Product-Led Growth (PLG) is one of the most cost-effective and sustainable go-to-market strategies for SaaS businesses. It enables customers to extract value from products before they subscribe.
Companies like Amazon and Facebook grew into powerhouses by first allowing users to gain value from their platforms before monetizing them. But how can you apply this strategy to your own business?
1. Focus on the Customer
A company that embraces PLG will prioritize its product, funneling the majority of resources into building a world-class solution for its target market. Instead of investing in a sales team and marketing campaigns, a company focused on PLG can rely on its product to do the heavy lifting for customer acquisition and retention.
Companies that practice PLG aren’t limited by the cost of a sales or marketing team and can invest in user experience improvements to keep them engaged. They also have the freedom to introduce features that may drop metrics but improve the user experience overall, like Slack’s popular instant-messaging app.
Investor Blake Bartlett coined the term “Product-Led Growth” in 2016 after noticing SaaS products Datadog and Expensify acquire users without costly marketing and sales teams. To implement this strategy, digital-facing teams across your organization need to rally around a vision of success that includes leveraging behavioral analytics to optimize user journeys, personalize the product experience, and introduce new features that customers actually want.
2. Build a Personalized Product Experience
Product-led companies use their product as the primary driver of customer acquisition, activation, retention and expansion. Instead of investing in expensive marketing and sales tactics, they invest in ensuring that the product itself drives the business’s growth.
Examples of this include software development giant Atlassian and Slack, an instant-messaging platform used by millions of teams to communicate. Both organizations offer their products free of charge and nudge users toward a paid plan once they’re comfortable using the product as part of their daily workflow.
These companies also invest in building a personalized product experience, which helps them retain and upsell their customers. This requires deep insight into the product’s usage and performance, which is possible through behavioral analytics. Event-based user behavior tracking reveals what features users find valuable, which helps the team improve the product and introduce new ones that align with user needs. This data-driven approach is key to creating a sustainable product that grows its own customer loyalty and generates revenue without the need for manual marketing and sales efforts.
3. Align Your Team
Aligning your team on the overarching strategy and goals of your business is a critical element of organizational alignment. Managers need to ensure that their team members’ objectives are aligned with the business strategy and that everyone can see how their work contributes to the company’s overall success.
One way to do this is to introduce a culture of transparency and open communication, especially in a remote workplace. Using collaboration tools like Slack and Trello opens up easy communication channels between teams, so that everyone is on the same page.
Product-Led Growth also encourages a shift in metrics that can be used to gauge business success. For example, leveraging data on user progression in-app and adoption levels can replace the traditional marketing KPIs of MQLs, giving businesses greater visibility into buying intent through product usage. This can be a more accurate way to evaluate the performance of a SaaS business and drive growth. By ensuring that all departments are on the same page, it becomes easier to implement new initiatives and meet short-term and long-term business goals.
4. Measure Success
Sustainable growth is a concept that business leaders can use to plan for the future success of their organizations. By measuring the sustainable growth rate, businesses can develop innovative strategies that will ensure their long-term profitability.
Measuring sustainability also provides companies with a better understanding of the impact they have on their communities. For example, a company can measure its energy usage to determine how much it is contributing to greenhouse gas emissions. In addition, a company can also implement initiatives to reduce its environmental footprint.
One of the most effective ways to measure sustainability is to utilize a point value scorecard. This system encourages broad participation from stakeholders and helps companies set goals that are aligned with the company’s sustainability strategy. This method also allows organizations to track progress over time.