User-led growth relies on user insights to create the best customer experience. Product-led growth leans on the product experience to drive revenue growth. These two models don’t compete. They should be used together. You should create an amazing product, ask users for feedback, then use that feedback to improve the product.
What Is a Product-Led Culture?
There are two main challenges that occur with PLG: the first is getting your entire team on board with this growth strategy centered around the product vs. the marketing and sales teams. The second is understanding data. It can be challenging to understand how your PLG efforts are working, which is why it’s important to lean on PLG metrics like time-to-value, product-qualified leads, and feature adoption rate.
Product-Led Vs User-Led Growth: What Is the Difference?
According to OpenView Partners, product-led companies are 30% more valuable than those who aren’t product-led.
Essential Product-Led Growth Principles
To help you understand more of how PLG companies succeed, take a look at some of the most popular product-led companies in the world:
1. On-Premise Software (1980s/1990s)
HubSpot is another product-led company that strategized by offering a sales team and customer success team for freemium users. This additional support early on enhanced the user experience, allowing plenty of product education early on which fueled signups.
The goal is to provide enough value that a percentage of free users eventually upgrade to a paid plan. Additionally, you can drive revenue through further upgrades, upsells, add-ons, and cross-sells.
This means there’s less risk for them, which reduces friction and makes them less hesitant to try it out. By reducing the barrier to trying your product, you’ll encourage more users to get their hands on the product, which will fuel premium user conversions.
Product-led growth is a relatively new concept. It’s only a few years old. But, the principles of PLG are centered around a common goal: to create a product-first, user-first experience growth engine around a SaaS product rather than a sales or marketing-first approach.
A Brief History of Product-Led Growth
Your product is nothing without community. While you’re developing your product, develop your community. A community shouldn’t be added on.
How do you know if product-led growth is the right strategy for your company?
Now that you understand why PLG is important and the core principles to lean into the strategy, it’s time to look at how you can tell whether you’re on track or not.
This is one of the pillars of PLG. It’s crucial you offer value upfront before asking your prospect to hand over their hard-earned cash. By offering your product in the freemium model, you are taking on the risk so the consumer doesn’t have to.
This is a crucial metric you can use to track your sales growth. PLG seeks to offer value upfront to the user. However, it doesn’t end there.
It’s not just about features. It’s about how those features interact with one another and the end user in an enjoyable way. Oftentimes, this means tightening up the timeframe between the first interaction with a prospect and the moment they begin using your product.
2. Better Acquisition
For instance, you may find that a new feature you introduced has a high adoption rate which has fueled your overall product adoption to increase.
4. Expansion Revenue
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In the past, we thought of these companies as going “viral.” But, the question is, why did they have exponential growth? How did they flip the switch on virality and generate massive consumer interest?
Another core metric you should consider tracking with a PLG strategy is feature adoption rate. While product adoption rates are commonly tracked in product teams, a key metric for PLG is feature adoption.
While sales teams still have their roles in closing deals, the marketing team is primarily driving growth through different advertising strategies and customer research.
Finally, if you’ve assessed that the market is ready and you’ve got the resources to make it work, it’s time to assess your product’s maturity.
In this article, you’ll learn everything you need to know about product-led growth, including what it is, why it’s important, and how it works. Plus, you’ll see a few examples of companies that have successfully scaled using a product-led growth strategy.
What Is Product-Led Growth (PLG)?
What do Slack, Zoom, and HubSpot all have in common? They’re all software, right?
The company tapped into a type of virality once early adopters began convincing co-workers to hop aboard. Slack began upselling to a paid subscription by convincing users to store their complete messaging history, which was crucial for large companies.