Product-Led Growth: The Strategy Everyone Is Watching

By Maria Geokezas, COO and VP of Client Services at Heinz Marketing

Content marketing has defined the last two decades, but there’s a go-to-market strategy that’s been capturing lots of attention — product-led growth.

As a growth strategy, product-led growth removes the traditional sales cycle and, instead, lets the product sell itself. Product-led growth counts on trials and freemium models to prove the product and convert leads into loyal users.

So, does that mean a product-led company can nix its sales team? Not quite.

A product-led approach is holistic. In place of individual teams – marketing, sales, and customer success – working on separate pieces of the strategy, the teams work in unison to support users throughout the product life cycle. Sales teams are there to jump in and show curious leads just what the product can do, especially at the enterprise level.

How Do You Know if You Could Incorporate a Product-Led Growth Strategy?

Product-led growth isn’t for every technology company. It necessitates an end-user product that is intrinsically self-explanatory. The strategy only works if users can guide themselves from discovery through onboarding with minimal instruction. If your users struggle to progress without a salesperson or support, your product isn’t ready to implement a product-led strategy. Before you consider product-led growth, ask yourself:

1. Is your product compatible with a free tier or trial offer? One of the most common features of product-led growth is letting users test the product extensively before committing. But, to generate revenue, you have to strike a balance. You need your free product features to hook your users without providing so much value there’s no reason to pay for the advanced features.
2. How are users finding your product? Sales prospecting and outreach aren’t core components of product-led growth. Rather, the goal is for customers to be the ones getting the word out about your product. Word-of-mouth user referrals and viral attention are the ultimate propellants for product-led growth.
3. What’s the point of customer activation for your product? Because ease of use is a primary tenet of product-led growth, acquisition and the point of activation can widen. For instance, a user might stay on the free version for months, only using it occasionally, until one day they discover a premium feature that solves a pain point and finally upgrade.
4. What percentage of users make it past onboarding? Again, signing up for a product and adopting it as your go-to solution isn’t necessarily the same thing. Not all users will make it past onboarding. Moving users through product adoption is where marketing and sales can make or break your product-led strategy. You should provide content and sales support to give the customer the resources to succeed.
5. What is your churn rate? A high churn rate signals there’s a hiccup with your product that customers can’t overcome. Keeping your churn rate low is key for product-led growth.
6. What friction points cause churn or intervention from customer support? Once you know what causes churn or support interventions, you can improve your product, marketing, and sales strategy to guide your customers through common issues.

Product-led growth is a fresh way of thinking about customer acquisition and retention, along with the metrics used to define success.

How Does Product-Led Growth Differ From Content-Led Growth?

Content and product-led growth are notably different. So, what are the major distinctions between the two popular strategies you must consider?

Lead Generation

Content-led growth relies on marketing and sales teams to generate, qualify, and convert leads through a mix of paid advertising and audience outreach.

Conversely, product-led companies use their marketing to fuel virality — as the backbone of their marketing strategy. Tapping into a large base of potential users through word-of-mouth and media attention is critical to gaining leads before a competitor. That’s not to say that content can’t also go viral and drive leads, but it’s less crucial.

Since marketing and sales-qualified leads aren’t part of the product-led process — leads must qualify themselves by hitting specific use points in the product. That’s why products must be essentially flawless for the strategy to work because there’s no one there to overcome obstacles and objections along the way.

Acquisition

With a content-driven strategy, converting leads to customers can take longer. Because you are typically using content to change the status quo and educate before a buyer realizes the need for your product, the sales process starts much earlier than with product-led growth.

Product-led growth has a low barrier to acquisition. There’s virtually no risk of testing a product for a short trial or signing up for a free-tiered plan. And product-led companies count on the user exploring the product and deciding if it’s for them as they go. It cuts out the middle of funnel steps. The end goal isn’t to acquire a customer; it’s to activate them.

Content

Content brings prospects in with a sales-led strategy and moves them through the funnel. Before committing to the product, leads interact with loads of marketing content — browsing whitepapers, reviewing case studies, and requesting demos.

But product-led growth uses content less as a lever for conversion and more as a user guide for the product. So, marketing materials like product guides and use cases are more important than white papers and datasheets.

For example, the all-in-one app, Notion, creates content centered almost exclusively on teaching users how to integrate the product into their daily tasks. Once you sign up for Notion, you immediately receive emails linked to how-to guides and videos. There’s no sales push, no marketing emails with social proof, no content not based on the core product. Instead, it’s all about supporting users to get more out of the product and keeping them around long-term.

Metrics

Content-led and product-led growth strategies have some unique metrics of success. Undoubtedly, revenue and customer lifetime value reign supreme, but the path to profit is measured differently.

Companies that focus on a content-led approach must track how a lead moves through the funnel to become a customer. The objective is plugging leaks along the way. According to Salesforce, foundational content metrics include:

1. Content engagement
2. Lead conversion cycle
3. Revenue
4. Lifetime value
5. Customer satisfaction

On the other hand, with product-led growth, the metrics revolve around where the product may be falling short in attracting and keeping customers. Per the Product-Led Growth Collective, a product-led strategy needs to track:

1. Product-qualified leads
2. Time to value
3. Revenue
4. Lifetime value
5. Net churn
6. Network effects and virality

Whether your company uses a content or product-led growth strategy, metrics matter, and knowing which metrics provide the most insight is critical.

Ultimately, deciding if product-led growth will work for you depends on the strengths of your product and team. It takes more than a superior product for it to work. For example, a complex product targeted only at enterprise-level customers won’t succeed with the strategy, no matter how great the product is. But if your product is straightforward with a precision onboarding process, product-led growth may be just the strategy you need.