Product-Led Growth – Pioneering the Future of Business Growth and Success

Companies that focus on product-led growth build their go-to-market strategy around the product itself. This often involves offering a free trial, which may be limited in time or functionality, and is often followed by an upsell to a paid version of the product.

This approach allows the product to become a revenue and retention driver without relying on marketing or sales. Atlassian, for example, uses PLG tactics to help users adopt their software.

1. Focus on User Experience

A company that focuses on Product-Led Growth prioritizes the user experience and focuses on making the product itself its primary growth channel. This reduces customer acquisition costs (CAC) by eliminating the need for a large marketing team to purchase ad space and spend time on lead qualification.

Instead, a business encourages users to try out the software for free through free trials or freemium models and converts them into paying customers with the power of their own product’s functionality. This approach has been used by companies like Airtable, Slack, Dropbox, and Zoom to great success.

To succeed with this strategy, a company must monitor user experience metrics such as net churn, customer lifetime value, virality, and average revenue per user. Having a strong analytics platform that enables easy reporting and data visualization is crucial to the process of creating exceptional product experiences and measuring them. For example, using a tool like Heap’s Effort Analysis allows teams to quantify how difficult it is for users to move through the steps of a given flow and make improvements accordingly.

2. Build a Strong Product

A key element of Product-Led Growth is ensuring the product itself is a primary source of revenue and retention. This often means reducing customer acquisition costs with free trials or freemium experiences, while driving users deeper into the product over time until they are ready to upgrade.

Examples of successful product-led companies include Slack, Zoom, Airtable, GitHub, and Atlassian. These brands have embraced the self-serve model, built strong user experience, and are now earning impressive valuations from investors.

This requires cross-functional teams who can work together to select the right metrics and enact coordinated changes across the company. This is the opposite of the traditional marketing-led strategy, which still relies heavily on a sales team. The product itself is a primary source of revenue, and the marketing, customer success, engineering, and sales teams are focused on helping users succeed with it. This helps ensure users find value, stick around longer, and promote the product to their networks.

3. Build a Strong Team

Product-Led Growth puts the product front and center in go-to-market efforts. Sales and marketing teams reorient their strategies to let the product do the heavy lifting for acquisition, engagement, conversion, and retention.

For example, Slack allows users to try their freemium product for a while before nudging them to upgrade to the paid plan. This way, the product does the selling for the company by proving value and attracting new customers through positive social proof.

Personalized onboarding messaging and in-product guidance are also examples of the type of product experiences that can help drive user retention and expansion. Companies that prioritize Product-Led Growth can reallocate or save resources that would be otherwise spent on scaling sales and marketing efforts. This can lead to higher financial productivity. In order to achieve this, it’s crucial for engineering and customer-facing teams (like marketing, sales, CS, and analysts) to be aligned with the goals of Product Management. They need to be working together to build world-class products and seamless customer experiences.

4. Measure Success

Unlike traditional sales and marketing strategies, Product-Led Growth doesn’t require sizable upfront investments. But it still requires a commitment to understanding what keeps users engaged with your product. The best way to measure that is with a robust user journey monitoring system that tracks key metrics like product qualified leads, time to value, revenue per active user, feature adoption rates and NPS.

Using this framework will allow you to align cross-functional teams around common goals, providing a north star that they can rally around. This will help your company focus on optimizing the user experience while delivering a highly effective product, resulting in better customer acquisition, retention and expansion.

Zoom is a great example of this model in action. They entered the video conference space in a crowded, well-established market and grew to become the largest player by focusing on product and user experience, while nudging customers towards paid plans that unlock new features and increase capacity.