The Ultimate Guide to Product-Growth Marketing
- Product-led marketing is a marketing strategy that puts your product at the center as the primary marketing tool.
- The model works by making the product easily accessible (via freemium or free trial) and creating a memorable product experience.
- This differs from the sales-led growth model, which depends on a sales and marketing team to drive product growth.
- As a result, product-led companies are leaner, with shorter sales cycles. They also offer better user experiences, thanks to their intuitive products. And they’re optimized for long-term growth.
- The PLG model, thus, reduces acquisition costs, increases retention rates, and creates a frictionless customer experience.
- The freemium or free trial model is a good product-led strategy to start with. Others include simplifying processes, identifying (and eliminating) friction points through surveys and analytics, etc.
- Personalization and targeted onboarding are also good product-led strategies as they make your product easier to use.
- Userpilot is an ideal choice for companies looking to switch to the PLG model. It helps you with everything from segmentation and personalization to survey and analytics. Book a demo today to learn more.
What is product-led growth marketing?
Product-led growth marketing (PLG Marketing) is a go-to-market strategy that focuses on your product as the primary driver of customer acquisition.
Unlike traditional marketing strategies, which focus on creating awareness and generating and closing leads via a sales team, in PLG marketing, the product is the primary tool for attracting, converting, and retaining customers in the PLG model.
How the product-led growth model works
The product-led growth model is a business strategy that leverages the product as its own sales and marketing tool. This is done by creating a valuable and easy-to-use product and offering users a free trial or freemium plan.
By allowing users to experience the product and its value themselves, the product becomes the main driver of acquisition. For a good product, users who experience it are more likely to convert to paying customers and become brand advocates.
To understand how this works, consider that a traditional marketing (sales-led growth) model works because the sales team does whatever is necessary to convince the customer to buy.
The customer, therefore, doesn’t engage with the product until they’ve decided to purchase it. This is not the case for the product-led model, where the customer’s engagement with the product drives purchases.
Thanks to the freemium or free trial system, marketing qualified leads (MQLs) in the product model engage with the product before monetization. In the product-led business, monetization comes naturally as the customer solves a pain point with your product.
Product-led growth (PLG) marketing vs sales-led growth
By now, you’ve probably already noted some differences between product-led growth marketing and sales-led growth.
Let’s now itemize them for easier comparison:
- Product-led growth (PLG) relies on self-serve channels like free trials and freemium pricing models to generate demand and drive sales.
- Sales-led growth (SLG), on the other hand, depends on the expertise of sales and marketing teams to nurture customer relationships and close deals.
- Monetization in PLG is often a combination of an initial purchase and subsequent upselling and cross-selling.
- For SLG, monetization focuses on getting the most revenue from the initial sale.
- PLG relies on the product to deliver an impeccable user experience and drive retention.
- SLG, however, relies more on the customer success team or support agents to drive customer retention.
- Following the above, product-led companies often need smaller sales and marketing teams, with the product doing the heavy lifting.
- The opposite is true for sales-led companies, which require larger marketing and sales teams to build relationships, close deals, and drive product adoption.
- With subscription pricing models common amongst PLG businesses, growth is usually slower but steady.
- SLGs, though, may have more rapid growth thanks to high initial sale prices. However, this growth pattern is much less sustainable.
- Based on the last points, PLGs may take longer to reach profitability. Thanks to its low initial sale price, it relies on upsells and cross-sells to drive revenue growth.
- SLG, meanwhile, enjoys high ticket initial sales, providing a quicker path to profitability.
Benefits of a product-led growth marketing strategy
You may have already noted that a product-led growth strategy is more sustainable than its sales-led counterpart. However, there are many more benefits of product-led growth. Here are the top three:
- Shorter sales cycles: Product-led growth helps businesses reduce their sales cycles by allowing users to experience the value of the product before they commit to it. Users who experience this value are more likely to convert to paying customers.
- Better user experience: Product-led businesses focus on creating valuable, easy-to-use products that users love. This means creating intuitive products, providing customer education and support, and providing a much better user experience.
- Optimized customer lifetime value: The PLG model provides you with a dominant growth engine. It optimizes the customer lifetime value through its lower customer acquisition cost (CAC), higher retention rates, and better expansion opportunities.
Thanks to a combination of all three benefits, product-led SaaS companies are generally more profitable than their traditional counterparts. What if you’re already using the traditional marketing approach?
3 Reasons why you should shift to a product-led growth strategy
Shifting to a product-led growth strategy may require that you change your entire organizational approach.
While that may be time-consuming and expensive, it’s going to be worth it. Let’s see why.
Reduce customer acquisition costs (CAC) while standing out in the competition
In a world where no-code tools and easily accessible APIs have lowered the cost of building your own SaaS product, customer acquisition costs have risen massively. One way to lower these costs is to switch to a PLG strategy.
For starters, its self-service nature enables you to work with a lean sales team. Your small sales team can then focus on high-value prospects, while the product handles SMB by itself.
Your sales team can also focus exclusively on product-qualified leads (PQLs). Because your PQLs have already experienced the value of the product, your sales team will enjoy a higher close rate for sales-led deals.
Finally, a freemium or free trial product acts as an organic customer acquisition tool. Instead of buying social media or search engine ads, you can focus on virality and word-of-mouth marketing to drive sales.
Users are keen on trying out the product on their own rather than listening to a salesperson
The modern customer is spoilt for choice when searching for product solutions. The internet has also made it incredibly easy to locate solutions, compare them, and test them out.
The result is that the salesperson is now more unnecessary than ever. Rather than convince buyers to take the plunge, adding a salesperson just adds unnecessary friction to the user’s journey.
The PLG model succeeds in this regard as it adopts the “Show, don’t tell” marketing approach. Rather than depend on sales teams, the PLG model optimizes the product to do the heavy lifting of qualifying leads.
Create a frictionless customer experience from free trial user to paying customer
Product-led companies create a frictionless customer experience by ensuring a smooth transition from inquiry to free trial to account upgrades.
With the product as the key driver of growth, optimizing the product experience is a necessity. The customer’s experience with the product from the moment they sign up is, thus, designed to be smooth and painless.
This is achieved by creating a personalized experience from start to finish, from onboarding to in-app messaging and upgrading notifications.
By eliminating any friction points, simplifying processes, and making the product intuitive, the PLG model turns the product into a high-converting sales agent.
Key product-led growth metrics to understand
Before we consider how you can create a product-led growth strategy, let’s first get you acquainted with some important product growth metrics and terms.
- Customer acquisition cost (CAC): The average amount of money your business spends to acquire a new customer.
- Customer activation rate: The percentage of customers who take a desired action(s) within a specific period of time after signing up for your product or service.
- Time to value (TTV): The time users take to realize the expected product value and reach their AHA! moment.
- Customer lifetime value: The total expected earnings per paying customer over the length of their relationship with your business.
- Free-to-paid conversion rate: The percentage of customers who upgrade from a free trial or freemium account to a premium account.
- Expansion revenue: The portion of your revenue that’s generated from already existing customers.
- Average revenue per user (ARPU): The average amount a company generates from each user.
16 Product-led growth strategies to adopt to become a product-led company
Ready to become a product-led company? Let us now consider 16 different product-led growth strategies and how to apply them in your business.
Product-led businesses offer a free trial or freemium model to let users experience the product
So far, you may have noted that the free trial or freemium model is key to the product-led growth strategy. This is because it allows users to experience the product’s value before they commit to paying for it.
Users simply don’t want to pay for something without knowing how it works. This model, thus, de-risks the product for the user while also increasing their likelihood of converting to paying users.
To implement the freemium or free trial model, you must consider the length of the trial period, the features to include to deliver value without giving too much away, and competitive pricing for your paid plans.
Simplify the sign-up process to remove friction
To enjoy product-led growth, you must ensure the user experience is as seamless as possible. One way you can do that is by making it as easy as possible for users to sign up and start using the product.
First, you’ll need to reduce the number of steps in the sign-up process and keep the sign-up process intuitive. Ask only necessary questions and eliminate unnecessary fields from your flow.
You can further simplify the process by offering single-sign-on (SSO) and social login options. These will give users more flexibility, making your product more easily accessible for them.
Showcase social proof to gain user trust
Displaying social proof on your sign-up page is yet another way to compel users to sign up and try out your product. Used correctly, social proof helps you gain the user’s trust by showcasing others who have trusted you.
You can do this by displaying customer testimonials on the sign-up form or displaying the number of users or customers you have.
Break the email verification wall
A common obstacle product-led companies miss when trying to simplify the sign-up process is the email verification wall. This is when users are expected to verify their email before accessing the product.
Although this is a necessary step for confirming the information you’ve received is correct, it adds an extra layer of friction to the user experience and can discourage users from continuing.
One way you can combat this is by allowing social logins or adding “magic links” to the sign-up process. You can also delay the verification until later and remind them in-app with a small banner.
Personalize the customer journey to drive customer success
Personalization is key to ensuring every user enjoys a unique and relevant experience that helps them achieve their desired outcome. Think of it as a way to customize each user’s experience to match their needs.
To do this, you’ll need data – as much as you can get. The data you collect should help you understand your customer’s needs and goals. You can get this data from surveys, customer support tickets, product usage data, etc.
Once you’ve gotten your data, segment users according to their goals and customize the customer journey for each user group.
This is exactly what Notion does! When users first sign up, they are asked a series of questions to help Notion understand their goals and preferences.
Then, Notion uses this information to personalize the onboarding experience and provide relevant tips, templates, and tutorials.
Remove empty states for a shorter time to value (TTV)
Empty states are screens that users see when they first interact with your product. Because they have no data or content, these screens contain many empty fields, which can be very frustrating for users.
Instead of having your users feel like they have a mountain to climb with those empty fields, use empty states to provide actionable advice and nudge users to explore the product.
You can do this by pre-populating the product with sample data and content that demonstrates how it works. Or, you can use tooltips and modals to explain how a feature/function works when a user first interacts with it.
Implement onboarding checklists to enable new customers to use the product and activate
Another way to shorten the time to value (TTV) is to give users clear direction that will lead them to activation in a short time.
You can do this by implementing personalized onboarding checklists. The checklist should break down the series of actions required for activation into a list of simple, easily achievable tasks.
A good checklist is simple, gives users a psychological edge, and is designed to help users quickly derive value from the product.
Couple your checklists with action-focused walkthroughs
Help users achieve product activation even quicker by adding action-focused walkthroughs to the onboarding experience. These walkthroughs provide users with step-by-step instructions to complete a task or achieve a goal.
Note that interactive walkthroughs aren’t mere tutorial videos or passive text instructions. Instead, they require users to take specific actions as they progress through the tutorial.
You can trigger these walkthroughs from your checklist or at a user’s first interaction with a feature. When used correctly, they improve feature discovery and adoption and reduce onboarding time.
Identify and prioritize product-qualified leads (PQLs)
Product-qualified leads (PQLs) are existing customers of your product’s freemium or free trial version who have experienced its value and are likely to become paying customers.
Unlike marketing-qualified leads (MQLs), PQLs focus on customers with real buying intent. To enjoy product-led growth, segment these customers and reach out to them with upselling prompts.
You can also automate your prompts to match the customer’s needs. For example, Loom limits its free trial users to a 5-minute recording limit. Once that limit is reached, they send out a contextual prompt to upgrade your account.
Create an extensive resource center to prevent users from dropping off out of frustration
One way to preserve the self-service nature of the product-led growth model is by creating a knowledge base with necessary documents, videos, tutorials, and FAQs to assist your users at any time in their customer journey.
You can personalize the resource center using the collected customer data and according to their user journey stage.
Make the resource center easily accessible so that customers can solve their problems without leaving the app.
A/B test different in-app messages to improve new feature adoption
Helping users to quickly adopt new features is a key product-led growth strategy. One way to achieve this goal is by using in-app messaging to help users discover and adopt new features.
To increase your chances of success, conduct A/B tests on different in-app messages to see what works best for your user base. Test different message contents, timing, positioning, format, etc., to learn which one works best.
Show transparent pricing
For every user that contacts you to determine your prices, many others simply walk away. Hidden or unclear pricing information adds an extra touchpoint, thus disrupting the self-serve nature of product-led growth.
As part of your shift to the product-led growth model, you need to make it easy for potential customers to learn of your prices. Create a dedicated pricing page without any hidden fees and make it easy to locate.
Get actionable feedback from different customer segments to improve your product
The easiest way to know whether your product satisfies your customers’ needs is to ask them. What do they think about the product? Are there new features they’d love to see? What challenges do they experience?
Conduct in-app surveys to get feedback from your customers. Design personalized surveys for different customer segments. And, act on their responses to improve your product.
Identify and eliminate friction in the customer journey
Friction points are obstacles that prevent users from completing a desired task or achieving a desired outcome. In addition to conducting surveys, you can identify these areas through intensive funnel analytics.
Use analytics to track user behavior and identify areas in the user journey where they’re struggling or dropping off.
Look closely to determine why that happens. Then, take steps to correct the situation.
Use the product to turn free trial users into paying customers
Your product is your biggest marketer in product-led growth marketing. Treat it as such. Employ contextual upselling and cross-selling techniques to drive account upgrades.
Set triggers across your product to help you identify upsell opportunities. Then, promptly launch upselling messages at the right time for the right users.
Boost advocacy through WoM marketing
Customer advocacy is a key ingredient in product-led growth marketing. Word-of-mouth (WoM) marketing is the process of encouraging customers to talk about your product to others (friends, colleagues, etc.).
This form of marketing is especially effective as it provides trustworthy social proof to all its recipients. Creating a product people love is the first step to boosting advocacy.
Another way to do this is by launching an NPS survey, segmenting users with high NPS scores, and asking them for a review. You can also reward your advocates through discounts and other benefits.
Examples of product-led companies
Now that you know what product-led growth strategies to implement, let’s consider some examples of product-led companies and how they’ve implemented these strategies.
Userpilot is a product-led company that helps other SaaS businesses become product-led companies. We provide a platform that helps other companies improve their onboarding, understand user behavior, and drive adoption.
Userpilot combines a free trial offer with extensive product growth content to help users unlock the product’s value. We also offer contextual experiences that drive user engagement and conversions.
One of the more popular product-led companies out there, Slack offers team collaboration and communication software. They use a combination of product-led strategies to drive growth.
First, users can easily sign up for a free account and begin enjoying the product’s value on a limited scale. In addition to its intuitive interface, Slack also provides targeted messaging to drive adoption and upsell its users.
Notion’s approach to product-led growth marketing has fueled its rapid adoption since it first launched. The note-taking and collaboration platform offers a free version with many of its core features.
Notion’s user-friendly design and flexibility make it a useful tool for individuals and teams alike. They also do a good job of showcasing social proof on their website to encourage others to take a plunge.
Airtable is like an Excel spreadsheet and a relational database rolled into one. As a product-led company, they understand that if they can get more than one user from a company, the company is more likely to stick with them.
So, immediately after a company member signs up, they’re directed to a screen where they can add other team members.
Airtable also incentivizes WoM marketing, offering a $10 credit for every new user successfully invited to the platform.
Miro is a whiteboard cross-platform collaboration software. A part of their product-led strategy involves targeting a specific audience rather than trying to please everyone.
Miro has also created a product that’s highly valuable and ingrained in the work process. Whether you’re presenting to team members or clients, the Miro board helps you “get work done.”
Zapier is a workflow automation tool that supports over 4,000 app integrations. As part of their product-led approach, Zapier works with a tight feedback loop.
They do this by conducting surveys on new features they’re releasing and zapping that data into Airtable spreadsheets. This allows Zapier to receive user feedback promptly while carrying users along.
There are clearly several benefits to adopting the product-led growth model. If you already follow a traditional sales system, you can start by making your product more customer-centric.
Userpilot helps you do just that! It arms you with in-depth product usage and customer analytics data to help you make data-driven business decisions. Book a demo today to learn more!