Product-Led Growth (PLG)—All You Need to Know to Grow Your Business

Are you searching for a game-changing, cost-effective go-to-market (GTM) strategy that can turbocharge your SaaS, website, mobile app, or PC software? 

Look no further than the GTM concept product-led growth, often referred to as PLG. It’s the secret sauce that not only slashes customer acquisition costs but also puts your business’s revenue on autopilot mode.

So, why wait? Let’s dive in and transform your business strategy today!

What Is Product-Led Growth (PLG)?

With the product-led growth model, users can try a product you’re selling before buying it. Software companies, especially those selling SaaS, commonly use PLG. It kickstarts the sales cycle by letting your target audience experience the product without commitment. 

In PLG, all business activities for company growth, like user acquisition, product usage enablement, user satisfaction, user retention, and scaleup, depend on the product, not your marketing or sales team.

In short, PLG is:

• Customer or user-centric
• Growing business without depending on aggressive marketing  
• Product-led user onboarding
• Access to monetized apps and services is effortless
• Freemium-based pricing model

Apart from the Software-as-a-Service (SaaS) sector, you can implement the PLG strategy in the following businesses and sectors.

• Low-cost PC, Mac, and mobile apps
• Businesses that sell easy to sign up for services and tools
• High-cost but easy-to-onboard tools
• Brick-and-mortar shops where users can try a sample product before purchasing
• Free samples are shipped or gifted to users so they come back for more, and they usually pay if the product is good

Also read: Supercharge Your Marketing Strategy with Freshmarketer

How Does PLG Work as the Go-To-Market Strategy?

PLG works as the GTM strategy by focusing on the product or service you’re selling. Your startup or business must concentrate on researching a highly sellable problem of end users you want to solve. 

Then, create an extremely useful but ridiculously easy-to-operate app or web app that users can access online. Allow the users to use all the features for free for 7 days or so. When users realize how helpful and affordable the product is, they subscribe to a paid plan after 7 days. 

Your main focus should be on raising customer satisfaction levels so more users join via the virality factor of the product. Then, scale up the back-end infrastructure of the product to sustain a high user onboarding number.  

Driving Factors of PLG Strategies

#1. In-App Tutorials and Guidance

In-app tutorials and guidance are crucial for enhancing user onboarding. The step-by-step instructions and interactive trials or demos help users quickly understand the product’s value. By simplifying the learning curve, these features contribute to higher user retention rates and overall satisfaction.

#2. User-Generated Content

Encouraging users to create content, such as reviews, testimonials, or even integrations, can be a powerful driver for PLG. User-generated content not only adds credibility but also expands the product’s reach through social proof and recommendations from existing users.

#3. Virality Features

Virality features are designed to make it easy for users to share the product with their networks. Examples include referral programs, sharing buttons, or inviting friends to join the platform. These features can rapidly increase user acquisition and organic growth.

Also read: How to Build a Word-of-Mouth Marketing Strategy that Increases Brand Awareness

#4. Free Trials of Premium Features

Offering free trials of premium features allows users to experience the full value of the product before committing to a purchase. This approach enables potential customers to make informed decisions and often leads to higher conversion rates.

#5. Product or Service Trials

Offering free trials and demos is the essence of a product-led growth strategy. You can either offer time-limited, features-restricted, or a blend of both. Users shall sign up for the product or service, try it out till the trial ends, and make informed buying decisions. This strategy helps to showcase the product’s value proposition effectively.  

#6. Freemiums

Freemium models provide a basic version of the product for free, with premium features available for a fee. This approach widens the user base, as many users initially opt for the free version. As users grow and require advanced capabilities, they are more likely to upgrade, contributing to revenue growth.

#7. Community Building

When you build a strong user community around the product, it fosters engagement, loyalty, and knowledge sharing. For example, Microsoft Community, Official Apple Support Community, etc., are the platforms where the user community engages with company officials or influencers. 

Also read: Best Startup Communities Where Entrepreneurs Thrive

Benefits of Product-Led Growth

1. PLG strategies emphasize self-service and intuitive onboarding, leading to quicker user adoption as individuals can start using the product immediately.
2. PLG leverages virality and user referrals, reducing the need for expensive marketing and sales efforts, which in turn lowers customer acquisition costs.
3. By focusing on user satisfaction and continuous value delivery, PLG strategies lead to higher user retention rates and reduced churn.
4. PLG models can scale rapidly, as each new user can potentially bring in more users through referrals and virality features.
5. Product-led growth relies on data analytics to understand user behavior, preferences, and pain points, enabling data-driven product improvements and decision-making.
6. PLG prioritizes the user experience, resulting in products that align more closely with customer needs and preferences.

Now, we will discuss the drawbacks of product-led growth.

Drawbacks of Product-Led Growth

1. PLG often starts with free or low-cost offerings to attract users, which can lead to slower initial revenue generation.
2. Building and maintaining a product that can drive PLG success requires significant investments in product development, user support, and infrastructure.
3. PLG relies heavily on self-service and automated onboarding, which may not suit all customer segments or industries.

Next, we will explore the difference between PLG and other business orientation concepts.

PLG Vs. Other Business Orientation Concepts

Sales-Led Vs. Product-Led Growth

In sales-led growth, the sales team plays a central role in acquiring customers through direct outreach, negotiations, and personalized sales processes. In contrast, product-led growth focuses on creating a product that is self-explanatory and intuitive. It allows users to adopt and use it independently, with minimal or no involvement from a sales team.

Features	Sales-Led Growth	Product-Led Growth
Customer acquisition model	Direct sales efforts, outbound marketing	Self-service, viral marketing, referrals
Customer acquisition cost	High	Low
Product or service onboarding process	Typically guided by sales teams and account managers	Self-guided, intuitive user onboarding
Customer-centricity	Intermediate	High
Pricing and monetization	Traditional pricing models with tiered plans and negotiation	May offer freemium, trial, or tiered pricing structures

Also read: Sales Orientation: The Roadmap for Customer Satisfaction

Marketing-Led Vs. Product-Led Growth

In Marketing-Led Growth, marketing efforts take center stage in attracting and converting customers through various promotional channels and campaigns. On the other hand, Product-Led Growth prioritizes building a product that is intuitive and valuable, encouraging users to adopt it organically.

Features	Marketing-Led Growth	Product-Led Growth
Customer acquisition model	Outbound marketing, lead generation, advertising	Viral marketing, referrals, product virality
Customer acquisition cost	High	Low
Product or service onboarding process	Users are directed to sales teams for onboarding	Self-guided, intuitive user onboarding
Customer-centricity	Moderate	High
Pricing and monetization	Traditional pricing models with tiered plans and negotiations	May offer freemium, trial, or tiered pricing structures

Also read: SaaS Marketing Explained

The Components of a Product-Led Growth Strategy

#1. User-Centric Product Design

• Create a product that is intuitive, user-friendly, and focused on solving specific user needs
• Continuously gather user feedback to inform product improvements

#2. Self-Service Onboarding

• Develop an onboarding process that allows users to get started with the product independently
• Provide in-app tutorials, walkthroughs, and documentation to guide users

#3. Freemium or Free Trial Models

• Offer a free version of the product with limited features (freemium) or provide time-limited access to premium features (free trial)

#4. Clear Value Proposition

• Communicate the product’s value proposition clearly and succinctly to users
• Highlight how the product can solve specific pain points or improve their lives

#5. Data-Driven Decision-Making

• Leverage data analytics to understand user behavior, identify bottlenecks, and make informed product improvements
• Monitor key metrics such as user acquisition, retention, and conversion rates

#6. Transparent Pricing

• Publicly displayed pricing tiers on the website
• No hidden fees, taxes, etc.

#7. User Education and Content Marketing

• Create educational content, such as blog posts, webinars, and tutorials, to help users maximize the product’s value
• Use content marketing to attract and engage potential users

#8. Monetization Strategies

• Develop clear strategies for monetizing the product, such as tiered pricing plans, upselling, cross-selling complementary products, etc.

Metrics of a PLG Strategy

Performance metrics of the PLG strategy are also important components of this business orientation concept. Here are the metrics you must monitor:

• The number of new user sign-ups
• Conversion rate or the percentage of free users converted to paid users
• Organic growth rate
• Referral rate
• Marketing qualified leads (MQLs)
• User retention rate (URR)
• The number of active users
• Time-to-value (TTV)
• Net promoter score (NPS)
• Average revenue per user (ARPU)
• Customer lifetime value (CLV)
• User and customer churn rate
• Product feature usage
• Customer acquisition cost (CAC)
• Customer acquisition payback period
• Virality coefficient (K-factor)

Now, let’s explore the examples of successful product-led businesses.

Examples of Successful Product-Led Businesses

#1. Google Workspace

The Google Workspace apps like Gmail, Drive, Docs, Sheets, Slides, Meet, etc., enjoy the PLG strategy for scale-up and sustainability. Google Docs entered when Microsoft Word was dominating the word-processing app market.

Still today, Google Docs has a market share of 8.33%, while Microsoft Word has a market share of 5.94%, according to 6sense’s reports. 

#2. Atlassian Business Tools

Almost all the business apps from Atlassian, like Jira Software, Jira Service Management, Jira Work Management, Confluence, Trello, etc., are available as freemium apps for anyone to use. This is also a most successful example of PLG strategy for SaaS marketing and growth.

#3. Notion

Another cool example of PLG is Notion. It’s a connected workspace where you can create content pages, databases, data analytics, web pages, knowledgebase, and more. You can run multiple businesses on Notion at an affordable monthly subscription cost or free of cost as well.

#4. Canva

In the world of visual design and multimedia, Canva is a clear winner. It’s also a SaaS product that’s maintained under the PLG strategy. Users can sign up and use the tool for free and upgrade when they see a value in the tool. 

Learning Resources

#1. Certified Product-Led Growth Leader: ProductLed

This ProductLed course provides you with the knowledge, skills, frameworks, and processes required to effectively strategize for a successful product-led approach in a business. From basics to creating a product-led company, you learn all in 5 easy modules.

#2. Product-Led Growth: Udemy

This Udemy course delivers solid coursework for knowledge and skills of PLG transformation for any business. Sign up for this course if you’re a product designer, customer success leader, or product manager willing to work in a PLG company.

#3. Product-Led Growth: How to Build a Product That Sells Itself

This Amazon book helps you learn how to create a SaaS product that sells itself without aggressive sales and marketing efforts.

It also explains how to convert free users to customers, save up to 6 months, and make huge investments in product development by publishing a free trial-enabled SaaS, SaaS pricing strategies, and more. 

#4. The Ultimate Trilogy for Product-Led Success

Are you prepared to upgrade your business to new heights? Explore the potential of product-led growth, onboarding, and SEO in this all-encompassing 3-in-1 collection of books on PLG.

The coverages and explanations of this book collection are poised to revolutionize your business and propel you toward success.

#5. Product-Led Onboarding

If you’re an online products and services developer and want to enhance the product onboarding process in the most effective customer-centric way, you must read this book right now!

#6. Marketing for Product-Led Growth

Though product-led growth is completely independent of marketing strategies, however, you can boost PLG revenue by combining it with marketing.

This book explains you how to embrace marketing as a PLG company.

Conclusion

No doubt, PLG is the best and low-cost approach for a tested and proven go-to-market strategy. The above article has covered all the important aspects of product-led growth strategy so that you can learn it in simple English. To further your knowledge in this business orientation topic, you also explored online courses, certifications, and books.

Next up, the best platforms to list or launch your product.