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#1 NEWSLETTER
People want to try
before they buy
Before you buy a new perfume, you want to know what it smells like, don’t you? It’s the same story with other products. Before you buy new pants, you want to try them on. Before you buy a new, very expensive cheese, you want to try what it tastes like. That is why there is a hostess next to the refrigerator in the supermarket, perfume testers are on the shelves in the drugstore, and you can easily return pants you bought online.
For the same reason, Slack, Dropbox (and, until recently, Netflix) offer their users a free trial period that allows you to test their offer before buying access.
What do all these examples have in common? The go-to-market strategy they use is called product-led growth.
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WHAT IS
PRODUCT-LED
GROWTH?
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What is product-led growth? A Definition & Why It's Taking Off
The PLG strategy assumes that the product should be designed to sell itself, with little to no involvement from the sales team. If users see great value in it, they will come for it themselves, buy it themselves, and start using it without anyone's help. Does it sound like a fantasy? Nothing could be further from the truth. This is a very effective strategy used by small, large, and the largest SaaS companies in the market. Explore it further thanks to this comprehensive guide, or read on! :)
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“If you’ve used Slack or Dropbox, you’ve witnessed the power of Product-Led Growth first-hand—you didn’t read a lengthy whitepaper on the benefits of strong internal communication or cloud-based file sharing. You wanted to see the product in action! [...]
Product-led growth describes a business strategy that places a company’s software at the center of the buying journey—and often at the center of the broader customer experience. A product-led growth strategy counts on the product itself—its features, performance, and viral potential—to do much of the “selling.”
Wes Bush, ProductLed
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WHO USES THE
PLG STRATEGY?
PLG is such an effective strategy that almost everyone uses it (with minor exceptions that we will discuss below).
I bet you know at least one company operating this way (you’ve heard of Dropbox, right?).
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Slack case study
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How and when
SHOULD
YOU CREATE
PRODUCTS USING
PLG STRATEGY?
“Product-Led Growth means that every team in your business influences the product. Your marketing team will ask, “how can our product generate a demand flywheel.” Your sales team will ask, “how can we use the product to qualify our prospects for us?.” Your customer success team asks, “how can we create a product that helps customers become successful beyond our dreams?.” By having every team focused on the product, you create a culture that is built around enduring customer value.”
Allan Wille, Co-Founder & CEO, Klipfolio
In order to successfully apply the PLG strategy, certain conditions must be met. A product should not only meet the users' expectations, solve some of their problems, or satisfy their needs. This is what every existing product on the market should do. The SaaS created with PLG in mind stands out from the rest thanks to several unique features.
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four pillars of the plg strategy
Free or Freemium
- Try before you buy – demos and trials
- Minimize cost friction
- Non-committal pricing
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Short time to value
- Customers will get immediate value from the product
- Positive initial experience
- Value first, money later
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Self-service
- Let customers explore the features of the product
- Self-sign-up/education
- Companies track the user journey
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Viral
- Product users invite others to join
- Customers create the network effect
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In addition to the above-mentioned pillars, there are several other aspects to ask about when looking to apply a PLD strategy. You will learn about those while reading the following studies.
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Nine levers of Product-Led Growth
The PLG strategy assumes that the product should be designed to sell itself, with little to no involvement from the sales team. If users see great value in it, they will come for it themselves, buy it themselves, and start using it without anyone's help. Does it sound like a fantasy? Nothing could be further from the truth. This is a very effective strategy used by small, large, and the largest SaaS companies in the market. Explore it further thanks to this comprehensive guide, or read on! :)
Read now |
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"PLG should not be considered a condition, but rather a philosophy. It is not a set formula but rather an approach by which founders look at each of the components of their GTM and figure out how best to leverage the product to achieve better their goals of acquiring, growing, and retaining customers. To be product-led, the question should not be "how do I be like Slack?", but rather "how do I better use the product for my go-to-market and customer?"
Blackbird
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10 product-led growth principles
10 rules that you should apply in the PLG strategy, based on examples of such companies as Canva, Slack, AirBnB, Duolingo, Hubspot, Spotify, Balance, and Calendly.
Monika Konarzewska
Kreatik
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"Customers are unwilling to pay for something just because a marketing campaign tells them it's great. Users are becoming more aware of all your marketing manager's tricks up their sleeve. It's time to develop a great product and let it speak for itself.
When designing a digital product that the PLG model will support, you should keep in mind some fundamental principles. Product-led growth companies aren’t successful by chance but because they know those rules and play by them."
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“The more it costs you to sell something, the more it will cost others to buy it.”
Paul Graham, founder of Y Combinator
"You might be able to build a sales team focused on your home base region (US, Europe, etc.), but if you want to build a global company (and what great company doesn't?), staffing up a sales team to reach customers in every region is slow, painful and expensive. Sales-driven companies take a long time to become truly global. On the other hand, Self-Serve first companies can go global rapidly."
Gokul Rajaram
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WHEN YOU
SHOULDN’T
USE PLG
- When your product is very complex, onboarding the user yourself is impossible, and implementing the product in the customer's company requires a lot of effort and solid support on your part.
- When your product is very niche and has a small Total Addressable Market (TAM), and relationships matter a lot in sales.
- When your product opens up a new category in the market, attracting users requires a lot of education and changing the habits of users who have been previously solving their problems in a completely different way. PLG will be a good option once the market has settled on your solution.
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Daniel Johnson
We Scale Startups founding partner, business mentor, and professional speaker.
He develops growth
machines for startups to
predictably, scalably,
and repeatedly drive revenue and customers through data-driven Growth Marketing.
Visit Daniel's website: www.danieljohnson.xyz
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Have you seen differences working for startups from different countries?
It is interesting to travel and explore the startup industry all over the world as each location has its pros and cons. Taiwan was unique for its history and cultural experiences and made me realize that culture has a big impact on the start-up industry.
The product is created to enter the market and growth (acquiring users) is based on it. Very often a business approaches to marketing and product separately. What is your experience with it?
I believe that profitable distribution and scale are arguably the hardest part of any business, and the sooner people understand it, the better. Growth is like a pyramid. You start at the bottom, with the basics: customer personas, message maps, clear value proposition, and analytics. Only when you build a solid foundation do you invest in advertising. I also believe that every employee is responsible for the development, whether you are a CEO or an intern.
In product-led growth, data is as important as the customer's perspective and opinion. What do you think?
In my opinion, marketing data and product data are integral, and separating them is like building a house without a brick - you have to implement it and weave it. Regardless of the job position, everyone should know how to use data and transform it into information, and then turn it into action.
Data can be used in a variety of ways, including unethical ones. 5 or 10 years ago, unethical actions were a very rewarding strategy. What are your thoughts on this topic?
Industry leaders like Facebook are implementing these types of products and strategies that are very tempting to other companies, but it really doesn't pay off. If the product is not successful as a result of laborious processes, it is unlikely to be successful in the long run as a result of unethical activities.
Read now
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In a Product-Led Growth strategy, a key factor is user satisfaction. If the platform they are testing meets their expectations and solves some important issues, they are willing to invest in a paid version. Some companies confuse this satisfaction or even intentionally replace it with addiction. Such accusations are especially directed at social media creators. Notifications, infinity scroll, collecting likes and hearts, competing for followers, non-chronological presentation of content (based on an algorithm), and many other mechanisms make users almost unable to tear themselves away from the digital product.
But the problem is not just present in SM; many digital products hide this addiction under the guise of habit formation, a mechanism described by Nir Eyal in his book Hooked – How to Create Habit-Forming Products.
If you use Gmail on your browser, you may think that's the end of our newsletter. Nothing could be further from the truth!
Click "expand message" and keep reading!
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How nir eyal’s habit
books are dangerous
It's long been said in the industry media that intentionally making users dependent on a platform or app is uncool or downright immoral, and I agree. Per Axbom is even more adamant and says it is straight-up dangerous.
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"The idea that we create change by influencing people to create so-called positive habits, instead of educating them about the many actors already influencing their habits, is a maddening concept for me. If “winning“ relies on getting people subconsciously hooked on the “right stuff”, then we’ve already lost. The company with the most to invest, and the greatest endurance, wins."
Per Axbom
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netflix strategy
analysis - based on
product led growth
The product-led growth strategy can be so effective that it's risky. Netflix found this out when, and at one point in its development, it had to stop offering a free trial period. Maciej Marczak wrote about applying a PLG strategy from the perspective of a streaming service on our blog.
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“According to a published report, just 1/3 of subscribers continue using a given platform after the end of the free trial period. We have to be upfront here – for each of these platforms, it’s a terrifying perspective. That’s why companies like Apple TV, HBO, or Disney+ implement diverse strategies to turn this trend around.”
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A large, global customer base is the dream of any company following a product-led growth strategy. A large customer base brings big profits but also big challenges. Although users in the product onboard themselves, they cannot be left completely unattended.
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Community-Led Growth: The Product-Led Growth Expansion Pack
The product-led growth strategy assumes that no one else is involved in the interaction between the product and the user. In practice, it often looks quite different. Communities form around digital products with lots of users, and they are worth nurturing. A well-cared-for community can drive sales. Corinne Marie Riley wrote about Community-Led Growth.
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"Community-Led Growth allows a company to have a stronger pulse on their customer pipeline, feature requests, and real-time support while enabling users to get the most out of their product. These users, in turn, become champions, creating a flywheel of active members strengthening the community."
Corinne Marie Riley
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UX helps cross-culture business – how big companies design for a global audience.
When designing for a global community, you need to consider cultural differences that can affect user satisfaction with the product and the trust they have in the company. You'll read how companies like Amazon, Uber, and Airbnb have tackled this challenge on our blog.
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"Question: What if we ignore UX research and relegate the culture of our users to the background?
An answer to this question is brought by no other than Amazon itself, which launched in the Indian market in late 2018. At the beginning of the expansion, the company was making heavy losses as customers in India were not using one of its main revenue-generating functions. Here, we talk about the space intended for searching for products to buy on the mobile site's homepage. It turned out that the magnifying glass icon was not something that users in India associated with searching..."
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To be as successful as Slack and Dropbox, you must first build a great product that addresses real user pain points. If you can't solve user problems in a way that works for them, it doesn't matter how much virality (or another hack) you try to incorporate into your product - product-led growth won't work for you. The foundation of an excellent product must be there first.
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If you want to use product-led growth in your company, show your product instead of telling stories, but never promise more than you can give. If the product does not match the promise, it can backfire due to a negative brand image.
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The PLD strategy lowers the cost of selling
a product, but means that the entire company should work on the product. The involvement of the marketing team, sales team, and customer success team in the work of the designers and developers team is the key to success.
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The fact that the customer is able to buy the product on his own and start using it himself does not mean that he should be completely alone. Build a community around your product that will advise and help each other and help you sell more at the same time.
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Product-led growth may not be a viable option for certain businesses. It will not work if your product is complex and expensive, targeted at a niche group of customers, or a very big innovation on the market (at least at the beginning).
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Rapid user growth is cool, but it comes with a risk and new challenges. The free trials and limited-time offers can be abused if certain checks are not in place.
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Making users addicted to digital products is not cool. |
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If you want your product to be loved around the world, you need to be aware of cultural differences that affect the user experience.
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The creature responsible for this newsletter
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Monika Konarzewska
Strategist and Head of UX at Kreatik. She creates digital products from the moment they are just an idea or a need. She conducts needs research, ethnographic observations, and usability tests and is responsible for the excellent user
experience of designed applications and websites.
Monika is also a certified facilitator of Design Thinking - a method that allows the creation of new products and services in an innovative way.
Big fan of micro-adventures, day trips, and nature photography.
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