product-led growth planning

Why Product-Led Growth Beats Traditional Marketing

For the past few years, product-led growth has been all the rage in the tech startup world. But what is growth hacking, and how can it be applied to companies of all sizes?

Growth hacking is a process of rapid experimentation across marketing, product, and sales channels to identify the most effective and efficient ways to grow a business. And while growth hacking is often associated with startups, the truth is that any company can benefit from growth hacking techniques.

In fact, many of the world’s most successful companies have used growth hacking to achieve scale and market dominance. One of which is product-led growth. In this article, we’ll explore what product-led growth is, how it differs from other growth strategies, and how you can use it to grow your business.

What Is Product-Led Growth?

Product-led growth (PLG) is a go-to-market strategy in which the product itself drives customer acquisition and growth. In a PLG model, the product is the primary growth driver rather than marketing or sale.

The principle of PLG is that businesses provide users free access to a restricted version of their product. ‌By delivering value, it becomes embedded in consumers’ daily lives. Users eventually tell their friends about the product, and more people start using it, resulting in adoption.

Ease of use also comes into the equation, as a product that’s hard to use will not get people to recommend it. In fact, according to Forbes, 89% of consumers determined that ease of use is the most critical factor in product adoption.

In a PLG strategy, the goal is to get users hooked on the product, to continue using it, and eventually pay for the full version. The key is to offer just enough value in the free version to keep users engaged. Because of winning marketing strategies like this, tech companies like Slack and Dropbox became successful.

Why Use Product-Led Growth Instead Of Product Marketing?

Product marketing (PM) is the process of bringing a product to market and making it successful. It involves all aspects of creating, launching, and managing a product, including market research, product development, pricing, promotion, and sales.

The key difference between PM and PLG is that PM is focused on creating a product that meets the market’s needs, while PLG is focused on creating a product that drives growth.

Here are a number of reasons why you might want to use a PLG strategy instead of a traditional PM strategy.

Shorter Sales Cycle

With product-led growth, you can significantly reduce your prospect’s time-to-value and sales cycle. 

By having your ‌prospective clients onboard themselves, they are more likely to grasp the value of your product much quicker than if you had to explain it all to them. ‌Additionally,‌ ‌they can start using your product much sooner, which further reduces ‌the‌ ‌amount of time it takes to convert them into paying customers.

building a product-led growth site

Lower Customer Acquisition Costs

One of the main advantages of using product-led growth is that it results in significantly lower customer acquisition costs. This is because product-led businesses rely on organic growth through word-of-mouth marketing and customer referrals rather than paid advertising.

And since customers are more likely to refer a product they love than one they don’t like, product-led businesses enjoy a higher conversion rate from leads to customers.

Higher Revenue per Employee

PLG products tend to be more automated and less labor-intensive. This means that the cost of producing and selling them is lower. They are also often self-sustaining, meaning they generate their own revenue without requiring a lot of extra effort from employees. In addition, PLG products tend to be more in demand, which leads to higher margins per customer. 

Self-Education Preferred by Customers

In the digital age, customers are more likely to self-educate about a product before they buy it. This is especially true for products that are complex or have a lot of features.

In order to reach these customers, companies need to shift their focus from product marketing to product-led growth. By emphasizing the product itself, companies can create a customer experience that is more engaging and informative.

developers reviewing product-led growth site

Implementing Product-Led Growth Right

There are 3 pillars of product-led growth:

1. Design With The End-User In Mind

The first step to implementing PLG is to design your product with the end-user in mind. This means creating a product that is easy to use and provides value from the first interaction.

Then understand why customers would want to use your product. What problem are they trying to solve? ‌What‌ ‌need‌s ‌do they have? Once you understand this, you can design a product that ‌is more suitable for them.

2. Deliver Value Before Capturing Value

In a traditional business model, you capture value first and then deliver it. But in a PLG model, you need to deliver value first and then capture it. You can do this in a number of ways, such as providing a free trial or offering a low-cost introductory plan.

Once users are hooked on your product, you can then start to charge for it. And because they’ve already seen the value of your product, they’re more likely to be willing to pay for it.

3. Invest In The Product With GTM Intent

The third and final pillar of PLG is to invest in the product with go-to-market (GTM) intent. Too often companies try to cut corners and do not make the necessary investments in their products. This leads to stagnation and ultimately failure.

If you are not going to put the necessary resources into your product, you are better off pursuing a different growth model. Since a product-led growth (PLG) strategy is all about getting users to discover and use your product, it is essential ‌to build one that works well.

Final Thoughts

Product-led growth is a powerful growth strategy that can help you scale your business quickly and efficiently. But it’s not right for every business.

If you’re not sure if PLG is right for you, consider talking to a growth advisor. They can help you understand if PLG is a good fit for your business and ‌provide guidance on how to implement it.