Join the next cohort of the  PLG Certificate Program. Application Closes Oct 24
Join the next cohort of the  PLG Certificate Program. Application Closes Oct 24

How to Build a Product-Led Growth Strategy

Building a product-led growth strategy can seem complicated, but it doesn't have to be.

Product-led businesses have changed the playbook for successful growth strategies and approaches to marketing.

saas go-to-market strategies

Go-to-market strategies have changed as business models have – from sales-led (growth driven primarily by sales teams), to product-assisted (customers trying the product earlier in the process), to where we are now: product-led.

Product is now the growth engine for companies. Features and usage are the primary drivers for customer acquisition, retention, and expansion.

As a result, our growth strategies need to reflect this.

The Difference Between Marketing-Led vs Product-Led Growth Strategies

Product-led growth chart

In the marketing-led growth strategies of old, prospects had to jump through hoops (lead forms, free trials, quotes, demos). Customers wouldn’t realize any value at the marketing stage – it takes quite some time to get them through the hoops.

The focus was on funnels and numbers – generating MQLs and SQLs – with product teams playing a limited role in this process. It’s an insular echo chamber system, with little awareness of or for the user.

Shift instead to product-led growth strategies, and the product itself becomes the experience. Companies are providing access to products earlier in the buying cycle via trials and freemium models, personalizing each user’s journey.

The focus now shifts to customers, as they are using the product so much sooner. Product teams are tied so much more closely to customer acquisition, as what they are creating is both the product and the marketing material.

Creating a Product-Led Growth Strategy Playbook

Key drivers for PLG

Before we get into the key elements of a great product-led growth strategy, it’s worth highlighting some of the key drivers behind product-led growth.

  • Consumerization of customer expectations: A good user experience has always mattered, but in product-led companies, it’s now the most important thing. Users expect a seamless experience and you need to be able to deliver it.
  • Economics behind fast growth: if you are able to drive demand through your product, you can create a much faster and more efficient funnel and marketing and sales teams. Smart, fast growth in a product-led business is a competitive advantage.
  • Shorter cycles to launch new features: if you can master an efficient product delivery pipeline, you will innovate faster and receive greater quality, more valuable feedback from your users.

Now, let’s look at the five foundational elements of a product-led growth strategy.

1. Define your North Star metric

In every customer and every product, you should have a North Star metric that you can align your teams behind.

Measure the successes and outcomes that your product delivers for your customers.

Your North Star metric should guide your whole customer journey. From the moment you onboard customers, guide them into the features and value areas of your product that lead them towards your North Star – the metric that proves you are driving the best outcome for them and you.

2. Transparent pricing

Transparency is so vital whether you have a freemium or trial model. You have to be clear that there is no upfront commitment but differentiate between premium and free usage at the same time.

Transparent pricing is all about having your prospects understand and experience the value of your product at a free and paid level, whilst giving them a clear idea of the budget they need to realize further value.

Pricing is a real sticking point for SaaS companies. Don’t let your prospects and leads assume that your product is expensive or complex – make it easy for them to see how attainable the next step of their journey is.

3. Apply a paywall

Just as a user hits the threshold of deeper use and integration with your product, you want to expose them to more features but lock them behind a paywall. David Axler of Wave Apps held a great session for the Product Led Institute on optimizing free trials if you want more on this.

You need to determine what the right blend is for free and paid features. Ideally, you will give your free users enough value whilst withholding enough to encourage upsell.

Make sure that the extended value of your product is crystal clear to your users. They should be able to drive value from your freemium product (or achieve the first value that your product delivers in a trial model), but as their usage grows, you can apply a paywall.

This kind of incremental pricing model (starting small and experiencing value, then adding further costs down the line), is becoming far more common and makes a big difference to users.

4. Make your product viral

A viral product is one that becomes part of people’s daily routine and is super-simple to onboard new users into – no matter how they find your product.

Refer a friend and reward schemes are the tinder for the fire of virality, as they make it easy to turn your customers into advocates.

Enabling growth and creating virality comes down to ease and impact.

Enable your product to expand and allow your customers to invite their colleagues and peers to refer. Create exponential growth that is outside of your control – it’s not as scary as it sounds!

5. Frictionless onboarding

Enabling quick time to value for your users is vital.

As prospects have less and less time to spare, we need to enable them to go into the product and experience value quickly.

In the marketing-led growth approach of the past, prospects might have submitted a form, waited for someone from sales to follow up, and jumped through lots of hoops over weeks and months to finally get their hands on your product.

People move on and lose interest. You only have a few minutes now to fight for their attention – so make your onboarding painless and mistake-free to get them to share a few more of their minutes with you.

The Enterprise Product Success Formula in a Product-Led Growth Strategy

A visualization of the Enterprise Product Success Formula

So, we know the principles that make a great product-led growth strategy, but what are some of the finer details?

Of course, your product should be a great experience at every stage, but there are some key milestones and features that you should focus on to ensure your product-led growth strategy is a success.

1. Create a consumer grade product experience

A consumer grade product experience is easy, effortless, and enjoyable. Key to this is mastering the first interaction. Set user expectations instantly so you can engage and guide users consistently to their first moment of value.

Capture users' desired outcomes, too. If you understand the customer’s desired outcome as part of your onboarding process, you can personalize their journey and create the best possible product experience for them.

And build a Nurture Track. This means mapping your users' journeys and nurturing them along the way with best practices, webinars, community, and in-app guidance.

2. Easy to learn

Contextualize the features that are most relevant to and helpful for users.

Give your users a seamless experience – any friction they encounter will endanger the chances of them converting to paid customers.

Identify challenges and improve the usability and discoverability of your core features, so that getting started with your product is easy and enjoyable. The sooner a user achieves value from your product, the better chance you have of keeping them as customers.

This leads us to our next point…

3. Accelerate Time to Value

Understand and optimize the first mile of your users’ product experience towards achieving their moment of value.

This isn’t siloed in Customer Success – great user experience starts with the Product team. Prioritize the product roadmap to support exceptional experience during demos, trials, and onboarding processes.

So, this could look like creating personalized feedback for users depending on their stage of the journey, in-app walkthroughs, or simplified processes to achieve quick micro results.

4. Become sticky and viral

We touched on virality earlier, but stickiness?

Sticky features are:

  • easy to expand by adding value to users
  • add value over time
  • are hard for users to replace
An explanation of sticky features

Now, not all sticky features need to be specially differentiated. A common feature that serves its purpose effectively and does exactly what users want can be as sticky as a highly specific, niche feature. It’s all about delivering value long-term in a way that engages users consistently.

5. Built-in ability to expand

Expansion is a focus for every product-led business, but approaching it the wrong way could see you trapped in the Product Death Cycle – releasing new features before your users have time to understand them, ultimately pushing them away.

The key to successful, sustainable expansion is to not build more features before your core features have been adopted. Make sure you (and your users) figure out your core feature before you drive to the next one.

The product death cycle of: adding new features, launching them, seeing an initial spike in users, growth flattening, and then repeating the process.

Iterate over your core features, improve their usability, and then move onto the next feature with patience.

And to make smart expansion plans, you need to have great feedback.

Collect qualitative and quantitative feedback – especially when you launch a new feature and you see that your ideal customers are using it. Combine a simple score (e.g. “how would you rate our product from 1 (poor) to 5 (great)?”) and open text feedback (e.g. “how can we improve this feature?”).

If you are capturing users’ desired outcomes as part of their onboarding, you will have a clear view of what your users want from your product and can expand accordingly.

6. Easy signup and adoption

We often see that, when a company struggles, the immediate outcome or decision is to build more products or go to a new market.

But rather than starting elsewhere, focusing on adoption (and avoiding a leaky bucket) is a smarter approach to take.

Especially in B2B, this starts way before a user’s renewal. You want to know a user’s intentions way ahead of the renewal date.

So, focus on behavioral retention over a 12-week minimum. Look at users’ signup dates and the value actions they are taking within your product to determine the likelihood of retention. These value actions will teach you what’s working and what’s not.

You need to be able to look across an account to see a majority of users are achieving value, rather than one or two power users. Otherwise, you’ll end up with churn.

7. Create an Enterprise Grade Ecosystem

Once you have secured a few hundred accounts, with a tested and proven product, you want to look at moving towards an enterprise-grade ecosystem – enabling seamless integrations and data sharing through standard interfaces and workflows.

This allows you to scale and deliver more value, based on integrating with other platforms and is expected by your clients.

If you’re able to be their centric platform, integrated with others, you will deliver more value, become stickier, and become a key part of their operation.

Cross-functional alignment in companies with product-led growth strategies

A product-led growth strategy cannot be ‘just’ a sales effort or a marketing effort.

In a product-led growth strategy, teams combined their efforts – from sales and marketing to product and customer success. They all align behind the goals and execute a plan in alignment.

These are where your teams should be focused when working under a product-led growth strategy.

1. Marketing focus

  • Product launch and positioning
  • Driving trials/demos
  • SEO & paid media channels
  • Social/Podcast/G2Crowed
  • Promoting webinars through the app

We move away from Marketing Qualified Leads (MQLs) to Product Qualified Leads (PQLs – a lead who has signed up and performed an action that demonstrates buying intent).

PQLs are a far more accurate method of tracking customer journeys from signup to upsell and a key metric in product-led growth strategies.

2. Sales focus

  • Show me vs tell me – using the product to demonstrate value
  • Product-oriented sales team – where the buyer tends to be in control of the process
  • Using usage and features as levers
  • Land and expand strategy, with incremental spend as a key revenue generator
  • Strong understanding of competitive landscape

3. Customer success focus

  • Using automations and measurements to drive adoption at scale, from onboarding to continuous adoption strategies
  • Maximizing the outcome of the product
  • Dealing with larger accounts and use cases
  • Becoming the architects of implementation at a larger scale

4. Product team focus

  • Outcome- and growth-driven, rather than feature-centric
  • Focused on creating and enhancing customer outcomes
  • Promoting simplicity, ease-of-use, and seamlessness
  • Helping other teams understand what they’re building

Everybody aligns behind that North Star metric, driving adoption by prioritizing usability enhancements and user empowerment.

Thank you so much for taking the time to read this article and learning about a framework you can adopt in your own business.

A product-led growth strategy makes sense for so many businesses, not just SaaS, and I hope you can see how universally useful this system can be.

If you would like to discuss product-led growth strategies further or build out a playbook for your business, or if you’d like to talk about Gainsight, head to our website or reach out to me on LinkedIn.

Mickey Alon
Mickey Alon
CTO and Founder, Gainsight