“Product-led growth might be a buzzword right now, but this is going to just be called ‘good business’ very soon.”
~Val Geisler, SaaS marketing expert and digital strategist
Product-led growth (a go-to-market strategy that uses the product itself as the primary means of growing the customer base) is an increasingly popular approach.
It’s highly effective in the right situations, but marketing a product-led business is a little bit different. It might even require some adjustments to your marketing team structure — which is how we’ve ended up with a new approach called PLG marketing.
Today, we’ll show you how to understand this and leverage the growth strategy underlying it, incorporating it into the marketing approach you use with your SaaS clients.
What is PLG marketing?
Product-led growth relies on the product to drive user acquisition, conversion, and retention. In product-led companies, all departments focus on making the item as successful as possible because it is the key to success and scalability.
PLG marketing, then, is the set of marketing activities and tactics that digital agencies and marketing teams use to succeed with PLG.
Benefits of a product-led growth strategy
Embracing a product-led growth strategy delivers powerful advantages for certain businesses. Consider these six benefits that a PLG approach (and adding PLG marketing to your digital agency project management) can deliver to your right-fit clients.
Reduced customer acquisition cost (CAC)
Traditional marketing isn’t cheap. Digital marketing can be less expensive in certain ways.
But product-led growth is much more affordable — it doesn’t cost much to send an in-app message or a marketing email.
With product-led growth marketing, CAC is lower because the product itself drives the growth — not cold calls, lead generation, TV commercials, and other things that cost money.
Remember, a user who’s already enjoying the demo or freemium tier of a SaaS product is already:
1) Primed to buy
2) In your client’s marketing funnel
Faster user adoption
PLG companies tend to make products that are easy to start using and have a wide-ranging appeal. PLG works well with short sales cycles and quick onboarding; if users can get up and running quickly and feel like they understand how to use the product (at least at a basic level), then the sale is much easier.
Take Canva as an example. Anyone can create a free account and poke around in the tool. Most users have a basic understanding of how it works within just a few minutes. The product leads the way. And then, just when users are confident that Canva can meet their needs, they run into a premium feature or asset they would like to use.
Higher customer engagement
With PLG marketing, you’re talking to people already using your client’s product. They are engaged on some level, and you’re increasing that engagement (and hopefully converting them to paying customers) with your marketing efforts.
Compare that to outbound marketing, where you compete for attention from people who don’t yet know or trust your client’s product. The intrinsic higher customer engagement in product-led models is a significant value.
Many of the methods and tactics within PLG marketing are extremely scalable:
In-app messaging scales to every app user (or segments as needed).
Self-serve tutorials and user guides are infinitely scalable.
Acquiring free users can be scaled using marketing tactics with high virality and low cost (social media marketing, content marketing, SEO, etc.).
Compared to a traditional sales-focused marketing approach, PLG is attractively growable.
Shorter sale cycles
Product-led growth leads to shorter sale cycles because the product is doing the selling. Not some complicated nurture campaign, not repeated high-pressure sales calls, or pricey ad campaigns. Just the product itself convincing users that it’s worth paying for.
There’s still a time and a place for other digital marketing tactics in PLG marketing. You’ve got to build that large free user base somehow, and often, the strategies you’re accustomed to using still make sense.
This is part of why Canva, Amazon, Microsoft, and even Google are spending money on PPC ads and TV/streaming commercials.
But at the core of PLG, you do tend to see a short sale cycle that doesn’t involve much direct interaction.
Stronger customer loyalty
When your product sells itself, you don’t have to work very hard to build customer loyalty.
When your clients’ customers love using the product (because it works well and because it was built with a singular focus on PLG), they just aren’t interested in looking elsewhere.
The key elements and strategies used in PLG marketing
Product-led growth works best with specific types of products, and it really takes off when businesses and agencies add in the right key elements.
If you’re exploring PLG marketing for any of your clients, make sure these key elements and strategies are in play.
In a customer-centric business, it’s all about the customer experience. In a sales-led business, it’s all about sales. And in a product-centric approach, it’s the products.
Of course, every business must consider customers (user experience), as well as sales and products. You can’t have one without the other two —at least not for long.
What we’re really talking about is where the business centers its focus:
Does customer success exist to make a better product, more sales, or the customer successful?
What about product development?
Accounting and sales?
In a product-centric approach, the focus throughout the business stays on the product. It’s the center of marketing efforts, customer success, and quite literally everything else. All efforts drive users to the product because it’s the product that does the heavy lifting.
Free or freemium model
Essentially, PLG creates products that sell themselves. But to do so, there has to be a way for people to use or interact with it prior to that sale.
Enter the freemium model, where you offer a free basic version of a product but an enhanced premium version at a cost.
It’s a model that many big companies use: Canva, Zoom, Grammarly, Slack, and Google Docs just to name a few.
All these brands have some form of free product that does enough to be useful and attractive — and hopefully get you hooked. And then, when you need more, upgrading to the paid version just makes sense.
If your client doesn’t have a product that can work in the free or freemium model, a free trial is another option.
Self-service or user-friendly onboarding experience
Self-service onboarding — where the user navigates through the onboarding process on their own, often through software or browser prompts — is vital to product-led growth marketing.
That’s because users need to recognize value almost immediately so they keep using the product and eventually convert into paying customers.
You’ve seen these in action as a consumer. Anytime you visit a web tool that’s been updated, the browser tab darkens, and a little popover box appears, pointing out all the stuff that’s new. That’s self-service onboarding.
Self-service matters for another reason, too: Your clients can’t spend a ton of money on human customer success teams to support free users because free users aren’t paying for them.
Self-service onboarding works for the free users, and it might suffice for most of what paid users need, too.
Using low-cost marketing channels
PLG strategies still require bringing in free users; your product can lead the way only once people use it. For these, PLG typically employs low- and no-cost marketing channels. Word of mouth, customer referrals and endorsements, and the like are free in a sense.
Other low-cost marketing channels include content marketing, SEO, and sometimes paid search/PPC/paid social. Go for whatever makes sense for the market or demographic your client is aiming for — and doesn’t blow out the marketing budget.
As you tackle these more conventional marketing elements, make sure you’re using the right digital marketing agency tools.
In-app tutorials and education
These are the next steps past self-service onboarding. The first is getting users to a basic level of competence with the product. Then, during or after conversion, more detailed tutorials kick in to turn basic users into experts, champions, and raving fans.
Building product virality
Virality is when something spreads through existing social networks, formal or informal. Product virality, then, is when a product spreads in similar ways.
Slack is a prime example of this. An engineer at a company would discover Slack and start using it on a small project. As the engineer invites others to collaborate, they naturally have to create accounts. Then, they saw how great Slack was for that first use case and took it to other teams, companies, vendor relationships, and so on.
In this way, Slack spread through software development teams, through broader company ranks, and across companies and vendors until it was practically everywhere.
In-app messaging is the way PLG marketing teams reach existing customers. These could be announcements about sales and discounts, visual cues about premium features, and landing page-type messaging when a user navigates to a premium feature.
Sending a message within the product itself is nearly free, and if done well, the reach can be astounding. It’s like a marketing email that users can’t avoid!
7 important product-led growth metrics to track
Measuring product-led growth relies on a specific set of metrics. Some of these show up in other approaches, while others are unique to PLG.
Make sure you’re tracking at least these seven metrics for any client taking a PLG approach:
Product qualified leads (PQLs): Users who have experienced the product’s value (trial or free users). The PLG model requires a large pool of PQLs to reach sustainability, so tracking this top-line number is important.
Time to value: How long it takes for a user to find value (sometimes called the “Aha!” moment), measured from account creation or initial use. Lower time to value is almost always a good thing, especially in PLG.
Free trial conversion rate: The percentage of free users who convert to paid users. Useful for tracking so businesses can identify deviations from their norm.
Feature adoption rate: The percentage of users who utilize a specific feature in the product. Important when adjusting the feature mix of paid and free, as well as in determining development goals.
Expansion revenue: Recurring revenue from existing customers above the basic price for the product or service (upsells, cross-sells, add-on services, etc.).
Customer lifetime value (CLV): How much the average customer will pay over their lifetime relationship with the product or brand. Relevant during acquisition and valuation and can inform appropriate new customer acquisition spending.
Net revenue churn: Churn rate (lost revenue from cancellations/downgrades) minus expansion revenue for the same period. A 10% net revenue churn means that you expanded revenue by 10% more than you churned MRR. A more useful way to chart overall revenue growth or contraction than just churn and MRR/ARR alone.
Empower your clients’ PLG marketing with Teamwork.com
The product-led growth model is a powerful tool for many agencies. And with the right knowledge and the best tools, your digital agency can empower clients with top-tier PLG marketing support.
Teamwork.com is the all-in-one project management platform built for agencies. With a flexible interface that supports numerous methodologies and approaches, Teamwork.com gives you better project visibility, analytics, planning and scheduling tools, and much more.