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Tips & Guides — 13 Jul 2022

What is Product Led Marketing Growth?

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  • What is Product Led Marketing Growth? Here’s 3 Steps to Achieve it

What is Product Led Marketing Growth? Here’s 3 Steps to Achieve it

Every now and then, new marketing concepts grow from word-of-mouth ideas to becoming part of the business lexicon. Companies claim to be “customer-centric” and startups base success on terms like “growth hacking.”

If you’ve been living under a rock for the past decade, you may have missed out on the modern evolution in how companies build and market products to their customers. It’s what companies like Slack, Dropbox, Hubspot, and more champion. What we’re talking about is product led marketing, also known as product led growth (PLG).

What is Product Led Marketing?

Product led marketing is where a business depends on its product to facilitate the customer journey from lead generation, to customer success, to conversion. The product is the primary driver of customer acquisition. Companies typically accomplish this by offering a free trial or freemium version of their product.

What is a Product Led Growth Strategy?

Product led marketing is a business strategy that aligns the entire efforts of an organization from product development, to sales and marketing. Every department approaches the same goal from a different angle. Working together, a product led growth strategy focuses on solving problems for the end-user.

Product Led Growth Strategy

Image source: Productled

Sales

The products and services on offer cannot have a paywall that eliminates their usefulness to the end-user. Unlike other growth strategies, there’s no need for performance-boosting sales AI. You boost transaction conversion by boosting the product experience for the user.

Customer success should be achieved before any transactional call to action. The sales team will need to be available to help meet the use-case needs of customers when the decision-makers are ready to buy. 

Marketing

There will be less ad and marketing spend with a product led growth strategy. Instead, the focus should be on reducing friction for customers to become users of the product. Word-of-mouth marketing will be a key component. Think of the end-user as your marketing partner. But the product itself should be taking the time to sell its benefits to the customer and their colleagues.

Success

Product led growth is all about customer success. If the users cannot quickly and easily have that “aha” moment with your free product, they will likely stop using it. And you can’t even dream of getting paying customers at that point. 

Engineering

The heart and soul of your product is what it can do for the end-user. What pain or frustration can it solve for your customer? Product led growth only works if your product is engineered to work for them. This requires research into and empathy with the regular users of your product.

Design

Today, design appears to be the king when it comes to product appeal. A well-designed product will reduce the friction between your user and their success. But with product led growth, intuitive product design is also part of your marketing strategy. The more user-friendly your product, the more easily other users will be able to adopt it. 

3 Pillars of Product Led Growth

Product led growth helps to align all aspects of the business. The goal is always the same, to drive acquisition and increase recurring revenue while scaling a business. But to reach those goals, any business needs to base its strategy on the three pillars of product led growth.

1. Design for the End-User

With PLG, it’s not all about the numbers, it’s about people. Before you can properly design the product, you need to have a deep understanding of who your users are and how you can help them. Your product team needs to listen to the feedback of its users and make meaningful improvements. 

Even when a product launches, your team should monitor the needs of your user base. As issues and suggestions come back, they will only help you further enhance your product. The better your product gets, the easier it will be for customer success and user adoption.

End-User

For example, when it comes to partner marketing, the Affise platform can be tailored to suit a variety of use cases. It has unique software suites suited to different business types and the needs of any user. The service also gives users fully customizable dashboards and reporting in any way they see fit. 

2. Capturing Value

The last time we checked, the goal of businesses hasn’t changed much in several millennia. We all are working together to nudge the customer towards that lovely precipice where they hand us their cash (or credit card) and parachute off with recurring payments!

But to have successful product-led growth, we need to reprogram how we think. PLG is a bottom-up form of marketing. We hand the product to the users as their entry point to the sales funnel, but they haven’t given us any money yet. And if we don’t give them any reason to, then they never will.

When you’re letting your products lead the way, you need users to observe their usefulness during their self-serve free trial or freemium use. They need to experience the joy of eliminating pain points or resolving an ongoing problem in their daily work. 

This can only happen if your products have useful features and are highly functional. But you also need a streamlined onboarding process whereby customers can quickly achieve a meaningful action where success occurs. 

Just how involved the onboarding process is depends on several factors. If your product is straightforward, then the design and engineering should make that self-evident. 

If your free product has layers of complexity, then channels for support and human touchpoints should be readily available. New users should be directed to the right resources to match their specific use cases. This could range from fraud prevention functionality to app documentation and integrations. 

3. Invest in the Product With Go-To-Market Intent

The early stages of product development are all about hypothesis and experimentation. When you’re forming a product led growth strategy, you have to consider all aspects of the campaign during development. Each component of PLG must be built into the product. 

Otherwise, you will have a nice product on your hands, but it won’t be ready for a go-to-market strategy. This is because the product won’t be able to drive acquisition, conversion, and market expansion without the proper internals. Any app or service will only be a go-to-market product if it has:

  • The ability to measure data, compile metrics, and track user behavior.
  • Functionality for growth and improvement with time as your user base increases.
  • Built-in readiness for testing of feedback-based improvements for the end-user.

Major Components of a Product Led Growth Strategy

Product is the Key Channel

Your product is the main vehicle for all of your marketing efforts. Keep the interface clean but make sure users can see useful features gained when upgrading to a paying subscription. Use the product to effectively communicate onboarding and upsell opportunities.

Viral Effect

Viral Effect

Image source: viral-loops

Your product needs to have a built-in virality. This means it should be designed with shareability in mind. A great example of this is the success of Dropbox and its product led approach. In their freemium model, users could gain permanent storage upgrades by successfully referring other users.

Collaborate 

Product led marketing is a company-wide effort. Every member of the team should be aligned with the goals of a product led strategy. There are no silos here. Open communication between departments is a must. And each touchpoint should be tailored to driving acquisition and conversions through customer success. This includes user onboarding, the eventual sales process, and retention.

Pay Attention to User Experience

First things first, it’s all about the user experience. You and your team can improve this by minimizing friction at every step of the process. Make it easy for users to understand the main benefits of your product and gain access to the free trial or freemium version. 

From there, you need to have an intuitive design and streamlined onboarding process to ensure rapid time to value (TTV). Any difficulties or delays in user success means they will likely move on to another freemium product. But if you give them that lightbulb moment painlessly, they will gladly help you acquire more new users

User Experience

Affise reduces friction by having a user-friendly interface, detailed analytics, and automation tools. But it goes a step further making it easy for businesses to migrate affiliate programs to the platform. This is accomplished painlessly with the migration tool CPAPI which seamlessly connects offer sources to Affise.

Build on Self-Service Funnels

With the product-led growth model, your acquisition and conversion will be solely driven by self-service funnels. This saves on ad spend and marketing team resources. But it also prevents you from bloating the business with too many customer-facing roles.

Have faith in your product to lead the way. If your product isn’t as simple as, say Clicking a button to zoom into a video conference, then direct the user to educational resources. These can be placed in the app or sent in a welcome email. 

Use clear copy to guide users to the right place so they can learn how to use your product. You can use questionnaires and surveys the first time users load up your platform. Just a few simple questions can help you guide the user to the success they desire.

At some point, with enough expansion, you will need more knowledgeable salespeople and customer service personnel. These teams will help be there to meet the niche needs of enterprise customers and large businesses.

Run Growth-Related Experiments

At every step of your PLG strategy, your business should be looking to improve growth. This means experimenting with things like the signup process, product features, onboarding experience, and pricing. These are all part of the customer journey. Don’t just mess around with your user roadmap on a whim. Base experiments on data like conversion rates and app usage. 

Personalize the Onboarding Process

We’ve mentioned it before, but the best way to improve the product experience is to track app usage and user behavior. This will let you make sure you can help the user get where they want to go. By tailoring the onboarding process for a reduced TTV, you will help the user realize you have a great product

Tracking user activity can help with more than just onboarding. It can also help with things like email retargeting and upsell opportunities. Use in-app functions or product marketing emails to recommend paid features that will be most beneficial based on each user’s platform usage. 

Personalize Onboarding Process

Image source: Slack.com

A great example of PLG onboarding comes from work communications platform Slack. The product is advertised as a way for businesses to organize how they work. But the app has been painstakingly designed with the end-user in mind. Everything about the user interface aims to please.

Segment Users

User feedback and app activity tracking data allow you to segment your users with as much granularity as needed. For PLG companies, everything depends on the entire buyer’s journey as a whole. The product’s value helps to qualify leads. 

The journey might look different than more traditional business models. But it’s the customer experience that moves everything forward. Use segmentation to tailor every step of the customer journey.

How Do You Achieve Product Growth?

There are several ways in which you can boost product led growth. Here are a few of the best practices to drive a product led approach.

Start With Stuff Under the Hood

Start With Stuff Under the Hood

Everything in PLG starts with a check of the engine; that is, the product itself. If you don’t have a great product that meets the needs of your target market, then what’s the point? This is true for SaaS companies, ecommerce, or any industry. 

The difference is that with product led marketing, you need to think not just about your target market but your end-user. Those are the real people that will help drive customer acquisition. When building and developing your product, you will need to answer several questions:

  • Who are your end-users?
  • What are their pain points?
  • How can your product solve a problem for them?

Having validated use cases is only one side of the coin. Your product managers need to ensure your platform is light and easy to use. The product needs to be designed for frictionless success. The marketing and CS teams can collaborate to ensure in-app promptings and onboarding features make this happen.

Build Viral Elements Into Your Product

We already mentioned the massive success of Dropbox. The cloud storage provider was able to maximize product qualified leads via their mega-successful referral program. This helped the company vault to one billion in sales before making its IPO. 

You may not be able to capture lightning in a bottle like Dropbox. But you can take inspiration from their story. Adding incentivized freemium upgrades is only one way to craft virality into your product. For many businesses, permanent user upgrades could prove costly in several ways. 

You Don’t Need Referral Incentives

For another example of virality, let’s take a look at the Calendly platform. To start, they check the first box off. They’ve solved a common pain point for their end-users when it comes to business meetings. Most everyone knows how annoying and frustrating it can be to schedule a meeting. 

Referral Incentives

Image source: Calendly

But there is a subtle stroke of brilliance with how Calendly functions. Users schedule meetings in the app and send a link. When the recipient views the meeting invite, they are already being marketed to by “powered by Calendly” in the top corner.

The attendee is likely thinking, “you know what, scheduling meetings IS a pain”. Impressed with the usefulness of the product, they can click a link to sign up for the service themselves. This is the beginning of a viral loop that grows exponentially with more use. 

Your product will be different. It might be for messaging, managing workflows, or something else. But use the product itself to create shareability. This can be with built-in features or the general use case (like Calendly). 

Or you can get more creative with referral incentives. Maybe discount or credit referrers 10$ or 20$ towards their subscriptions. You can also offer percentage discounts (10-20 percent) that might be more appealing for B2B customers.

Identify a Few Key Users Who are Influencers 

Product led marketing isn’t really about ad spend and active promotion. However, it can always pay dividends to partner up with the right influencers on social media. This can work wonders if you manage to impress a few key influencers with large networks and followings on platforms like LinkedIn or Facebook. 

Few Key Users Who are Influencers

Finding the right influencers may be time-consuming and distracting. You should look to a solution like Affise that can help connect partners to reach your target audience. With the right network built, you should be able to build a strong user base to take the reins of marketing your product. 

Importance of Product Led Growth Today

It seems that many in the marketing world spent several of the past years hailing product-led growth as the future. Well, we have news for you. The future is already here. Consumers shop differently than before. 

It’s a Brave New World

Advertisements and sales reps are no longer the standard tactic of acquisition. In fact, research from Gartner shows that more than 60% of buyers make a purchase before engaging with a vendor. They want self-service to help guide their buying decisions.

And with SaaS products, it’s all about the end-user experience. In The Salesforce 2021 State of Marketing Report, it was found that 80% prioritize experience just as heavily as the product or service.

Unlike the good old days of CIOs and other executives making all the buying decisions, it’s the people using the software that decide what to use. Today, more than ever, companies’ tech stacks are based on what the employees started using on their own. This leads to the company-wide adoption of services that prove most useful. 

Gain User Attention

Today’s companies have short attention spans. Following the lead of their end-users, organizations are happy to switch things up and use the best products available. In the 2019 Annual Saas Trends Report, it was found that the average mid-sized company saw a 39% turnover in their SaaS stack from the previous year.

Today, just as B2B customers are more likely to alter their tech stack, end users are always looking for the next big thing. When it comes to software services, churn is on the rise, more than doubling in just one year.  

A 2019 report found that the average employee uses over eight apps at work. But a similar report found that employees only use about 55% of an app’s features. This means that although users are installing more apps, you only need to get the most useful features upfront with your product marketing.

Increasing Revenue, Cutting Costs

Besides giving your audience what they want, product led growth is also important to your bottom line. With more competition than ever, customer acquisition costs (CAC) are going up every year. With a PLG strategy, you will spend less on marketing but more on product development.

Increasing Revenue, Cutting Costs

Image source: PLG collective 

However, with product development’s bottom-up funnel, you can increase CAC payback. A recent study has shown that it’s two times cheaper to upsell an existing customer. And three times more profitable to generate revenue via customer expansion. And a 2018 OpenView study found that PLG companies had a median revenue 29% higher than non-PLG companies.

Conclusion

In some ways, not much has changed. Any company wanting long-term growth and success will need to put out a great and useful product. However, product led marketing growth helps companies connect their products with the users of today. 

A PLG strategy helps the entire team to drive the all-important metrics of acquisition, lead generation, and conversions. With a product-centered approach, your users benefit from a continually improving service. And you will be rewarded with more users and an expansion of revenue. 

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Jenna Bunnell

Written by

Jenna Bunnell is the Senior Manager for Content Marketing at Dialpad, an AI-incorporated cloud-hosted unified communications system that provides valuable call details for business owners and sales representatives. She is driven and passionate about communicating a brand’s design sensibility and visualizing how content can be presented in creative and comprehensive ways.