What product-led growth is and how to apply it for your SaaS

PLG (product-led growth) is gaining popularity as the go-to-market (GTM) strategy for companies that want to use their product as a primary growth engine.

By putting the product and customer first, SaaS (software-as-a-service) companies can build a sustainable growth mechanism, therefore quickly increasing their ARR.

In this article, we’ll look at PLG, how it works, and then how to apply it to your SaaS business. We’ll also explore the benefits of this approach and provide actionable steps you can take to start implementing PLG today.

We propose every strategy based on our experience with TextMagic and Touchpoint, for which we have applied PLG principles.  

What is product-led growth (PLG)? 

PLG is a GTM strategy that prioritizes the product experience as the primary driver of business growth. In other words, in a PLG model, the product becomes the primary sales and marketing tool, driving user adoption, engagement, and expansion. 

According to a report by OpenView Partners, PLG has become a dominant GTM strategy, with 74% of software companies adopting it, up from 40% in 2016.

Product-led companies experience higher revenue growth rates, lower customer acquisition costs, and therefore better CAC payback than sales-led or marketing-led ones.

Why should you consider product-led growth?

A product-led growth strategy allows users to experience and learn the product at their own pace and is generally suited to simple, inexpensive solutions that are easy to adopt.

The impact of a strong product experience is crucial in the B2B customer journey because it shortens sales cycles and increases customer retention. When companies think about becoming product-led, they typically think offering a free trial or a freemium version of their tool is enough. But PLG is about so much more.

In a PLG model, the product is designed to provide a seamless experience for users, basically making it easier for them to discover, adopt, and expand its usage.

This positive experience can lead to faster decision-making and higher conversion rates, as users are more likely to become paying customers when they have a positive experience with the product.

A seamless user experience and a personalized onboarding process that accurately presents all of the product’s capabilities truly draws users in and keeps them loyal to the brand later on.  

Here are the main benefits and risks of product-led growth companies: 

Examples of successful product-led companies include Slack, Dropbox, and Zoom:

• Slack grew from 15,000 daily active users to more than 12 million by focusing on a freemium model that allowed users to adopt and share the platform easily. 
• Dropbox grew its user base to more than 500 million by offering a free trial and making it easy for users to invite others to join. 
• Finally, Zoom’s intuitive and user-friendly interface has helped it become the go-to video conferencing tool for many businesses and individuals, with its user base growing from 10 million to more than 200 million daily meeting participants in just a few months during the COVID-19 pandemic.

The three pillars of product-led growth

PLG relies on three key principles to satisfy user needs and deliver consistent value. We will discuss each principle, then provide a checklist you should follow to ensure you meet these principles. But, first, here’s a quick overview:

Design for the end-user	Deliver value before capturing it	Invest in the product with go-to-market intent
Create a seamless sign-up and onboarding experience.	Put the user and the product first.	Build a growth engine for your product.
Listen to the user and add features based on user needs.	Deliver value to users quickly.	Track, measure, and analyze user behavior.
Build a culture of continuous improvement.	Make customers aware of the potential success before selling.	Run quick experiments all the time.
Personalize every significant user interaction.

Pillar #1: Design for the end-user

When designing for the end user, it’s essential to consider usability, accessibility, and design. Here are some examples of this principle applied to Touchpoint and TextMagic:

Seamless sign-up process

Users are more likely to abandon the sign-up process if it’s too complicated or requires too much information. 

We made it easy for users to sign up and get started quickly by only collecting essential information during the sign-up process and providing a clear value proposition to incentivize users to complete the process.

Personalized onboarding experiences

Personalizing the onboarding experience is crucial to user retention. SaaS companies should use data to personalize the onboarding experience to meet the unique needs of each user. 

Personalization can include recommending features or content based on the user’s preferences or using their data to customize the interface for their use case. It can help users feel more connected to the product, increasing engagement and retention.

Stellar mobile experience

Optimizing for mobile use and responsive SaaS design is paramount in a mobile-first world. There are several aspects to consider here that would take a whole different article to cover: 

• Responsive design for all elements of your site
• Speed and excellent usability for the service/product
• Availability of mobile apps for the service/product.  

Adding new features based on user needs

We strive to understand our users’ pain points, goals, and priorities by gathering feedback through surveys, user interviews, and support interactions. While redesigning the TextMagic web app, we created an interactive demo for users to leave their thoughts on each screen. 

The trick is to look for common themes and patterns in the feedback you receive and prioritize features that will impact most users.

Once you’ve identified the features you want to add, test them with a small group before rolling them out to your entire user base. 

Pillar #2: Deliver value before capturing value

Strong product-led growth companies convey their value proposition instantly. Here is how you can constantly deliver value to your users: 

• Offer a free trial. The simplest way to provide value is by providing full access to your tool. At TextMagic, users can sign up and test all our features at their own pace before committing to the paid version. Other similar examples include freemium models and open-source tools.
• Place customer success before sales success. If a product is easy to use, provides value to the user, and fosters a positive experience, it will lead to increased adoption.
• Address pain points and jobs to be done. There are two ways to approach solving a customer problem: by industry vertical or by job to be done. Most problems people need to resolve are industry-agnostic. Our marketing strategy is based on Jobs to Be Done: From Theory to Practice, by Anthony W. Ulwick.

• Invest in rich documentation for automation and integrations. By providing clear and comprehensive documentation, businesses can improve usability, reduce support inquiries, encourage adoption, and enhance collaboration. 
• Provide templates and extra tools that make it easier to adopt features. Once you implement a new feature, consider providing extra capabilities that help users easily navigate it.  

Pillar #3: Invest in the product with GTM intent

The following three processes help capture market demand and ensure you tweak your product according to client preferences:

Build your product as a self-serve distribution vehicle 

We go into more detail about our GTM strategy in this article. While refining your GTM strategy, you must focus on designing a minimum viable self-serve product experience to drive user activation. Here are a few tips to help you: 

• If you want to embrace PLG, go through a closed beta phase with a minimum of 10–30 users to confirm product–market fit. We plan to release Touchpoint in closed beta in Q3 2023. 
• Test your entire product experience before public launch to avoid vague messaging, poor product experience, and losing user focus. 
• Focus on one strong value proposition early on. 

We strongly recommend this guide to help you nail your self-serve experience. 

Identify key PLG metrics and use the right tracking tools

These include product usage metrics such as time spent on the product, features used, and user feedback.

As far as analytics are concerned, platforms like Google Analytics, Mixpanel, Amplitude, and Heap help ensure your data tracking system is scalable and flexible to grow and evolve as your business expands.

Run fast GTM experiments on a smaller scale

One way that we test product–market fit and feature potential is by developing free tools that go well with our product or providing free sub-features. 

Run tests on user subsets to collect feedback and improve features before making them available to all users. 

Is PLG the right choice for your SaaS product?

PLG can be an effective growth strategy for your SaaS. Here is a quick way to validate product-led growth as a choice for your company, using Touchpoint as an example:

Essential PLG attributes	Example
The product’s unique selling points are immediately understood.	Touchpoint is a uniquely valuable solution because it combines several tools into one platform, making it easier for businesses to manage their marketing, sales, and customer service activities. This has been confirmed through interviews and customer surveys.
The product offers great value before payment.	Touchpoint will offer a fully featured free trial and access to free tools useful to our target audience.
The product offers a frictionless onboarding experience.	Touchpoint customizes each onboarding experience through a 5-step survey that collects information about a user’s industry, needs, other tools, etc.
Your marketing funnel ends with product engagement.	The final goal of all marketing activities is to drive awareness and persuade users to sign up for a free trial instead of talking to a salesperson. Users are free to engage with the product before purchasing.
The product is easy to adopt by multiple users.	Touchpoint’s per-user pricing and metered services make it easy for new users to onboard the tool and adopt features. This will create a built-in network effect, increasing the average account value.
The product can be adopted at a larger scale, leading to increased usage.	Touchpoint’s multiple modules (Sell, Serve, Collaborate, etc.) allow for upselling and cross-selling. As new modules are adopted, the Touchpoint product becomes indispensable to our customers.
The product works well in partnership with other companies to drive internal adoption.	Touchpoint provides seamless integrations with major tools directly from the dashboard. It will also be available on Zapier, where it can be connected to 3,000+ apps through no-code automations.

How to become a product-led company

You made it this far, congrats! We know this is a lot of information to digest, so we’ve provided a quick checklist to help you on your way to becoming product-led:

1. Make it easy to sign up and adopt the product

Focus on benefits and value for the user

• Use customer-centric language that focuses on the benefits and outcomes the user will achieve by using the product.
• Include customer testimonials and case studies that highlight the positive impact the product has had on other users.
• Create product demos or videos that showcase the product in action and highlight its key benefits and features.
• Use social proof, such as user reviews or ratings, to reinforce the product’s value.
• Tailor the messaging and positioning to different customer segments to ensure the benefits are relevant and meaningful to their needs.

Introduce the “AHA!” factor early on

• Use interactive elements such as quizzes or assessments to engage users and help them discover the product’s value.
• Provide a product tour or onboarding experience highlighting key features and benefits clearly and engagingly.

Use simple navigation

• Use clear and descriptive labels for navigation links and buttons.
• Limit the number of options in the primary navigation menu to the most important pages.
• Use a consistent layout and design for all pages to reduce confusion.
• Include a search bar on every page to make it easy for users to find what they want.
• Test the navigation with real users to identify any confusion or frustration and adjust accordingly.

Use transparent pricing plans

• List pricing plans, add-ons, metered services, and other costs on the website.
• Provide a pricing calculator or estimator tool that allows users to estimate the cost based on their needs.
• Include any applicable fees or charges upfront in the pricing information.
• Clearly explain any limitations or restrictions on the plans, such as usage caps or feature restrictions.
• Offer a free trial or a limited production version to allow users to try it before they buy.

Make onboarding frictionless (and personalized)

A smooth and personalized onboarding experience can help users quickly understand the value of your product, reduce churn, and increase adoption and retention rates. 

• Provide guidance and tutorials and make them easily accessible throughout the onboarding process.
• Incorporate interactive elements (quizzes, surveys, assessments).
• Offer incentives, discounts, or other perks to incentivize users to take action.
• Gamify the onboarding experience.

2. Contextualize features relevant to users

• Understand the user’s pain points and how your product can solve them.
• Showcase features that help users save time, such as automated task assignments or integrations with other productivity tools.
• Present features in the user’s preferred format (visual or audio).
• Tap into user data to personalize the presentation of features.

3. Align your entire team behind your PLG strategy

Fragmentation between departments leads to failure for PLG SaaS companies. Here are the main points to follow to ensure alignment between departments. 

• Identify the “North Star” of your PLG strategy and communicate it to your entire team.
• Focus your marketing team on these initiatives:
  • Create demand instead of just capturing demand.
  • Build mental availability, not just awareness of your brand. 
  • Emphasize ease of use and generate excitement for the product to build word-of-mouth. 
  • Drive free trials from relevant audiences. 
  • Attract product-qualified leads (PQLs). 
  • Use SEO, paid media, and content marketing as growth channels. 
  • Create valuable content in easily digestible formats (videos, audio, etc.).
• Focus your customer success team on these initiatives: 
  • Drive adoption at scale with automation.
  • Actively reach out to users to offer guidance, training, and support.
  • Identify new use cases for your customers. 
  • Work closely with customers to understand their needs and challenges.
  • Engage with larger accounts and high CLV users.
  • Analyze user behavior to help the product team implement useful features. 
• Focus your product team on these initiatives:
  • Create better customer experiences (accent on ease-of-use and simplicity).
  • Help the marketing, sales, and success teams understand what you are building.
  • Make it easy to communicate the value of the product. 
  • Prioritize outcomes instead of features. 
  • Develop a data-driven view and a product roadmap focused on impact. 
• Focus your sales team on these initiatives:
  • Organically guide customer success instead of sales. 
  • Help customers discover how the product addresses their needs. 
  • Adopt a consultative role within your product-led strategy. 

Are you ready to begin your product-led journey?

Product-led growth offers a unique approach to growing your SaaS business by prioritizing the needs of your users and creating a product that sells itself. 

By applying the principles outlined in this article, your business can achieve sustainable growth, increase user satisfaction, and drive revenue.

Follow our blog to stay updated with the latest PLG strategies and learn more about our product development journey. Discover the main challenges that product-led companies face, how to overcome them, and which tactics to employ in your PLG strategies.