Introduction to product led growth

Recently there is a lot of buzz around product-led growth across all corporates today irrespective of the org size. Product-led growth (PLG) is a strategy in product management where the product becomes the primary driver of customer acquisition, retention, and expansion. With a PLG strategy, the goal is to create a product that is so valuable and intuitive to use that it drives adoption and growth without the need for traditional sales and marketing tactics.

The key components of a PLG strategy include:

1. A focus on the product experience: With PLG, the product itself is the primary driver of customer acquisition and retention. This means that the product needs to be intuitive, easy to use, and provide a lot of value to the user.
2. Data-driven experimentation: PLG products often use data-driven experimentation to optimize the product experience and drive growth. This might include A/B testing, user feedback, and user behavior analysis.
3. A freemium or low-touch pricing model: In a PLG strategy, the product is often offered for free or with a low-touch pricing model, which allows users to try the product before committing to a paid plan.
4. Viral or network effects: PLG products often have built-in viral or network effects that encourage users to invite others to use the product. For example, a project management tool that allows users to invite team members to collaborate on projects.

Using the components highlighted above, companies are not only able to put the product first but also inspire users’ journey for fueling growth. Examples of successful PLG companies include Dropbox, Slack, and Zoom. These companies have created products that are intuitive, easy to use, and provide a lot of value to the user, which has led to rapid adoption and growth without the need for traditional sales and marketing tactics.

Implementing a product led growth strategy

Now that we broadly understand what PLG is, let’s delve in further and define the steps that you can take to move your org in that direction. Here are some key steps to consider when implementing a PLG strategy:

1. Define your target audience: Identify the specific user segment(s) that you want to target with your PLG strategy. This could be based on demographics, industry, job function, or other factors. Creating your target user persona also keeps you directional in your approach.
2. Identify your key metrics: Determine the key metrics that you will use to measure the success of your PLG strategy. This could include metrics such as user acquisition, activation, retention, and expansion.
3. Create a valuable product: Develop a product that is valuable and intuitive to use. This might involve conducting user research, prototyping, and iterating on the product until it provides a lot of value to the user.
4. Offer a freemium or low-touch pricing model: Consider offering a free or low-touch pricing model that allows users to try the product before committing to a paid plan. This can help drive adoption and growth.
5. Build in viral or network effects: Look for ways to build in viral or network effects that encourage users to invite others to use the product. This might involve creating social features, incorporating referrals or incentives, or leveraging integrations with other products.
6. Optimize the user experience: Use data-driven experimentation to optimize the user experience and drive growth. This might include A/B testing, user feedback, and user behavior analysis.
7. Leverage customer success: Focus on customer success to drive retention and expansion. This might include providing excellent customer support, offering training and education, and creating a community around the product. Checking the Net Promoter Score(NPS) for the customers helps you track how likely are your customers to recommend your product.
8. Build, measure, learn: Continuously measure the success of your PLG strategy and iterate on the product and strategy to improve results.

Implementing a PLG strategy requires a deep understanding of your target audience and a willingness to experiment and iterate on the product and strategy. By creating a valuable product and leveraging viral and network effects, you can drive adoption and growth without relying solely on traditional sales and marketing tactics.

PLG first case studies

Measuring the success of a product-led growth strategy can be challenging, as it often involves tracking multiple metrics across the entire customer lifecycle. Here are a few examples of how the companies I mentioned earlier measure the success of their product-led growth strategies:

1. Slack: Slack measures the success of its product-led growth strategy by tracking user engagement and retention. The company looks at metrics such as daily active users, weekly active users, and monthly active users to see how often users are using the product. Slack also tracks how long users stay with the product, as well as how many teams and organizations are using the product.
2. Dropbox: Dropbox measures the success of its product-led growth strategy by tracking customer acquisition and activation. The company looks at metrics such as sign-ups, downloads, and upgrades to paid plans to see how many users convert from free to paid. Dropbox also tracks how often users are accessing and sharing files, as well as how much storage space they are using.
3. Zoom: Zoom measures the success of its product-led growth strategy by tracking user adoption and expansion. The company looks at metrics such as daily meeting participants, monthly meeting minutes, and the number of paid plans to see how many users are using the product. Zoom also tracks how often users are hosting meetings, as well as how many users are using additional features such as webinar hosting and room systems.
4. Canva: Canva measures the success of its product-led growth strategy by tracking user engagement and conversion. The company looks at metrics such as monthly active users, design creations, and upgrades to paid plans to see how many users are using the product. Canva also tracks how long users are spending on the platform, as well as how many designs they are creating and sharing.
5. HubSpot: HubSpot measures the success of its product-led growth strategy by tracking customer acquisition and expansion. The company looks at metrics such as sign-ups, downloads, and upgrades to paid plans to see how many users are converting from free to paid. HubSpot also tracks how often users are using the product, as well as how many users are using additional tools such as marketing automation and customer service.

These are just a few examples of how companies measure the success of their product-led growth strategies. Each of these companies has identified key metrics that are relevant to their business and product, and they use these metrics to track the effectiveness of their strategies over time.

Is your org PLG first?

In conclusion, Product-led growth (PLG) is a strategy in product management that puts the product at the forefront of customer acquisition, retention, and expansion. By creating a product that is intuitive, easy to use, and provides a lot of value to the user, companies can drive adoption and growth without relying solely on traditional sales and marketing tactics.

PLG involves a focus on the product experience, a freemium or low-touch pricing model, viral or network effects, data-driven experimentation, and customer success. By leveraging these components, companies can create a sustainable growth engine that is driven by the product itself.

We discussed multiple companies that used PLG strategies to dominate their markets and offerings

Implementing a PLG strategy requires a deep understanding of your target audience, an iterative approach to product development and experimentation, and a focus on customer success. By putting the product at the centre of your growth strategy, you can create a sustainable and scalable business model that drives long-term success.