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What is product-led growth and how can it help SaaS businesses scale?

Product-led growth is a SaaS trend that has catapulted companies with ingrained product-led approaches into global enterprises. Established businesses like Hubspot have successfully adopted the product-based business models as a catalyst for growth, with many others following suit.

A product-led growth strategy positions your business for robust growth by lowering acquisition costs, boosting your customer satisfaction rates, and improving customer loyalty. The latter is achieved through the delivery of a consistently valuable product. 

Let’s explore what product-led growth is and how implementing this strategy can help you achieve sustainable growth. 

What is product-led growth?

Product-led growth (PLG) is a strategy that makes the product itself the central driver of customer acquisition, sales, and retention. Rather than channel funds into sales teams or paid advertising, businesses with a product-led strategy invest in creating a valuable product that naturally attracts and engages.

PLG strategies essentially involve giving customers the keys to the product during their research or purchase phase by offering them a “try before you buy” plan. The idea is to let the software, its features, and performance speak for themselves. If you give customers the key, you allow them to experience the ins and outs of your product and demonstrate product value to the point that the customer decides to upgrade to a paid version.

Companies implement a PLG strategy using either or both of the following:

  • Free trials: Users get to try the full product at no cost for a set time (e.g. 30 days) before they are encouraged to pay.
  • Freemium models: Users get a basic or limited version of the product for free, and pay a premium for the full product and/or advanced features. For example, a company offering technologies for call centers might provide extra AI-powered features to customers on their premium plan. 
  • Self-service trials: Users can take self-guided demos to get to grips with the key features and functionalities of a SaaS product. This allows them to evaluate its performance independently of sales staff. 
  • In-app notifications: If a potential customer has registered for a free trial, on-boarding messages sent through the SaaS platform or app can be used to increase conversions. These messages should be personalized based on the users’ needs and reasons for registering but they can also be used to guide users through the app to improve their product experience.

Read also: Driving growth through happy customers: The importance of customer satisfaction

PLG strategies essentially involve giving customers the keys to the product - Oneflow

Benefits of a product-led growth strategy

Of all the advantages of using a PLG strategy, a few warrant special attention.

Lower customer acquisition costs

When your product drives the buying process, you ease the financial strain that results from the use of other advertising strategies. Instead, your efforts focus on ensuring the value of your product and sharing that value with your freemium customers to convert them to paid customers. Your Customer Acquisition Cost (CAC) will be significantly lower – it’s much easier to upsell to existing customers than it is to sell to new ones.

Building a customer referral program into your product is also a PLG best practice that leverages the advocacy of loyal customers to lower acquisition expenses. 

Top-of-funnel expansion

Because customers prefer to try products before buying them, offering a free trial or freemium product automatically widens your top-funnel engagement. So if your customers can’t decide between contact center vs call center services, a freemium plan allows them to explore the features and benefits of each to decide which technology works best for them.

Offers a better user experience

If your goal is to create a product that naturally drives conversions, it should be intuitive, easy to navigate, and self-serviceable in its free form. This hyper-focus on improving user engagement and satisfaction means that a PLG strategy should deliver an exceptional user experience.

A product-led growth strategy is a viable option for SaaS businesses

How to scale with a product-led growth strategy

Your potential for growth lies in how effectively you execute your PLG strategy. It’s great to attract hordes of new customers with a freemium trial, but there’s no guarantee that they’ll convert. 

Here are some things you can do to maximize the success of your product-led strategy.

Utilize the product growth flywheel

The product growth flywheel is a PLG framework that product-led businesses use to create an optimal user experience, with the goal of nurturing new users to become customer advocates. Customer advocates are high-value customers who refer your product to others, lowering your acquisition costs and driving sustainable growth.

Prioritize value

In a PLG strategy, your business’ growth is intrinsically linked to the value of your product. Because your customers have no financial commitment to you, it’s vital to deliver promised value as quickly as possible. The earlier you demonstrate value, the quicker you build customer confidence in the paid version of your product.

Prioritize adding value to your product by:

  • Integrating personalization into your product.
  • Conducting market research to identify pain points.
  • Updating your product in response to customer feedback and emerging technologies or trends.
  • Producing new features and functions as purchasable add-ons.
  • Creating those “aha” moments during your onboarding experience.
  • Rigorously testing your product with each new addition.

Read also: What is a digital transformation? And what drives one?

In a product-led growth strategy, some metrics are more important than others - Oneflow

Perform consistent—but relevant—updates

Updating your product or releasing add-on features or functionalities is a common way for SaaS businesses to increase their product’s value.

Analyzing the paths your customers take as they use your product provides insight into potential areas for improvement. For example, if users encounter issues operating your remote desktop apps on their Android devices, you might implement a function that makes it easier for them to do this.

You can also gather customer feedback and use it to improve your product. You can do this through:

  • Short in-app surveys
  • Long-form surveys
  • Phone calls
  • Face-to-face communications
  • Email requests
  • Suggestion boards
  • Social media

Create an agile and intuitive onboarding experience

Users value convenience. With so many options available on the SaaS market, it’s easy for customers to abandon a product that’s difficult to grasp. The more intuitive and uncomplicated your product is to use, the faster consumers will recognize its value.

Even if your product is inherently complex, a product-led growth strategy can work for you. Identify the most valuable or common use cases of your product and work on creating a user-friendly template that demonstrates its potential value.

Keep an eye on the metrics that matter

In a product-led growth strategy, some metrics are more important than others. Monitor and analyze the metrics below to gauge the success of your PLG strategy. 

  1. Time-to-value

Improving the time it takes for customers to find value in your product shortens their journey to advocacy. Consistently measure and improve your time-to-value by optimizing your onboarding process and implementing valuable integrations, resources, and features.

  1. Product-qualified leads

A customer who has completed your onboarding process and is consistently engaging with your product is known as a product-qualified lead. By identifying these customers, you can approach them at the right time to initiate their progression to the next buying stage.

  1. Customer lifetime value

This metric tells you how much an individual customer generates in revenue throughout the lifetime of their relationship with your brand, through both personal sales and referrals. PLG strategies are designed to facilitate high customer lifetime-value rates, so this metric is critical for gauging success.

  1. Upsells and expansions

Expansion revenue is the revenue you generate from existing customers. As well as customers who upgrade to more expensive plans, keep an eye on those who purchase add-on features.

  1. Customer churn

Your churn rates are highly indicative of your product-led growth success. They help you identify and improve problem areas in your user’s journey. For example, if your customers are leaving within a specific timeframe, it points to issues within your onboarding experience. If your paid customers are disappearing, you might need to create valuable add-ons or invest in a customer retention solution.

Automation tools and organization workflow best practices can help you manage multiple tasks effectively and make the most out of your statistical analysis.

Read also: 9 Tips to implement a data-driven sales strategy

In a PLG strategy, your business’ growth is linked to the value of your product - Oneflow

Key takeaways

A product-led growth strategy is a viable option for SaaS businesses big and small. If you’re a startup, a PLG strategy is all the more powerful, widening your top funnel and exposing your product to many potentially high-value customers.

Before jumping into a PLG strategy, arm yourself with a deep understanding of your customer’s pain points and the ways in which your product solves them. Aspire to integrate value in the core of your product and demonstrate this value to users as early on as possible. 

As long as you deliver on your promised value, your PLG strategy is sure to generate growth.


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