How to build product-led growth

2023 is set to be the year product-led growth (PLG) establishes itself as a leading strategy for SaaS businesses worldwide. 

More than half (58%) of SaaS-based businesses have already adopted PLG. Some 91% plan to invest this year. PLG companies have been shown to grow 25% faster than their rivals, and are more likely to double their year-on-year revenue growth. 

Yet switching to a PLG strategy is easier said than done. In this article, we will cover how to make those first steps towards product-led growth.

First, what is product-led growth? 

We cover this question fully in a separate article, but the key to PLG is easy to understand. It puts your products at the centre of your organisation, from operations to sales to marketing.

It’s easy to think, “we already do that”. And it’s true that all businesses, to varying extents, focus on products in their sales or marketing.

However, rather than being one piece of a strategy, with PLG your products are the strategy. Every function has to be set up in a way that makes the product the star of the show. Common methods used in PLG are “try before you buy” initiatives such as free trials, freemium models and self-serve sign-ups.

Yet PLG requires more than just removing a paywall. 

How to get started with PLG

A PLG strategy covers three stages: acquisition, activation and expansion. 

Acquisition: This stage requires attracting as many potential users as possible, often through free trials, freemium models or self-serve sign-ups.

Activation: Once people have signed up, the product itself has to give the best customer experience possible. Users must see the value of the product and want to activate their account.

Expansion: In the Expansion stage, the process is designed to upsell, cross-sell or expand how each customer uses your product to drive revenue growth.

To get started with PLG, each function of the business must be aligned along these three steps, and set up in a way that allows them to collaborate across the entire journey. You may need help. For example, TheyDo is a customer journey management tool designed to make this easier and the process more transparent.

Of course, software isn’t enough. PLG-led companies tend to require a larger number of product managers and developers than traditional SaaS setups, with a particular focus on user interface (UI) and user experience (UX). They also dedicate entire teams to onboarding.

Get to know your customers – all of them 

Once you have your team set up, the first step in your PLG strategy is to understand your customer. This doesn’t just mean understanding their pain points. It means truly understanding how they use – or could use – your product. This often comes ahead of finessing your product because you need to know where to channel your development efforts. It’s an ongoing and evolving process.

It’s not enough to issue a survey to existing customers. You must collect feedback at as many touch points as possible and turn this feedback into tangible actions and improvements. Thankfully, once in place, the very nature of PLG helps companies get regular and hands-on feedback from both existing and prospective customers. This creates a feedback loop in which product development runs in parallel to customer success. 

Again, software is here to help. HotJar is one of the best customer feedback tools because it not only helps you visualise feedback through heat maps and recordings – which reveal exactly how customers are interacting with products and websites – but it has been built with product managers and UX designers in mind.

Many customer feedback tools rely on surveys, forms and reams of data, but HotJar makes it easier to see, at a glance, where improvements must be made. And how. 

Build the best trial experience

The best PLG strategies build products that remove as much friction as possible at each stage. That is, acquisition, activation and expansion . 

Many companies fall down by making their core product as impactful as possible, only to set up unnecessary barriers. Or they limit the features that are available in the trial so it doesn’t do your product justice.

The classic example is asking for credit card details at sign-up. This may increase the activation percentages of those who sign up, but it will hinder acquisitions. Some customers don’t want to add their card details, some won’t have them to hand. For others, it may be a complete blocker as they require management sign-off before using a card.

Similarly, offering basic or limited tools during a trial doesn’t incentivise the customer to upgrade once the trial ends. They either stick to the free plan or don’t know if it’s worth paying for a subscription because they haven’t been given the opportunity to try the full product.  

Depending on the needs of the customer, the most successful PLG trials unlock the full scale of relevant features without cumbersome sign-up forms. At the end of the trial, the customer is automatically moved to the freemium model (where available) or their access is revoked.

This should trigger a follow-up from the customer success team to learn about the customer’s experience and push towards acquisition. If the product has been truly valuable, they will miss the paid-for features and be more inclined to upgrade. 

When free trials aren’t enough

That said, self-guided free trials and freemium models aren’t always the best option for companies. Some experts even suggest such approaches aren’t “pure PLG” because they don’t unlock the value or personalisation today’s buyers need. 

Let’s say your software requires a certain level of training, either because it’s technical by nature or because you want a customer to understand exactly what’s on offer. It’s better to build bespoke, personalised sandbox environments focused as much on education as conversion.  

“It’s true PLG is having a self-service sign-up on a website and where people can get started quite easily,” said Adé Mochtar, Co-Founder and CTO of product-led growth platform Instruqt. “But for me, I think it’s a step further. Product-led growth is about people becoming fans of your product. They really like to use it. It really solves a problem for them, and it helps them solve their problem in a really nice and elegant way without them getting in the way too much. So it’s not just about giving people self-service sign up. It’s about really helping a user solve their problem in the best possible way.”

Instruqt’s platform allows companies to build their own tailored sandbox environments that look and work like the real thing. However, they also give the company insight into how these customers interact with the software. All while being able to provide tutorials and help at key touch points. This creates a feedback loop for your product teams and developers to action. 

Build it and they will come? Not necessarily

However, these experiences and subsequent feedback loops can only occur if you attract customers during the acquisition phase. This is where sales and marketing teams play their vital role in the PLG journey.

Soliciting feedback to spot areas for improvement, prioritise features and identify new use cases isn’t just of benefit to the product teams. It gives marketing the best possible ammunition for their campaigns. 

The basics of marketing in PLG are similar to those seen in non-PLG companies. However, because the product itself is the main driver of customer acquisition, traditional tactics such as advertising and PR take a back seat to product-led marketing efforts. Think word-of-mouth referrals and viral growth.

In fact, virality is a key component of PLG. Setting up systems within which customers naturally share their experiences with others helps drive organic growth. And reduces the need for expensive campaigns, too! This means investing in features that encourage sharing and collaboration, such as social media integrations, user-generated content and referral programs.

Marketing campaigns focus more on the product’s capabilities over top-level benefits, too. While sales teams in PLG companies should be more technically minded, systems will be in place to upskill and teach them the technical detail needed to support the customer success teams. This includes understanding the product’s intricacies and taking a more involved role in onboarding than would be traditional. 

Measuring success

And finally, to succeed with PLG, you need to measure the right metrics. Traditional metrics such as revenue and sales are less relevant in a PLG strategy. Instead, place the emphasis on metrics such as user engagement, retention and referrals. This will yield more useful insights and identify areas for improvement and optimisation.

In this way, PLG can require an entire shift in mindset. This can make it seem daunting and time consuming. However, the success stats speak for themself. And if you break it down to its basics, PLG should be what you’re delivering to customers anyway: the best possible experience that meets their needs.