This article was originally published on Forbes.com
Companies that understand product-led growth (PLG) recognize that success comes from putting the user first. They develop a deep understanding of how people interact with and use the product. They tailor the product experience to seamlessly move the user from discovering the product, trying the product, experiencing value, buying the product and even sharing with others—ideally, this is done digitally, with no human intervention required.
When done well, the product can truly sell itself.
But therein lies the challenge: when it’s done well. PLG may sometimes be misperceived as easy. For example, some misguided individuals assume they are “product-led” if they simply add a free trial; there is a lot more that goes into it besides a free trial.
Building products that sell themselves is hard work. You must transform everything you do to focus on the user, guide the user to experience value in your product and continuously remove the obstacles that can get in their way.
What is product-led growth?
Product-led growth (PLG) is, at its core, a business methodology that relies on the product as the driver behind growth. It requires an organization to build the product in such a way that it drives customer acquisition, retention and expansion.
While leveraging free trials to let users experience the product before a purchase is a big part of the success of a PLG strategy, especially in our age of self-service, it is insufficient in itself. A free trial is only a first step; it enables the user to try the product before they buy it. So, what is the user trying? Will it meet the real need of the user?
To provide real value to the user, you must invest intentional time and research into understanding the user to ensure the product you’re offering actually addresses the challenges your customers are trying to solve. What’s more, you must design the product experience in such a way that the user will experience the value without getting lost or frustrated, or giving up.
You may have an awesome product, but if the user can’t get it to work, it won’t matter.
Does PLG make sense in today’s economy?
Today’s economic conditions are forcing organizations to revisit budgets and streamline their expansion tactics. During this time, some SaaS organizations are evaluating PLG as a leading method to effectively scale.
PLG is not a cost-cutting measure.
Some companies have embraced PLG as a means to reduce costs in marketing and sales. It is true that you build the sales process in such a way that you are less reliant on a salesperson, but you will need to invest in other ways.
PLG requires a different type of investment, like investing in programs such as customer research, user experience (UX) and product management. These programs, and teams, work together to develop a deep understanding of the user and their needs.
Taking the time to understand your user enables you to build a product that directly aligns with their needs. Your UX team also plays a big role here as they will design an easy-to-use experience that guides the user to experience the value without obstacles.
It is important to point out that many companies have both a PLG and sales-led growth (SLG) model. Unlike a traditional sales model, these PLG plus SLG models provide product usage data and insights to the sales teams and customer success teams to make these human interventions much more effective.
For example, rather than sending “cold leads” to a sales team, the sales team can target a “trial user” who is actually using the product and, therefore, increase the odds of closing a sale.
PLG companies are more resilient.
I believe companies that build products that are laser-focused on the customer and user needs are the ones that will succeed. And that’s what PLG is all about.
Companies that embrace PLG invest greatly in understanding customer needs and solving them in real ways to create a better product. This translates to greater customer satisfaction and better customer retention.
And this is why PLG-focused companies are more resilient; they are better at understanding and meeting customer and user needs versus those who do not.
Reap the benefits of a PLG strategy.
Building a PLG strategy is a commitment to building an engine.
The data honestly speaks for itself:
• PLG companies grow 25% faster than other SaaS companies and have better margins on average.
• Companies with a growth team have nearly double the median pay conversion rate.
Also worth mentioning is that Gartner anticipates PLG will be a standard component of go-to-market practices for 90% of SaaS companies by 2025, up from 58% today.
PLG is an extremely effective strategy when companies take the time to really understand their customers. This requires an investment and intentional commitment to understand what challenges users are looking to solve, how people interact with their product and the value they expect from that interaction.