How to Drive Product-Led Growth
By KATHRYN SHEPHERD-KING
If you’ve been in the product management world for any length of time, you’ll have probably heard about product-led growth. But what is it exactly, and how do we make it happen?
Product-led growth is a go-to-market strategy that relies on using your product as the primary vehicle to acquire, activate, and retain customers.
It’s a strategy that puts the product at the forefront of your growth efforts, leveraging its value to acquire, activate, and retain customers. But being product-led goes beyond revenue; it’s about creating a product-led organisation.
A product-led organisation means that every aspect of your business is driven by the product and its value proposition. All parts of the business are aligned on balancing the needs of both customers and the business and creating value for both.
You can be a product-led organisation without implementing a product-led growth strategy, but it is hard, if not impossible, to implement the other way around.
It’s also essential to understand how product-led growth differs from growth driven by marketing or sales functions.
Marketing-led growth relies on advertising for acquisition, email nurturing programs for retention and supports monetisation through bottom-of-the-funnel content and ROI calculators. Sales-led growth depends on the sales team doing outbound and product demos to acquire customers, business reviews and customer-success outreach for retention and sales deals to convert.
Marketing and sales both have a more traditional funnel approach and generally a higher cost of acquisition. In contrast, product-led growth leverages the product’s value to drive conversions – with an emphasis on getting users to experience and adopt the product as quickly as possible through such methods as self-serve product demos, trials, freemium, self-serve onboarding, gamification and notifications, product education and certifications.
Product-led sales take this to another level, with the product-led growth activities and the data it delivers helping to determine where and when to use your sales team to have the best chance of converting or optimising revenue.
Companies that implement a product-led sales strategy report a 30% increase in conversion rates compared to traditional sales-led approaches (as stated in the State of Sales Report by Salesforce), but even companies that are synonymous with product-led growth leverage other growth motions.
In reality, it’s not one or the other – but the right mix to drive growth based on your company, product, market and customers.
Is Product-Led Growth Right for Every Company or Product?
According to a recent survey by ProductLed Institute, 70% of SaaS companies believe that a product-led strategy is crucial for their growth in the next 12 months.
However, in complex industries, or if you have a complex product, customers often seek personalised interactions.
So how do you know if it’s right for you?
Ask yourself these questions:
- Do you understand your current growth motions and how predictable they are?
- Who has influence / decision-making power? Would users have influence?
- Is the product easy to explain?
- Can a customer self-serve activation?
- Is there a recurring need?
- Is the value of the product immediately apparent?
Trying to move to product-led growth if you don’t have the right environment can be detrimental, so you are best to hold off implementing or not implement at all.
So, assuming you’re in the proper position to implement product-led growth, what key ingredients will you need to be successful?
Key Ingredients to Product-Led Growth
You can’t just create a free trial or freemium offering and say you’re doing product-led growth. This is not a strategy and will likely not help you achieve your objectives.
You need to create a growth strategy that aligns with your business goals and your customers’ needs. The product strategy must then outline how the product will deliver on the growth.
Understanding how you will achieve it, like any strategy, is critical.
Cross-functional Alignment and Commitment
Ensure all departments align and commit to your approach. This can be through direct organisational structure change, cross-functional teaming or commitment to shared metrics.
For example, Amplitude has several teams co-own growth across marketing and product. They have a dual model where teams report to the VP of Marketing and VP of Product, respectively. Shared product metrics help reinforce alignment.
Product That Customers Love
Like any good product, your product needs to meet your customers’ needs and they need to love using it. However, it’s even more critical when using product-led growth.
You need a sustainable market with a recurring need to leverage product-led growth.
The Right Metrics for Success and the Data to Back it Up
You need to understand what will equate to successful outcomes, and then you need to track, analyse and reassess continuously.
Importantly, you then need to communicate it!
Sharing data and insights with your partners and stakeholders across the organisation is just as important as you having the data. It helps to create alignment across teams and keep everyone on track.
The North Star Framework is a great tool to help you achieve this, as it will drive you to ask what leading indicator will drive sustainable business results and customer value, and to find the key inputs that will impact this metric. Once you know these answers, you can align the work to be done and the teams to deliver on it.
For this to be successful, you need a deep understanding of how your users interact with your product, and the behaviours that will ultimately lead to effective monetisation. You need to identify what users find helpful, what keeps them coming back, and the best way to take them on a successful journey to becoming loyal paying customers.
But don’t forget you should be using both quantitive and qualitative data to inform your decision-making.
In a Qualtrics survey, 68% of customers said they’re more loyal to brands that ask for and act on their feedback. According to the State of Product Leadership Report, companies that consistently analyse user behaviour achieve a 2.5x higher user engagement rate.
Show Value Fast
Demonstrating value is always important; otherwise why would a customer use your product? But the time it takes to show – and not just tell – your customers the value of your product is critical.
And this is not just about acquisition.
Yes, free trials and the like are a great way to get users using your product, and onboarding is an important step to ensure speed to use – but ensuring you can continuously show value across the entire lifecycle is what really drives monetisation.
Salesforce is an excellent example of this, introducing trailhead, certifications, and their Dreamforce conference. They have not only created value (and fun) for the individual user, but for the B2B buyer as well – ensuring they have ongoing self-serve product support, learning, and a way to hire and retain the best talent.
Miro is another – both in product and through the Miroverse – reducing friction through templates (their own and from the community) reduces the cognitive load and adoption and helps create virality – where word of mouth and referrals help to drive growth.
Integration to other complementary tools (i.e. Jira) helps users operate and collaborate cross-functionally more effectively and efficiently.
Curiosity & Experimentation
While more process than tactic, experimentation plays an important role when putting product-led growth into practice.
Product-led growth represents an opportunity for product and growth teams to directly impact their organisations and bottom lines. But with that opportunity comes increased accountability.
Product decisions count more than ever, but it’s not just about optimisation. Be curious. Be bold in your hypotheses. Use experimentation to find the right balance between risk and benefit.
Gartner’s study found that organisations fostering a culture of experimentation are 1.7 times more likely to be industry leaders.
Bridging The Gap
So, what are some of the considerations when going from theory to implementation?
First, you’ll need to understand where you are at. If you don’t assess your current state, you risk failing before you even start.
Ask yourself these questions:
- How product-led is your organisation?
- Is that culture already in place?
- How are you structured? What capabilities do you already have?
- How are your teams measured and incentivised?
- How do you currently do growth? Is it working? Is it predictable?
- What is your product readiness – strategy, roadmap, current product?
- What data do you have access to?
- Are you measuring the right things?
Based on these questions, should you be using product-led growth? If not, don’t do it. If yes, find out if you’re ready to implement and what your next move will be.
Once you’re ready, you must identify what changes will make the biggest impact.
This could be to improve your internal organisational readiness or identify what growth initiative you implement first. You don’t need to put all your eggs in one basket (if you have existing growth motions), but if you don’t have any existing growth, start defining your strategy.
Do you need to review your organisation’s culture or structure? Start with a cross-functional growth team (rather than reporting lines) with clear success measures, and empower them with decision-making rights. Build confidence in the model before restructuring and disrupting the current state.
Ensure there is enough investment – including resources and learning – to get the data and reports you need to make informed decisions.
Consider which bets might make an impact, map out a new customer journey, test out your hypothesis, and then create and execute your plan to achieve product-led growth.
Always keep in mind that product-led growth is about putting the product’s value front and centre. You can unlock remarkable growth opportunities by aligning your strategy, fostering a product-led culture, and leveraging data to optimise the user experience.
Do you need any help becoming product-led? Brainmates can help you bridge the gap. We’ve created a Product-Led Growth Assessment Checklist that covers the ingredients needed to deliver product-led growth successfully, and can be used to help bridge any gaps when moving from theory to implementation.