10 benefits of product-led growth
Running a PLG-motion is chock full of benefits—but here are the 10 most important.
Product‑led foundations
Product‑led Growth cOLLECTIVE
Think about the last time your company had a meeting to discuss some aspect of growth—acquisition, expansion, conversion or retention.
Who had a seat at the table?
Sales, marketing, engineering, design, customer success. But what about the product itself?
If you’re practicing product-led growth (PLG), your product doesn’t just have a seat at the table in growth discussions. It’s at the head of the table.
Prices may be high right now, but consumers are still having their moment. Particularly in the world of SaaS.
They’ve made it clear: They want frictionless entry. They want quick, clear value. And they want to know they’re getting those things before they lay down any money.
And because SaaS has become so competitive, companies in the space have had to comply with these consumer demands if they want to thrive.
"It’s easier to spin up new software tools than ever. So you've got to deliver an exceptional experience. You've got to help the customer (the user) get their job done, and get value as quickly as possible with as little friction as possible. Or else they're just going to try another tool."
In other words: Gone are the days of exclusively top-down sales. Many SaaS orgs now embrace a hybrid sales-led and product-led GTM (go-to-market) approach; others are fully product-led.
It’s a product-led world, and we’re just living in it.
“The SaaS industry has experienced consumerization,” said Ramli John, Content Programming Director at Appcues. “We buy SaaS products like we buy cars or perfume. We try it out; we make sure it’s a fit. We don’t want to have to talk to sales and get a demo, but we don’t want to purchase it without trying it first.”
The good news for SaaS businesses? PLG is as simple as meeting consumers where they are right now.
That’s because users don’t want to be sold to. You no longer have to sell to executives, and can skip right to demonstrating value to the end user. These end user employees then do the selling for you—after they try your product for free.
Users want to teach themselves to solve problems with your products. You just equip them with your product and a well-developed knowledge base and let them go wild.
It’s easier—and it’s better for your business. Now let’s get into the specifics.
Running a PLG-motion is chock full of benefits—but here are the 10 most important:
PLG attacks growth from both ends. It boosts customer acquisition on the one end and increases retention on the other. And, it does so at a lower cost than predecessor methodologies: sales-led and marketing-led growth.
Think about it: Sales and marketing budgets have been huge historically. Millions of dollars in GTM spend is usually your starting point.
Adopt PLG, and those budgets go down. Way down.
When acquisition is built into the product, you don’t need to invest as much in growing your sales team.
When a lower barrier to entry is sending free trials and signups through the roof and compounding with word-of-mouth referrals, you can spend less on CRO, SEO, PPC and dozens more marketing acronyms.
Meanwhile, you’re not just getting more leads—you’re getting better, more qualified leads. That’s because they’ve already shown interest in your product by actually trying it.
And the very act of having more people try your product feeds data to your customer success team. That helps them understand how users engage with your product—and where to focus their upselling efforts and anti-churn operations.
Speaking of retention, consider this: PLG comes with smaller average deal sizes.
Sounds like a bad thing at first, but it’s not a structural flaw in your product-led castle. It’s a moat all the way around it.
More individuals try and buy under PLG models. That means your revenue is more diverse.
There’s your moat: When someone leaves, it’s a way more manageable hit than if you were relying on the huge “whale” accounts your sales team likes to bring in.
It’s not just about more growth. PLG leads to faster and more efficient growth.
Allowing consumers to try your products for free lowers the barrier to entry. That means you get a huge number of users to funnel into your conversion pipeline.
Remember—this is happening without sales or marketing. It’s built into the product. That’s the part that’s more efficient.
The part that’s faster has already begun:
Your pipeline is full. You’re not relying on the next big sale, or the next super-effective marketing campaign. You’re making new sales every day—in your sleep (if you’re automating everything the way PLG demands that you do).
This isn’t just our hot take. It’s backed by data.
The value of product-led companies is, on average, a whopping 30% higher than the public-market SaaS index fund, according to data from OpenView Partners. Oh, and all of the top SaaS IPOs in 2019 were fully PLG. That’s good company to keep.
When you go PLG, your customers have a better experience.
Why? Because your whole organization is designing and improving your products with users in mind. The whole point is to make the product easier to understand and more enjoyable to use.
PLG asks you to create user experiences that lead customers to your product’s value lightning fast. And well before they enter their credit card number.
PLG also asks you to build processes that allow users to onboard on their own time—without interference from anyone on your team. That kind of user onboarding process is much more enjoyable and much lower pressure.
All of these funny-shaped pieces of PLG fit together perfectly to solve the customer experience puzzle. Your product stands out—and excels—as a result.
Unless they’re dead, SaaS products are never done developing. And they’re best developed with the help of user feedback.
Guess what: PLG can 10x the amount of user feedback you get. And that helps you focus your product development efforts on what matters most: user needs.
Adobe is one of the best examples of this. With its thoughtful net promoter score (NPS) survey, they ask for users’ help improving its products, in the product—meaning the survey is served just when issues and opportunities to improve are on users’ minds.
Adobe isn’t alone here. Appcues relies on user feedback to evaluate the impact of new products and features—something that also informs the product roadmap.
“Great products aren't launched the first moment they’re available,” says Lyla Rozelle, Product Manager at Appcues. “Most PMs work in an agile environment focused on continuous improvement.”
“Adding an ease of use survey into certain areas of our product—and measuring the change in those results—helps direct our product strategy and roadmap,” Rozelle says.
Here's a glimpse at how we ask users for feature-feedback using Appcues surveys:
The main takeaway: Put the product front and center in your growth strategy. Let people use it for free. Ask for feedback.
Before you know it, you’ll have more than enough data to evolve your product in exactly the way your users need you to.
Imagine making the top of your sales funnel so wide that people in it had no idea they were in it. PLG lets you do that.
How? By opening up the funnel to the point that your future users don’t have to talk to anyone in your company in order to try out your product.
Now, the actual usage of your product is part of your top-of-funnel. It’s hands-on and valuable for users, and it’s the dream scenario for every marketer and salesperson.
That’s the beauty of self-onboarding, a central tenet of product-led growth.
“Users want to onboard themselves. They want to educate themselves rather than be educated. And the result is efficiency—a reduction in costs for sales and support and more.”
But the benefits go even deeper than that.
“It’s not just through the top funnel, but also onboarding or maybe even expansion, when you're letting users hit a certain limit and they actually upgrade themselves without having to talk to anybody from your team,” John said.
When you make your product experiences better, your customers are happier. (Of course they are!)
Happier customers means higher NPS scores. That’s important on its own, but is less important than the satisfaction itself.
The increase in customer satisfaction is inherent to PLG. In-product NPS surveys are how you measure it (and gather data that can help you improve your product even more).
Here's a peak into how we set up in-product NPS surveys at Appcues:
Data-driven decisions are generally the best decisions. But to do a bunch of data-driven decision-making, you need data. (A lot it!)
The good news is that if you’re a recent PLG convert: product-centric models are data machines.
Think about it: The simple act of turning your onboarding process into a self-serve affair could send the amount of data you have through the roof.
Where you once had one of your team members walking a new user through the onboarding process, you now have your product doing it.
And inside your product, you’re collecting data on all of your users’ interactions. What better way to validate updates and innovations?
In other words, PLG brings a lot of data-creating user behavior inside your product, where you can track it. That gives you more data to work with, which helps you make better decisions.
Need inspiration to create or improve an onboarding process that creates more and better metrics? Check out MURAL’s new user experience efforts.
Nine out of 10 SaaS leaders agree: Getting teams completely aligned is a huge pain.
Why would all the disparate teams be aligned? Marketers want to market. Salespeople want to sell. Engineers want to engineer. That’s what they’re paid to care about.
PLG solves this one. When you adopt the product as your key driver of growth, you’re sending your team the following message: Align around the product. Prioritize the user’s experience within the product above all else. Make it absolutely, incomparably awesome.
Presto—you have alignment. And aligned teams move quickly. And get sh*t done.
When you let your product lead your growth, you pour more resources into improving it. That makes it better, which makes it harder for customers to leave.
You see where this is going? This is one of the biggest benefits of product-led growth.
Under most SaaS pricing models, more time as a customer means more revenue for the business.
SaaS folks talk all the time about customer lifetime value (CLV). If they’re not talking about PLG as a way to increase it, they’re missing something important.
Remember all that extra user experience data and customer feedback you’re going to get thanks to PLG? It brings another benefit with it:
You can better optimize your product to achieve better product-market fit.
You can deeply understand your customers’ needs—the needs of the market. And you can evolve your product to meet those needs. Perfectly.
That translates to wider adoption and the revenue growth that comes with it.
The 10 most important benefits of PLG are as follows:
PLG is a big deal for SaaS companies, but many other types of companies can benefit from PLG. The key is that your product offers a unique and valuable solution that can be personalized for the user.
JetBlue—definitely not a software company—is a great example. They have created digital experiences that employ many aspects of PLG. And digital experiences are a core way almost any business will interact with its customers.
Absolutely not. Product marketers are going to play a huge role in implementing PLG at any company, but all teams need to be aligned around the product if the company hopes to enjoy the full benefits of PLG.
PLG is a team sport, after all.
The benefits of product-led growth are numerous. And they compound over time.
Each new user early in the funnel creates more data. Each data point gives you more opportunity to improve so more users join. And the cycle begins again.
Meanwhile, your imprint in the SaaS space grows, along with your revenue.
It’s why some of the best SaaS companies in the world have adopted PLG. And why you should, too.
But really, the No. 1 reason to adopt PLG isn’t strictly about pros and cons. It’s about one simple truth.
“(PLG) is the way people want to buy and use software these days,” Keating says, “And if you want to win—if you want to be a successful business—you have to give the people what they want.”
