What is product-led growth?

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Successful companies grow fast by moving users swiftly through their pipeline. In an ever-evolving market, this requires frequent fresh approaches to revenue generation.  One method of supercharging growth (and used to success by companies like Slack and Candidly) is product-led growth (PLG). And with the impact of PLG on user adoption, customer satisfaction and revenue growth, it’s no wonder the B2B tech world lapping it up. 

PLG emphasizes a user-centric approach. It prizes organic growth, fosters lower customer acquisition costs and focuses on faster time to value realization for customers. This data-driven iteration on business growth can offer your organization the benefits of scalability, global reach and industry validation—if you can adopt it effectively and it’s a good fit for your company. 

Let’s find out if product-led growth is right for the next edition of your B2B RevOps playbook. 

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What is PLG? 

Unlike market-led growth, product-led growth uses the product itself to drive acquisition, expansion, conversion and retention. The product is designed to be intuitive, user-friendly, and capable of delivering value to customers, requiring fewer sales or marketing efforts. Customers should move through the sales funnel almost without even knowing it. They gain hands-on practice with your product or service and get hooked at the outset. 

Key elements of PLG include providing a free or trial version of your product that allows users to experience its value before making a purchase. The product is designed to be self-serve, so users can easily sign up, onboard, and start using it without the need for extensive training.

PLG relies on the concept of product virality, where satisfied users naturally share their positive experiences with others. This leads to organic growth and increased adoption. Additionally, PLG emphasizes gathering user feedback and data to continuously improve the product and drive customer satisfaction.

By prioritizing the product and user experience, companies adopting a PLG strategy aim to drive customer acquisition, retention and expansion. And the best part, it does it all while minimizing the need for traditional sales and marketing techniques.

 

Who’s doing it right? 

As it becomes more popular, especially in tech, we see several companies successfully embracing a PLG strategy. Here’s what they’re doing right:

  • Slack: The popular collaboration platform has grown through a PLG approach. It offers a freemium model, allowing users to sign up and use the product for free with limited features. As teams adopt and use Slack, they often invite more users, contributing to the platform’s viral growth.
  • Dropbox: This cloud storage and file sharing service utilized a PLG strategy to achieve significant growth. By offering a free version of their product with a limited amount of storage, Dropbox attracted millions of users. Those user then shared files and invited others to join, driving growth.
  • Atlassian: A software company that offers a range of collaboration and development tools, including Jira, Confluence and Trello, Atlassian has embraced a PLG approach by providing free versions of their products, allowing users to try them out and upgrade as their needs expand.
  • Zoom: The video conferencing platform experienced exponential growth, particularly during the COVID-19 pandemic. It offers a freemium model with limited meeting durations for free users, allowing individuals and businesses to experience the platform’s capabilities and subsequently upgrade to paid plans for more features and longer meetings.

 

These companies have a product that solves their users’ problems. They offer limited versions of their solution, incentivize usage and enable sharing right in the product and watch their loyal customer base expand with almost no lift from their marketing orgs (or their budgets). These companies demonstrate how a PLG strategy attracts, retains, and essentially clones customers by focusing on delivering value through products and facilitating organic growth through user adoption and advocacy.

 

What are the benefits of PLG? 

PLG offers several benefits for businesses. Key advantages include customer satisfaction, reduced sales and marketing costs, faster user adoption, viral growth and network effects, data-enabled iteration, upsell and expansion opportunities, and differentiation from competitors in an already volatile market. Whew! PLG is about as close to a secret weapon as you can get. It offers the potential for scalable and sustainable growth by aligning business success to customer success, reducing friction in the user journey, and leveraging the viral nature of happy customers.

 

What are the pillars of PLG?

The three pillars of PLG are as follows: 

  1. Design for the converted user
  2. Deliver value before they seek it out
  3. Investment

 

Pillar 1: Designing for the converted User

With PLG, we immediately put the customer in the driver’s seat of the product. They should find their problem solved as soon as they use the product. The converted user, then, refers to the practice of optimizing the product experience and features to cater to users who have already upgraded from free or trial versions to paid plans or higher tiers of the product. These users have already experienced the value of the product and have made a commitment to continue using it. The first pillar of PLG is designing for the converted user. When designing for the converted user, the focus shifts from initial user onboarding to deepening the engagement and maximizing the value for these users. 

A few key considerations to make in the process of designing for the converted user:

  1. Advanced features and functionality: Converted users often have more advanced needs and are willing to explore the full capabilities of the product. Designing and enhancing features specifically targeting their requirements can help increase their satisfaction. It’s also a great way to ensure they continue to derive value from the product.
  2. Customization and personalization: Providing options for customization and personalization allows converted users to tailor the product to their specific workflows and preferences. This flexibility enhances the user experience and further integrates the product into their daily operations.
  3. Power user tools and efficiency enhancements: For converted users who are actively using the product, incorporating power user tools and efficiency enhancements can boost productivity and streamline their workflows. This can include advanced automation features, shortcuts, integrations with other tools, or advanced reporting and analytics capabilities.
  4. Proactive support and customer success: Designing for converted users involves providing proactive support and customer success initiatives. This can include personalized guidance, targeted resources, and proactive communication to help users achieve their desired outcomes and address any challenges they may encounter.
  5. Expansion opportunities and cross-selling: Designing for converted users also involves identifying expansion opportunities within the existing user base. This can include introducing additional features or modules that align with their evolving needs, cross-selling complementary products or services, or providing seamless pathways for users to upgrade to higher tiers.

 

Pillar 2: Delivering value before they seek it 

With PLG, the customer gains instant gratification from using the product and solving their problem immediately. This is often done through a demo or free trial. They don’t have to seek the value out of the product because their issue is solved on the spot. Delivering value before the customer seeks it, then, refers to the concept of proactively providing a solution to users even before they explicitly express their needs. 

The goal here is to anticipate and address user needs in a way that creates a positive user experience and builds a foundation for customer success. This approach is rooted in the idea that a product should be designed to intuitively meet user needs and deliver value from the moment they start using it. This includes intuitive onboarding, default settings and presets, proactive suggestions and recommendations, automated workflows, and contextual help and support. 

The idea behind delivering value before customers seek it is to exceed their expectations, make their experience as frictionless as possible, and demonstrate the product’s value proposition from the start. By providing value upfront, businesses can increase user satisfaction, encourage adoption and engagement, and lay the foundation for long-term customer success.

 

Pillar 3: Investment

Introducing the customer to success before they’re handed off to Sales makes them more inclined to buy. The funnel should lead directly to product usage, not a salesperson, earning the customer’s investment seemingly before they know it. The goal is to provide a self-serve experience that empowers users to achieve their desired outcomes independently. 

Basics of funnel design

Engagement funnel

Sales funnel
  • Drives user engagement, interaction and builds relationships with your target audience. 
  • Creates meaningful interactions, increases brand awareness and nurtures potential customers.
  • Captures leads, encourages users to explore your product or content and foster ongoing engagement. 

The primary objective may not be immediate sales, but a well-designed engagement funnel can eventually lead to conversions by building trust and loyalty with your audience over time.
  • Guides users through the customer journey and optimizes conversions.
  • Moves users from initial awareness to making a purchase or completing a desired action. 
  • Involves lead generation, product education, showcasing value propositions, providing persuasive offers and facilitating the actual sales process. 

The primary objective is maximizing the conversion rate and driving revenue.

 

Getting the user out of the sales funnel and into the product requires an audit of your funnel structure, as well as implementation of in-product features that foster investment. These may include:

  1. Comprehensive onboarding: Design a self-guided onboarding process that helps customers understand and use the product effectively. Provide interactive tutorials, videos, and step-by-step guides that highlight key features and showcase how to achieve specific goals.
  2. In-app education and resources: Offer in-app education materials, knowledge bases and help centers that customers can access at any time. These resources should provide answers to frequently asked questions, troubleshooting guides and best practice tips to empower users to overcome challenges independently.
  3. Automated success milestones: Define success milestones within the product and track customers’ progress toward those milestones. Celebrate achievements and provide guidance or recommendations for next steps when customers reach certain points in their journey. This helps users feel a sense of accomplishment and motivates them to explore further.
  4. Product-embedded analytics: Provide customers with access to product analytics and data that help them understand how they are benefiting from the product. This can include usage statistics, performance metrics and insights into how their actions within the product contribute to their desired outcomes.
  5. Proactive communication: Establish automated, in-app messaging or email campaigns to engage customers at various stages of their journey. Send personalized messages to provide tips, feature updates and success stories that showcase the value of the product. This ongoing communication keeps customers informed and engaged, driving their success.
  6. Customer community/user forums: Foster a customer community or user forums where customers can connect, share insights, and learn from one another. Encourage engagement and provide a platform for users to ask questions, share best practices and support each other.

 

Is PLG right for my company?

Determining whether PLG is the right strategy for your company involves considering various factors. 

You must assess if your product has the potential to be self-serve and deliver value without extensive sales or marketing efforts. PLG works best when the product itself is intuitive, easy to adopt and provides tangible value to users. Similarly, evaluate if your target market is receptive to self-serve experiences and willing to try and adopt new products without significant assistance. PLG relies on users independently discovering, adopting and expanding their usage of the product.

Consider if your business model supports a freemium or trial-based approach, where users can start with a free version of the product and upgrade to paid plans for additional features or functionality. PLG is often effective when revenue growth comes from expansion within the existing user base.

Does your product have the potential for viral growth, where satisfied users naturally share their positive experiences with others? PLG can be particularly successful when word-of-mouth referrals and network effects contribute to organic user acquisition and adoption.

PLG relies on data-driven insights to iterate on the product, enhance the user experience, and drive customer satisfaction and retention. Determine if your company has the capabilities and processes in place to gather and analyze user data effectively.

PLG also requires a cross-functional collaboration between product, engineering, marketing, customer success and data analytics teams to ensure a cohesive strategy. Evaluate if your company culture, structure, and resources are aligned with a product-led approach. 

Finally, analyze the competitive landscape and market dynamics to understand if a product-led approach would differentiate your company and provide a competitive advantage. Consider if other successful companies in your industry have adopted PLG and if it has yielded positive results for them.

It’s important to note that PLG is not a one-size-fits-all strategy. Its suitability varies based on factors specific to your company and product. Consider conducting market research, customer surveys and analyzing your product-market fit to make an informed decision about adopting a PLG strategy. 

 

What does the future of PLG look like?

Initially popular among startups and SMBs, PLG is now gaining traction in the enterprise market. Companies are adopting PLG strategies to cater to the changing preferences of enterprise buyers who expect intuitive and self-serve experiences. What makes this strategy really exciting is that it continues to change. New PLG trends continue to emerge. 

For example, more companies are adopting free or freemium models as a way to attract users and provide them with a low barrier to entry. This approach allows users to experience the value of the product before committing to a paid plan.

There is an increasing emphasis on leveraging product analytics and user data to make data-driven decisions. Companies are leveraging these insights to improve the product experience, identify user behavior patterns, and drive engagement and conversion.

There is a growing ecosystem of tools and platforms specifically designed to support PLG initiatives. These tools assist with onboarding, user analytics, product tours, in-app messaging and other aspects of the PLG journey.

Artificial intelligence (AI) will play a significant role in powering PLG strategies by enhancing user experiences, enabling data-driven decision-making and automating processes. One application will have AI algorithms analyzing customer data to segment your customer base effectively. By identifying groups with similar characteristics, behaviors or needs, AI helps you target specific segments that are more likely to be receptive to upsell offers. This segmentation enables tailoring upselling strategies and messaging to maximize their effectiveness.

AI can also analyze user data, behavior and preferences to deliver personalized experiences, crucial to successful PLG. By leveraging machine learning algorithms, AI can provide tailored product recommendations, content suggestions and targeted offers to individual users, increasing engagement and conversion rates.

AI can be used to detect churn risk. Yes, churn. It gives companies insight to address customer needs and situations. And with that insight, companies are better equipped to proactively build retention programs. Sometimes those insights and signals lead to upsell and cross-sell opportunities.

And, AI algorithms can analyze user behavior and usage data to identify opportunities for upselling and expansion. By understanding user needs and preferences, AI can suggest relevant upgrades, additional features or higher-tier plans, driving revenue growth and customer satisfaction.

Remember: successful implementation of AI in PLG requires robust data infrastructure, ethical data practices, and ongoing monitoring and optimization. Additionally, AI should complement the human touch and be used to augment the user experience rather than replace it entirely.

 

PLG: Long story short

Remember, optimizing PLG is an iterative process that requires continuous monitoring, experimentation and adaptation. Stay customer-focused, leverage data, and be open to learning and refining your strategies to drive sustainable growth through product-led approaches.

Learn more about how you can optimize PLG with Rev’s AI-powered Sales Development Platform. Schedule a demo with us, and we’ll show you how to identify which of your customers are ready for expansion opportunities—and why.