Blog Product Experience

What is Product-Led Growth – A Comprehensive Guide

Mathew Maniyamkott

Mathew Maniyamkott

10 min read

Let’s say you are looking for a productivity tool online. Would you be reading a lengthy whitepaper that talks about the uses of the tool or would you want to check out the tool and see how it works? Of course, you would check the latter. While most users do go through the sales cycle where they consume a lot of supplemental material about the product, they would want to see how the product works in real life.

What is Product-led growth?

It is a go-to-market strategy that uses the product itself to attract, activate, and retain customers. In the years since software was brought to the cloud, everything has changed. Customer behavior and the way businesses sell completely changed. The tech-savvy users are demanding software that is more intuitive, aesthetically pleasing, strong, and affordable than the software that they used earlier.

With personalization playing an important part in the buying process, it is no wonder that customers are looking for instant gratification while using a product. The market is certainly rising to meet customer standards. Providing a superior customer experience is the only way that business can make sense for customers. Why? Because there are a lot of options available for the average customer. They will obviously steer their attention towards businesses that promise to cater to their every need.

Since in product-led growth the main source of growth is the product, it ensures that there is alignment across different departments, right from sales, marketing, product team, design team, engineering team, and so on.

Product-led growth also brings a sort of democracy during the product creation process. It means when the product is being created, it needs inputs from different stakeholders. It will result in products that understand the sensibilities of potential customers and how they are affected by various things.

What does building a product require?

A product-led growth is the same as building a good product from the ground up. Let us what are the considerations that you should keep in mind when building a product.

Make it easy to use:

The easier it is to use your product, the higher is the probability of people using the product again and again. People are busy. They use a lot of apps on their mobile phones. It would be wise on your part if you could reduce the friction as much as possible when a customer uses your product. Friction when someone uses your product doesn’t encourage them to come back to your site and leverage its uses.

Here are some of the examples of friction:

  • Taking them forcibly through videos and instructions. It can be frustrating if they are already familiar with the product. Give them the option to skip instructions
  • Asking for too much information from them
  • Sending a lot of popup messages, it disturbs the experience of the user
  • Features that are not necessary
  • Making it too difficult to reach out to the customer service team
  • Confusing onboarding process
  • A complicated signup process

There are many more actions that can be construed as undesirable for the user. It will reduce the adoption of your product by a huge margin. The customer success team should be able to identify areas of friction based on how customers use the product as well as through their feedback.

Not showing value immediately:

Your customers pay money for your tool or service and are looking for an immediate solution. Here’s what you need to do: Give them a positive experience a few minutes into signing up as a customer. Providing them with a positive experience with your product as soon as they are onboard with you will give them the much needed confidence they need when they are using a new product.

If you can make the product appealing instantly, for example, if yours is an email marketing tool and you could get your customer to set up a campaign, then it is a huge win for you. Now the customer also will be happy because they have completed one of their goals and it is also kind of a validation of their purchase.

Using sales and marketing in the product:

Earlier, during product development, there was no connection with the marketing or sales team. They were considered as an independent team and all the work happened in silos. Thankfully, most businesses understood that silos don’t work anymore and there is a lot of information exchange and brainstorming among all the stakeholders which happen these days.

Let’s say based on the data that is available on the website about the app, it is supposed to offer you a few benefits, but what if in reality, the app is different. That would be devastating for the user as they implicitly trust that whatever is told by the sales team is true or that the marketing copy will make no mistake. Today’s technology allows the sales and marketing team to use the data given by the product to use it in sales conversations or marketing copy.

What are the reasons to choose Product-led growth?

#1 Faster sales cycle:

When users are in a position where they can onboard themselves, it reduces the time taken for a customer to find value in the product and the sales cycle. When customers understand how they can leverage your product for their business benefit, the next thing they want to do is get its full benefits. They are more likely to go through the sales cycle when they are using your product already. It is easy for you to convert your freemium customers into paying customers.

#2 Better user experience:

When your product is built in such a way that the user can do most of the operations available in the free model without the help of a customer success representative, then it is a source of great joy for the customer. The fact that they can onboard themselves means that the product is easy to use for everyone and gives them an enjoyable experience.

#3 Customers prefer it:

Talking to a sales representative or having to go through tonnes of materials that a customer would have to go through to familiarize themselves with the product is not an enjoyable thing to do. They want to use the product first and enlighten themselves about the product by consuming information that they can understand themselves.

Customers don’t want to give their information, talk to a salesperson, then sit in front of a demo for an hour while you can easily tell how you feel about the product by using it directly. Consumer expectations like this is what has made product-led growth a mainstay strategy for businesses.

#4 Increase retention rate:

With the help of product-led growth strategy, the customer success team will be able to understand who is finding value in the product and if there are any features that are being missed out on by the customer. The focus of a product-led growth strategy is to make the customer use the product as much as possible. Based on the user engagement data, they will be able to tell their customer how exactly they can use the product better. This will help in reducing the percentage of customers who are not finding the product useful.

#5 Lower acquisition cost:

Most of the product-led growth companies would have been used by you after someone sent an invite, isn’t it? For example, you might have never heard about an app like Trello unless you were exclusively searching for a productivity app or a to-do app. If your introduction to a particular product was through an invite from your friend, how much do you think they spent on acquiring you? Zero dollars.

When the product has in-built features that will drive customer acquisition, acquiring customers becomes easy and cheap. When customers have started using the trial or free version of your product, they become product qualified leads. These are leads that are familiar with your product, and love it too. They will even give you an idea of how these freemium customers are using the product. It will help the salespeople when they are talking to them because they know where exactly they can help them. That makes the conversation more taut and specific which will lead to conversions.

How to get started with product led growth?

#1 Deliver immediate value:

As a business, your first priority for someone who is becoming a part of your product is to make them complete a goal that they had in mind when paying for your product. For them, using your product might be to send email marketing campaigns to their customer base. As soon as the customer is onboarded, understand that you need to give them their first win. The first win can be setting up an email marketing campaign.

Provide them value in a simple manner without any friction. Do not give them $50 ad credits and say that they can only use it once they upgrade their present plan. An act like this will create unnecessary friction and can even result in them asking for a refund.

#2 Drive engagement:

Ensure that once the customer is onboarded and they get their win, they are still using the product extensively. They should have checked all the different features that are present in the tool. It is the duty of the customer success team to make sure that they are getting full value for their purchase. Study their behavior on the app and use this to make decisions regarding their usage.

Do remember that if the user doesn’t find compelling reasons to come back and use the tool on a regular basis, they will stop using it and it will be difficult to retain them as they are not finding any utility in it anymore.

#3 Empathize with what they need:

Most businesses fail because of one thing- not understanding their customer. You will be able to give your customers what they want only when you know what it is that they want. Based on the insights on the usage of freemium customers, you will be able to understand what they are looking for and analyze the features that are most popular. By knowing what they need, you will be able to offer them specific solutions which will help them get better ROI from your product.

How is Product-led growth different from sales-led growth

#1 Product-led offers a relevant outcome

The first and foremost difference between product-led and sales-led is that it has a meaningful outcome. For example, when you use SurveySparrow, the meaningful outcome is here setting up an online survey within a few minutes without having to write a single line of code.

Sales-led companies can do the same only with the help of the assistance of someone else, usually a salesperson. Users do not want to waste time talking to a salesperson as they want to understand the product by using it themselves.

It is true that not every kind of product can allow for self-onboarding. For example, complex products where the user is not proficient enough to work on it will find it difficult to work on the product by themselves.

#2 Cost-efficient growth

The cost of customer acquisition has only increased over the years, this is where product-led growth reduces the cost by miles. Since the users are onboarding themselves, the time-to-value and the sales cycle is reduced significantly. With little to zero assistance from your side, they will still be able to offer a great customer experience. Most product-led companies these days won’t offer you demos, and even if they do, it is going to be just an explainer video. Demos are dead unless you are selling complex products.

#3 Ideal for smaller businesses

The product-led approach works perfectly well for businesses that have simple products and have self-served products. A fully functional sales team is a must for enterprises where they need to come up with innovative solutions for each customer, go through the proverbial sales cycle slowly, show them a demo, address all their sales objections, and so on. The lifetime value of enterprise customers is high when compared to customers who come through a product-led growth strategy.

How is product-led different than marketing-led?

#1 Product-led companies care more about acquiring, activation, and retaining customers

Most marketing-led companies only focus on acquiring and retaining users but do not spend a lot of resources on activating them. When businesses do not work towards giving the customers their first win, they are more likely to churn. Early-stage companies focus too much on acquisition and retention but forget to take care of the important process that is in between all of this. SaaS companies should also focus on the activation of the users. This can only happen when they have a process in place to achieve them.

#2 Product-led companies depend on user growth

If you want to be a successful SaaS-based business, then you need to ensure that you are providing value to your customers. That is the only way you can retain your customers as well as find new customers. When customers sign up for a free trial of your product, they have a vague idea of the kind of value that you might bring them, but they are not sure. So once they are onboarded, you should show the original value by delighting them, making them engage with your product, and so on. When someone uses your product, they should be able to enjoy the user experience by themselves instead of having to go out of your way to show the value of the product.

#3 Product-led companies are cost-efficient

For getting out of the noise, you need to invest a lot in marketing, and there is no doubt about that. But if you are a SaaS-based business, you cannot keep spending the majority of your revenue in ads. Product-led businesses focus on the end-user and not the buyer, which means that they are able to run a company that will elicit trust and makes it cost-efficient while doing so.

Traits of successful product-led companies:

#1 Easy signup

Having an incredibly easy sign up process will result in a lot more signups than you think. Remember, there are a lot of customers who might not have a credit card. So if you are asking for credit card details for your free trial, then you can imagine leaving a lot of potential customers leaving your sales page. Simple things like not asking for a lot of details when they are registering, finishing the signup in one page or eliminating any kind of friction can be great for the success rate of signups.

#2 Value first

If you are trying to capture credit card information so that you can put them into a pricing tier, you will be losing their goodwill. Instead, make it a point to solely focus on delivering value. Keeping a paywall even before they are ready to be your customers will hinder the experience of the user.

#3 Deliver value asap

As soon as someone signs up, make sure that you deliver some sort of value to them. Get to know from them how they expect to get benefited from the product and use all your resources to make it happen. Time-to-value is one of the most important metrics for SaaS businesses.

#4 Viral factor

Product-led companies ensure that there is no friction at any point for the user during any process. To make sure that the end-user of the product is satisfied to the core, they will have invested heavily in design thinking, product marketing, building essential features, etc. All of this will increase the referral rates as well as the satisfaction of the customers.

Conclusion

Product-led growth is all set to change the way businesses work if it hasn’t already. It is all about total focus on how the end customer can be benefited. In this type of strategy, not only is the customer getting what they want, the companies are also putting themselves in a position where customers will appreciate them. With Product-led growth, you can show immediate value to the customers, which is an easy way to elicit trust in them.

Think of Product-led growth as SaaS 2.0. Only freemium models can engage smoothly in this type of strategy. It changes the way businesses think about their product, users, and all the other stakeholders involved in the development of the product. Customers want to see value as they sign up, even if it is a free product. So if you can show that value as soon as they are onboarded, the chances of them converting into a paid member are going to be easier. Product-led growth strategy will show the customers the value they will be getting. That’s what makes all the difference.

What do you think about product-led growth? Have you ever used this in your SaaS business? Share your thoughts on what you think about it and how it has helped you.

Mathew Maniyamkott
Mathew Maniyamkott

Guest Blogger at SurveySparrow

Regular contributor to various magazines. Passionate about entrepreneurship, startups, marketing, and productivity.

Leave us your email.
We won't spam. Promise!

You Might Also Like: