You’ve probably heard about companies such as Slack, Productboard, Calendly, or Dropbox. We know they all have different products, but they have one thing in common: They’re product-led growth companies.
In the very competitive SaaS market, companies have been forced to adopt different methodologies and strategies to stand out from the crowd and expand their customer bases. Because of this, in recent years, the concept Product-Led Growth (PLG) has become increasingly important and famous, and there is no doubt that it will remain. This methodology has become one of the best ways to drive growth and gain market share.
But, what is PLG? Which companies in 2022 are the best examples of Product-Led Growth? Today, we’ll cover all these questions and more, including:
- What is Product Led Growth?
- Product Led Growth Principles/Traits
- Examples of the Best Product Led Growth Companies
- Is a PLG strategy right for every company?
- Product-Led Growth in 2022
Ready? Let’s dive in!
What is Product Led Growth?
Product Led Growth (PLG) is a methodology that emphasizes the product as the main driver of user acquisition, expansion, conversion, and retention. It aligns company-wide teams from engineering to marketing around the product as a long-term, scalable source of growth. This strategy aims to improve user experience and increase “go-to-market” speed.
PLG also means reshaping different teams within your organization. By joining forces, teams like marketing, engineering, and sales can offer customers easier, more powerful, and more affordable software than anything they’ve ever experienced. This methodology increases retention, reduces customer churn, lowers costs, and increases business growth.
If you’re interested in having an in-depth look at PLG, check out our last blog post, What is Product-Led Growth?
Product-Led Growth Principles/Traits
The road to a Product-Led Growth company isn’t as simple as it sounds. It involves establishing a consistent strategy, well-developed, and teamwork across all teams. In this section, we’ve summarised the principal characteristics a business might have to become a successful PLG business.
1. Build a self-service product
The main driver of a PLG business strategy is the product. That’s why it’s crucial to develop a self-service product that can drive customer adoption, retention, and expansion itself without the direct need for human activities. PLG, it’s all about the product itself!
2. Generate virality
PLG businesses don’t need huge marketing campaigns or large sales teams, as they rely on network effects and virality. Because of the product’s success with all its features, networking, word-of-mouth, and referrals are the main drivers of the expansion.
3. Transparent pricing model
As PLG companies deliver solutions without the need for the human factor, the pricing model should be done in the same way. That means everything about the pricing model should be clear and easy to understand to avoid confusion and friction during the product purchase. By doing this, companies can calculate the total they’ll spend and adjust their budgets accordingly.
4. Focus on creating value instead of extracting it
PLG companies believe in the value of their products. In this way, they can offer freemium versions of their products for users to test before adopting. By using this method, they can transmit the value of their products and ensure product adoption and success.
5. Quick AHA moment
Let’s refresh our memories a bit. According to our last blog post, The ‘Aha’ Moment Product Guide: How to Identify and Measure, the Aha moment is the time when a user first realizes the value of your SaaS product. It’s when they understand how a product works, its main functionalities and value, and how to add it to their processes.
Ideally, it should occur during the first time a customer uses your product and when the onboarding process is complete. Basically, the sooner it happens, the better.
PLG’s products make their users experience the “Aha” moment faster. Through this, customers can understand its value quicker and become brand advocates sooner.
6. Provide personalized onboarding
Companies with a PLG strategy provide personalized onboarding. Through it, they can offer a unique experience to their new customers while helping them understand how to use the product successfully.
7. Tight feedback loop
It’s crucial for PLG to tighten the feedback loop. That means always answering your customers’ questions and solving their problems quickly is important. As a result, the user will be more willing to trust your company and use it more freely.
These principles are common in successful PLG companies. When you start designing a strategy to become one of them, these traits will be helpful to you. If you’re looking to illustrate the information with some examples, jump to our next section!
Examples of the Best Product Led Growth Companies
There are many product-led companies that are doing it right. These are constantly gaining market share and increasing their businesses. To illustrate everything we’ve discussed in this article, let’s look at the most popular PLG companies.
Slack has become the most popular chat tool for businesses. It allows reaching everyone in a company in one place. The company was founded in 2009 in Vancouver, and in just 13 years, it has 18 million daily active users and 156,000 organizations using the app. Crazy, right?
Slack is defined as a PLG company. As a starting point, Slack offers a freemium plan. As a result, potential customers can try out the platform without purchasing it. Then, it offers a more robust paid version that exponentially speeds up its revenue growth. Additionally, the company prioritizes customer satisfaction and delivers a positive user experience.
You’re probably familiar with Dropbox. It’s a hosting service that offers file synchronization, cloud storage, and client software. Dropbox has 700 million registered users and generates $1.91 billion in revenue annually.
One clear goal for this product-driven growth company is to create an intuitive product that meets users’ needs. Due to this, file sharing is easy and accessible for end users. Also, users who want more storage space receive 2GB of storage space by sharing a referral page to use on three devices!
To become PLG, the company gives its users access to many features, such as a calendar connection, one-off meetings, and unlimited one-on-one events. Moreover, it works through invitations; every time a customer shares a Calendly invitation, they promote the product themselves.
The companies listed above are all doing an excellent job, and they are great references for other businesses. However, it is important to note that the PLG strategy isn’t right for every company. To know the reasons why, let’s jump over to the next section.
Is a PLG strategy right for every company?
The PLG strategy focuses on how you think about your product and interact with your users. To become an effective PLG company, you must change the focus. Instead of putting your maximum efforts into selling and producing marketing campaigns, focus on developing an excellent well-developed product that can be viral and produce network effects.
But think about it: product-led growth will only succeed if you can solve user problems effectively, regardless of how much virality you try to incorporate. A great product starts with a solid foundation.
Product-Led Growth in 2022
Product-led growth is a method that changes how we develop products and services and interact with our customers. To implement it, you need to follow the principles such as building a self-service product, generating virality, including transparency in your pricing, focusing on creating value instead of extracting it, providing personalized onboarding, and more.
This strategy has many advantages, such as increasing virality, expanding market share, reducing churn, and improving customer satisfaction. But you need to consider that everything starts by developing a successful product.
If you’re interested in PLG, check out our FROGED features, such as product flows and integrations, that will help you improve your metrics and boost customer satisfaction.