6 Tips to Become A Product-Led Company
What is Product-Led Growth (PLG)? It is a growth model where the product is front and center and the product is the primary driver of customer acquisition, retention, and expansion. As per Todd Olson, you can also define it as a business that makes its products the vehicle for acquiring and retaining customers, driving growth, and influencing organizational priorities.?
Today, people expect a great experience. They want to feel in control over their choices and their interaction with the product. According to research by Salesforce in 2020, 85% said the experience a company provides is as important as its products and services. In the same study, 76% expected the companies and brands they worked with to understand their unique needs and expectations for products. But the reality is something else. Gartner said less than 31% reported having a high-quality product experience.?
Users want faster and easy-to-navigate and use the software. Unfortunately, what many get is slow, clunky, and complicated-to-navigate software. This has a direct impact on business outcomes. It impacts:
Why is it important? Product-led strategies lead to:
This approach can be particularly effective in the digital age, where customers have more choices than ever and are more likely to switch to a competitor if their needs are unmet. However, implementing a PLG strategy can be challenging and requires a company-wide commitment to change. It involves breaking down silos between departments, adopting a data-driven approach to decision-making, and continuously improving the product based on customer feedback. Therefore, companies of all sizes need to be willing to invest in the necessary resources, processes, and culture to make PLG work effectively.
Let's see what we can do to achieve this.
6 Characteristics of Product-led Companies
Product-led growth model usually is a low-touch, human-free, customer-acquisition model. Being a product-led organization means every department thinks about how they can leverage the product in different ways. The product isn’t just part of the overall customer experience - it is central to how every function performs their roles
Product-led Organisations have 6 key factors:?
1. Align Each Function Around the Product: The product is the driving force around every function. They empower employees to use the product to enhance customer experience. To achieve this, PLG companies align each function around the product, including marketing, sales, customer success, and engineering.
a. Marketing: In a PLG company, the marketing function is focused on creating product messaging that resonates with customers and drives adoption. The marketing team works closely with the product team to understand the features and benefits of the product and create campaigns that highlight these value propositions.
b. Sales: In a PLG company, the sales function is focused on leveraging the product to drive customer acquisition and expansion. This involves using the product as a selling tool to demonstrate its value to potential customers and helping existing customers expand their usage of the product.
c. Customer Success: In a PLG company, the customer success function is focused on ensuring that customers are deriving value from the product and are successful in achieving their goals. This involves using product data to identify areas where customers may be struggling and proactively reaching out to provide support and guidance.
d. Engineering: In a PLG company, the engineering function is focused on continuously improving the product based on customer feedback and data analysis. This involves prioritizing product enhancements that drive customer value and working closely with other functions to ensure that new features are effectively communicated and leveraged to drive growth.
By aligning each function around the product, PLG companies create a unified approach to product development, marketing, sales, and customer success. This helps to ensure that everyone in the organization is working towards the same goal of driving growth and creating customer value through the product.
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2. Make Decisions with Data Over Gut Feelings: PLG companies prioritize gathering and analyzing data to make informed decisions rather than relying on gut feelings or assumptions.
a. The teams balance managing the product with a heavy dose of data analysis. They seek to understand what exactly is happening with their product, where their users are struggling, and which features are being used most.
b. PLG companies often implement A/B testing and experimentation to validate hypotheses and make data-driven decisions. By testing different variations of product features or marketing strategies, PLG companies can determine which approaches are most effective and adjust their strategies accordingly.
c. By collecting and analyzing data on user behavior, product usage, customer feedback, and other key metrics, PLG companies can gain insights into how their product is performing, where there are opportunities for improvement, and what features or functionalities their customers value most. This data can inform product development, marketing, and customer success strategies, allowing companies to optimize their efforts and drive growth.
d. This is seen when organizations decide whether they need to keep or pull the plug on a certain feature. With this, they can focus on what actually matters and divert their resources to more high-value features.
3. Use The Product as a Marketing Channel: Here are some ways in which you can leverage your product to drive marketing:
a. Provide a Seamless User Experience: Your product should provide a seamless user experience that delights your customers. If your product is easy to use, intuitive and solves your customers' problems, they are more likely to become advocates and spread the word about your product.
b. Implement Viral Loops: Viral loops are features built into the product that encourage users to invite others to use the product. Examples of viral loops include referral programs, social sharing features, and in-product messaging that encourages users to invite their friends.
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c. Use In-App Messaging: In-app messaging is a powerful way to communicate with your users while they are using your product. You can use in-app messaging to communicate new features, promotions, and other important information to your users. It is also a brilliant way to receive feedback and testimonials.
d. Leverage User-Generated Content: User-generated content (UGC) is content that is created by your users. You can leverage UGC to drive marketing by featuring it on your website, social media channels, or other marketing materials. This can help you build social proof and increase the credibility of your product.
By leveraging your product as a marketing channel, you can create a self-sustaining growth engine that drives customer acquisition, retention, and expansion.
4. Have Amazing Onboarding: In a PLG company, the onboarding process is focused on ensuring that new users have a positive experience with the product and can quickly begin deriving value from it. A well-designed onboarding process can help to drive user adoption, reduce churn, and increase customer lifetime value.
a. Hyper-Personalization: A great onboarding process should be highly personalized to the user's specific needs and goals. This involves collecting data about the user's preferences, behavior, and usage patterns and tailoring the onboarding experience to meet their individual needs.
b. Progressive Disclosure: Rather than overwhelming users with information all at once, a great onboarding process should use progressive disclosure to gradually introduce users to the product's features and functionalities over time.
c. Clear and Concise Communication: A great onboarding process should use clear and concise language to communicate the value proposition of the product and how to use it effectively. This involves using visuals, videos, and other multimedia to convey information in a way that is easy to understand.
d. Interactive Elements: A great onboarding process should be interactive and engaging, with elements like quizzes, polls, and games that encourage users to actively participate and learn more about the product.
e. Continuous Improvement: A great onboarding process should be continuously improved based on feedback and data analysis. This involves tracking user behavior and engagement during onboarding and making adjustments to the process to optimize for user adoption and retention.
By designing an amazing onboarding process, PLG companies can create a positive first impression with new users, reduce the time to value, and increase user engagement and retention. This can ultimately help to drive growth and increase customer lifetime value.
5. Help Users Help Themselves: In a PLG company, the goal is to create a product that is intuitive and easy to use, allowing users to quickly learn how to use it and derive value from it. To achieve this, PLG companies often focus on creating self-service resources that allow users to find the information they need to use the product effectively without needing to rely on customer support.
a. Self-Service Resources: PLG companies often create self-service resources such as knowledge bases, FAQs, and user communities where users can find answers to their questions and troubleshoot issues on their own.
b. In-App Guidance: PLG companies may provide in-app guidance such as tooltips, walk-throughs, and help centers that provide users with context-specific information about the product.
c. Proactive Support: PLG companies may use data analysis and machine learning algorithms to proactively identify areas where users may be struggling and provide targeted guidance and support to help them overcome these challenges.
d. Education and Training: PLG companies may offer education and training resources such as webinars, video tutorials, and certification programs to help users develop the skills and knowledge they need to use the product effectively.
By helping users help themselves, PLG companies can reduce the burden on customer support, improve the user experience, and drive adoption and retention.
6. Collect and Use Feedback from Customers: In the past, product ideas used to come from the higher management of the companies and it was based on what they wanted to do or envisioned that the customer might want. This gave the users the feeling of being unheard and under-represented. In a PLG company, customer feedback is critical for understanding user needs, identifying areas for improvement, and driving product innovation.
a. Surveys and Polls: PLG companies often use surveys and polls to gather feedback from customers on their experience with the product. These surveys may be conducted through email, in-app notifications, or other channels.
b. User Feedback Tools: PLG companies may use user feedback tools such as feedback widgets, feedback forums, and feedback forms to collect feedback from users directly within the product.
c. Data Analysis: PLG companies may use data analysis to track user behavior and identify areas where users may be struggling or encountering barriers to adoption. This data can be used to inform product development and identify areas for improvement.
d. User Research: PLG companies may conduct user research such as user interviews, focus groups, and usability testing to gather more in-depth insights into user needs and pain points.
4. Customer Success Teams: PLG companies may have dedicated customer success teams that work closely with customers to understand their needs and gather feedback on the product.
By collecting and using feedback from customers, PLG companies can continuously improve the product, increase user satisfaction, and drive adoption and retention. By listening to customer feedback and incorporating it into product development, PLG companies can create a product that meets the needs of their users and drives growth and success.
Managing Partner - HASAN.VC, Founder Ethis
2 年Powerful stuff and comprehensive piece. Will re-read this