Every company I talk to is focused on sustainable growth. SaaS founders and revenue leaders are all looking for new ways to stand out amongst their crowded markets. And competition is only getting more fierce as digital transformation accelerates. ​​Gartner forecasts that the enterprise software segment will experience the highest spending growth amongst IT categories this year, exceeding $670 billion.

In this context, one topic that keeps surfacing is product-led growth (PLG). This business strategy drives all user acquisition, expansion, conversion, and retention primarily through a product itself. It tends to create company-wide alignment across teams — including sales, marketing, product, and engineering — around the product as the single source of sustainable, scalable business growth.

Product-led growth is important because B2B buyers now have different purchasing preferences (increasingly similar to how they buy in their normal, business-to-consumer lives) that sellers must adjust to if they want to be successful. 54% of prospects want to learn how a product works on the first call, yet only 23% of sales reps plan to cover that. And nearly 75% of enterprise buyers say they’d rather buy through an app or website, rather than a salesperson.

The power of PLG 
Any enterprise SasS company looking to grow its customer base, retain its current users, and scale more efficiently should be thinking about product-led growth. PLG delivers faster growth because it lowers barriers to entry and acquisition costs, while increasing customer retention and upsells. When your product fixes a true pain or serves a true need, it will grow nearly virally, all on its own. You’ve likely heard of Calendly or Zoom because someone sent you a link to schedule or host a meeting. After experiencing tools like these, you like them so much, you want to use them too.

In a PLG model, acquisition costs are lower because your product has its own methods of capturing paying customers, without requiring marketing spend, sales development support, or an Account Executive. And the best PLG strategies involve products that are incredibly easy to start using in minutes, with little to no setup. Further, most users begin with a free (or very inexpensive) version of the product, rather than paying a larger upfront fee and taking days, weeks, or even months before they feel the return on investment. Because users simply pay when they are ready or when it feels like it is warranted, they feel satisfied that they get the right value for their money. Each of these factors help create a strong bond with the product and help adoption spread quickly.

Honing in on your Product Qualified Leads
Product Qualified Leads (PQLs) are people who’ve already signed up, used the product, entered their data, and become a committed user. Rather than filtering through thousands of prospects only to find the 20% who might be interested, your sales reps can work exclusively with users who already love your product and are probably ready to buy more. Identifying PQLs can also help your Customer Success team target the best upsell opportunities while increasing customer retention.

A cornerstone of product-led growth is the data that it provides about product usage. With this insight, customer success teams can focus on the best users of your product, or those who show the most potential for a potential upgrade or cross-sell. They can identify what features a user or team may benefit from, and inform them of how they can gain more value (this also helps with retention). And product teams can observe how users are integrating the solution into their workflows in order to spot ways they can make it even “stickier.” 

5 steps to jumpstart PLG

Now, all of that sounds great in theory, but product-led growth doesn’t just happen on its own. Here are five steps that help companies establish a successful PLG strategy:

1. Educate your team on product-led growth. Don’t be surprised if many of them are not yet familiar with PLG or its benefits. Even though most of us have experienced it as buyers by now, many B2B software teams are still set in the traditional rhythms of enterprise selling cycles. Before you can begin any sort of PLG transformation, you must first educate your team (both above and below) to garner support and understanding.

2. Assess your starting point. Each industry and product will need to approach product-led growth slightly differently, but your foundation for a successful PLG strategy should include:
- Excellent product functionality. Your product must be second to none, so when users try it, they can’t stop using it.
- Frictionless user experience. Your onboarding and general navigation should be simple and easy
- All-star product management team. You’ll need stellar product leads to drive the bulk of this effort.

3. Shift your team’s roles. PLG impacts the entire organization. Instead of your company’s revenue being primarily marketing-led or sales-led, it will become driven by the product. Instead of having your marketing team focus on driving marketing qualified leads towards sales, they should push any sort of potential user towards the product, and then focus on converting those users into PQLs. By allowing your sales team to only deal with the most qualified users, they can shift from worrying about sales development (outside of enterprise deals), and instead focus on converting current users into paying users. PQLs have a significantly higher conversion rate than sales qualified leads, even though they are lower-touch.

4. Gather PLG usage data. Just as marketing needs data around webpage visits, content downloads, event attendance, and referral sources, PLG requires product data to be effective. It’s important to track what users do within your product, including where they spend their time, what dashboards they look at, and what features they use. All of this will help you convert the right folks into paying users and improve your customer experience over time.

5. Measure and repeat. Once your product-led growth process is in place, it’s time to measure, establish goals, and repeat. See what strategies work and what don’t, and adapt your company’s approach accordingly. 

To learn more about this topic, check out our guide to product-led growth in 2022.