As the business environment becomes competitive and expensive, and challenging to grow businesses, product-led growth (PLG) provides companies with an efficient and practical foundation for business growth. It is, therefore, that companies are increasing their investments in product-led growth models. This article explains what product-led growth is and how you can approach the adoption of this approach.
Traditional Growth Approaches
Traditionally, organizations, depending on the sector they operate in (B2B or B2C), have adopted different growth strategies like sales-led or marketing-led growth, or a combination thereof to fuel the growth. In addition, many people have also used a community-led growth approach to scale their operations.
Sales-led growth approaches rely primarily on the sales team to identify potential clients and close the deals by building relationships with them. Companies operating in the B2B space primarily utilize this approach.
On the other hand, companies adopting marketing-led companies build brands that attract customers. They utilize a variety of channels to attract, engage, and retain customers.
Those who utilize the community-led approaches build a solid and active community around the product or the service. This community drives product and business growth through collaboration, sharing, and support. This approach is evident in business models that have social or network effects.
How Does Product-Led Growth Differ From Traditional Approaches?
The product-led growth strategy does not shun the above functions; instead, this strategy ensures that all of the functions converge in the product. Product-led companies drive growth via this approach that emphasizes product features and the customer experience. Such product-focused initiatives drive the entire cycle of customer acquisition and retention.
How To Approach Product Development For Product-Led Growth?
The product team must focus on providing optimal value to users to enable PLG. Following are the dimensions you must focus on to align your product development efforts with the product-led approach.
1. Ensure that you thoroughly understand the customer and the problem domain. Their pain points, needs, and goals should drive product development decisions.
2. Clearly define your product’s value proposition, what it does to solve customer problems, and how well it does. Your value proposition becomes the foundation for your product development.
3. Identify and Prioritize core features that align with your value proposition and solve the critical pain points of your customers first. Then, add more features once you have validated the product market fit (this validation can also happen for features as well).
4. Adopt an experimental approach and establish shorter feedback loops. The earlier you gather customer feedback and act on it, the better your growth will be.
5. Define clear and relevant metrics to measure product growth and overall performance. Use data-driven decision-making to guide your development process further.
How To Approach Marketing & Sales Activities For Product-Led Growth?
1. Make your product the centerpiece of your marketing and sales activity. Your product should become the primary driver for customer acquisition and growth.
2. Provide easily accessible trials for your products. You can have free trials for a limited period or adopt the freemium model as part of your sales strategy. Ensure that you have mechanisms to clear potential customers’ doubts and guide them on the right path. The users who get convinced through this cycle will become your paying clients.
3. Leverage relevant social proof to generate additional confidence in a prospective customer. For example, utilize customer testimonials and success stories to build trust.
4. Develop an effective content marketing strategy using organic and inorganic channels to facilitate end-to-end customer journeys from discovery to buying decisions and product usage.
5. Building communities on social networks and beyond through continuous engagement and value delivery to these communities. Such communities provide excellent referrals to potential clients and help with onboarding and customer usage.
6. Incentivize referrals from existing customers to help you generate more leads.
7. Build channels that ensure continuous engagement with your existing and potential customers.
8. Unlock the possibilities of upselling and cross-sell from the product utilizing the self-service mechanism. Such opportunities will help you reduce your customer acquisition cost (CAC). It also enables you to shorten your sales cycle.
9. Use analytics to understand customer & user behavior and product usage and provide feedback to the product development group for further decision-making.
How To Ensure A Great Customer Experience For Product-Led Growth?
1. Provide ways for the customers to get started with product use without needing manual guidance. You can use multiple mechanisms to ensure an intuitive onboarding experience, including guided tours, relevant video and text tutorials, and how-tos. Pay additional attention to the user interface of your product. The best onboarding experience comes from a compelling UI.
2. Create effective self-service mechanisms allowing users to solve at least a significant amount of their queries. Such mechanisms include contextual help, FAQs, and other tools and techniques. With the technology advancing in NLP, ML, and AI fields, such mechanisms are easy to create.
3. Personalization is a vital and effective mechanism for customer engagement with the product. Utilize intelligent technology tools to provide optimal personalization to your customers. Don’t limit it to vanity aspects (e.g., color scheme), but try adding value to the customer operation.
4. Make it compelling for users to submit their feedback, complaints, testimonials, reviews, and other content. Compelling doesn’t mean coercive techniques that challenge the user experience.
5. Make your product as accessible as possible. Of course, some factors are hygiene factors now (e.g., mobile responsiveness). However, you should try to go beyond that and make the product easily usable for even digitally naive users.
6. Ensure that the product talks to other products. The customer today use a bouquet of specialized applications to perform their operations. Make sure you provide some way for them to exchange the data to and from your product for a seamless experience.
The Role Data & Analytics Plays In Product-Led Growth Strategy
Data analysis is essential for any product-led strategy and business model, as it offers insight into customer patterns and product results. Companies can better understand their customers by collecting and analyzing how they interact, use the product/service, and respond accordingly. This information helps them make informed decisions about product development, marketing, and customer support. As an example, data can be used by companies to uncover critical features necessary to customers, measure the success of marketing campaigns, and recognize areas that need improvement in customer service. By leveraging data, companies can segment their customers and customize their marketing and sales strategies to different segments.
Additionally, analyzing data can help anticipate customer behavior and provide insights into refining the product and keeping customers. Leveraging data and analytics can help businesses make informed decisions, boost their product and marketing efforts, and facilitate growth through a product-centric strategy.
Summarizing
Product-led growth (PLG) is a strategy that focuses on using the product as the primary driver of customer acquisition, retention, and expansion. This approach diverges from traditional growth strategies such as sales-led, marketing-led, and community-led strategies. Product-led companies must focus on the following;
- Providing optimal value to customers
- Aligning product development efforts with customer pain points, needs, and goals.
The foundation for the above includes:
- Clearly defining the value proposition.
- Identifying and prioritizing core features.
- Gathering customer feedback.
Marketing and sales should also focus on the product as the central aspect of their activities. They should focus on the following;
- Providing easily accessible trials
- Leveraging social proof
- Building communities.
Finally, data and analytics also play a crucial role in PLG by providing insights into customer behavior and product performance to make data-driven decisions.
