking Growth Driven by Products
Product-led growth can be hard to measure because you have to keep track of many different metrics at many different places in the buying process.
Keeping track of how many regular users interact with your product and how many stick with it is an excellent place to start. In this case, it might be through the product website, an app, or social media. The average amount of money your product makes, your customers’ happiness, and the NPS (Net Promoter Score) are also essential measures. It’s also helpful to see how specific changes or new product features affect growth as a whole.
Businesses can track and improve their product-led growth by monitoring these numbers over time.
