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.
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.
Image source: Openview
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:
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:
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:
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.
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.
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:
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.
Strong product-led growth companies convey their value proposition instantly. Here is how you can constantly deliver value to your users:
The following three processes help capture market demand and ensure you tweak your product according to client preferences:
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:
We strongly recommend this guide to help you nail your self-serve experience.
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.
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.
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:
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:
A smooth and personalized onboarding experience can help users quickly understand the value of your product, reduce churn, and increase adoption and retention rates.
Fragmentation between departments leads to failure for PLG SaaS companies. Here are the main points to follow to ensure alignment between departments.
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.
Marketing manager for TextMagic. I like figuring out how things work. Passionate about fitness and video games.
Alleviating customer pain points is no easy task. Check out our tips for tackling real-life pain point scenarios.
Unsure which customer experience conference to attend this year or the next? Find the right one from our selection.
Email has been sent!
Please check your inbox, we have sent you a template.
Please populate the form below and we’ll send you the link to download the template.
Please enter a valid email address