Product-led growth (PLG) has been a trending and essential topic for many businesses these last few months, and there’s a reason why. With a strategy that puts end users first, there’s been a noticeable shift toward applying a product-led approach, and we’ve seen large companies such as Dropbox and Slack see success through applying a PLG strategy.
By providing users with the tools and materials that allow them to use the product successfully, businesses are seeing a major increase in important customer metrics such as time to value, customer retention, and expansion rates. It’s undeniable that product-led growth is making its presence known and it is becoming a respected concept in almost every industry – especially for small-medium-sized SaaS businesses looking to scale their business growth. But do people really know the extent of PLG?
Today, we’ll talk about five fun facts you didn’t know yet about product-led growth that just might convince your company to try it!
This article will cover:
- What is Product-led Growth?
- 5 fun facts you didn’t know about Product-led Growth
- Best examples of companies focusing on PLG
- Is your company ready for a Product-led Growth approach?
- Product-led Growth is here to stay
If you’re interested in creating a product-led strategy for your company, book a call with us today, and learn how to become PLG in an easy way!
What is Product-led Growth?
Do you know Slack, Dropbox, or Calendly? All of them use a product-led growth approach. That’s why they’re able to grow more quickly and efficiently by leveraging their products to create a pipeline of active users who are then converted into paying customers.
A PLG strategy switches the center of power from actual sales to providing an optimal experience for the end-user, making the product the heart of the strategy. With it, customers quickly see the true value of the product and increase product usage – and so upgrading to a paid plan becomes a no-brainer.
The main characteristics of PLG are:
Trusting the product itself
A key giveaway of PLG is how a company launches and sells its product. Most of those companies will try to persuade users to try their products for free, believing the product will sell itself and that the users will become paying customers. A good example is Spotify, with its freemium version as well as a range of paid plans.
Analyze and adopt strategies depending on the data received
Another indicator that a company is product-led is how they analyze and adopt the data received. Companies that use this strategy focus on metrics that will help them offer customer focussed features, such as proactive customer support, onboarding experiences, feedback, and engagement. With all the information they receive, they adapt the products in order to become more and more successful.
Prioritizing product data quality and user experience
In PLG companies, the main driver of sales is the product itself. With PLG, businesses prioritize product data quality and user experience, which means that they won’t allocate as many resources to sales, marketing, advertising, or customer acquisition. A good example of this is Slack; they don’t use as many sales channels. However, they have over 10 million daily users.
5 Fun Facts you didn’t know about Product-Led Growth
Now that you know what product-led growth is and what its main characteristics are, let’s get to the fun part. Let’s take a deep dive into product-led growth and five interesting facts you may not know about it.
- It’s been here for a long time
Despite the fact that PLG seems to be an innovative idea that’s been trending recently, this strategy has actually been around for quite some time. I mean, when you think about it, before the shift to online and the likes of marketing, a product-led approach was really the only way to ensure success. In today’s PLG world, it’s the same premise, but with a technological advantage. Technically, “product-led growth” was a term coined by OpenView’s Blake Bartlett in 2016, and, since then, it’s become a buzzword.
- It changes the way SaaS should use metrics
PLG has changed the way SaaS uses and measures its metrics. PLG focuses on completely different metrics, and shouldn’t be measured with the same tools. Some essential metrics for PLG are:
- Time to Value
- Feature adoption rate
- Expansion revenue
- Average revenue per user
- Customer lifetime value
- Net revenue churn
- Retention
- Customer satisfaction
For more information about the nitty gritty of these PLG metrics, check out this article on our Top 5 SaaS metrics.
- The customer is the main driver behind PLG
The main driver becomes the end-user when applying a PLG strategy. It’s all about the customer – that’s exactly why product-led growth and customer success go hand in hand. Changing this focus allows companies to focus on other solutions such as offering more engagement, creating customized onboarding for each customer, and providing proactive customer support.
- Product analytics
Tracking product analytics is vital to ensure a good PLG strategy. Think of the metrics mentioned above, like customer churn, conversion rates, and subscription rates. A good product success platform will provide you with the tools you need to effectively collect and analyze these metrics in order to improve your product. These may include product flows or intelligent integrations.
- The sales process flipped upside down
Hooray to free trial and freemium business models! Users now want to see and use the product before buying it. By doing so, they can see how useful it is and how they can use it in their everyday work. Again going back to Spotify, their freemium plan has one of the highest conversion rates, at 46% in 2019.
Best examples of companies focusing on PLG
It’s always useful to see how other companies are focusing on PLG and how they stand out. Keep reading for some of the best ones.
Calendly
Founded in 2008, Calendly is a software company that helps teams schedule, prepare for, and follow up on external meetings. Having addressed one of the biggest pain points of the corporate world, scheduling meetings that don’t clash, it has become one of the largest software companies. Calendly is now valued at 3 billion dollars.
DocuSign
DocuSign is a company that allows organizations to manage electronic agreements and allow users to add their signatures using different devices. The free version of the product is of great value, as anyone can sign in and use it. Docusign then offers a paid version that users can convert to in order to access all their features. Now, more than 1 million customers pay to use DocuSign on a daily basis.
Figma
Figma is a collaborative interface design tool for web and macOS, with additional offline features available through desktop applications. Created to design apps, it offers unlimited free collaborations and personal files even with a free subscription. Around 4 million people use Figma, thanks to its accessibility and ease of use.
Slack
Who hasn’t heard about Slack? Slack is a messaging program designed specifically for the office but has also been adopted for personal use. It’s now been positioned as the main conversational tool of many businesses. It’s also used as a networking tool as well as for collaboration within an organization, easily integrating with your existing business tools for a seamless experience.
Is your company ready for a Product-Led Growth approach?
Switching a company to a PLG approach isn’t easy, but it’s possible. We’ve summarized the most important factors to take into consideration. Here’s what you need to know!
- Make sure your product has a unique value proposition. That means your product needs to solve a real daily problem or help make work more effective.
- The user can realize quickly how helpful your product is. That’s related to the TTV – the quicker a new customer can see the benefits of the product you’re offering, the better it is.
- Marketing, selling, and onboarding new users can be accomplished using your product’s features and functionality.
- The more people use your product, the more it grows. As the product is used by more people in a network or company, it becomes more valuable. When it comes to platforms, the more services your users can connect to, the more valuable your product becomes.
- The product itself drives adoption and retention.
- The market conditions are right to grow.
Book a Demo to learn more about how FROGED can play a huge part in getting your product-led growth strategy on track!
Product-Led Growth is here to stay
As a software service company, you know how important the product you’re offering is. It’s time to move away from sales and focus on your product features, proper onboarding, and customer engagement to drive growth.
Customers are switching their search to PLG companies, searching freemium solutions, free trials, calls, customized onboarding, etc. It’s clear to see that product-led growth is the future. Customers’ needs cannot be neglected anymore, especially with so many companies doing so well.
It’s time to invest in PLG strategies. Are you ready to make the change?
Want to learn more about product-led growth? Read all about it in our blog!