What makes product-led growth so beneficial to companies?
As a business, your primary aim is to increase sales, attract more customers, expand your market share and enjoy higher conversion rates. You have several business methodologies to choose from to enable you to achieve those objectives.
But the one that is fast gaining popularity is product-led growth (PLG). It is a strategy in which the product itself acts as the salesperson to achieve a company’s objectives. Because of the success of PLG companies, many SaaS companies have utilized this strategy to leverage their sales. How does the concept work, what are its benefits, and other crucial details related to it? Read on to find out.
What is product-led growth?
As its name suggests, product-led growth is a strategy or model that relies on the product or service itself as the chief initiator of client acquisition, lead conversion, and business development. It is primarily adopted by scores of SaaS companies that depend on a conduit of active product users to leverage their sales by turning them into paying customers.
Look at the concept with this example: Popular service providers like Dropbox and Slack give users direct access to the products right at the beginning without restrictions. They allow people to experience the product’s value themselves rather than promising it later. Ultimately, the strategy wins customers, attains referrals, and can generate business growth a lot faster.
Benefits of using this model
This growth-led strategy has many advantages, from cost-effectiveness to lower acquisition rates. These are some of the top benefits you must know.
It saves you plenty of money
Most SaaS companies rely solely on in-person sales and implementation, involving significant investment in higher customer acquisitions. With the product doing most of the sales pitch by itself, you can save a huge sum of money.
Marketing and sales through search engine platforms and social media continue to grow costlier by the day. For example, the average cost-per-click on Facebook in 2021 is between 0.5 USD$ to 3.5 USD$. Start-ups, in particular, find such costs too challenging and prefer to rely instead on self-serving products.
Always focused on the customer
The product-led strategy continues to grow at an impressive rate because it places the customer at the center of everything, thus ensuring a higher investment rate. The higher the customer’s satisfaction level, the better it is for your company’s promotion. Since this strategy requires companies to be client-centric, they ensure the user experience keeps getting better.
The sales cycle becomes considerably shorter
The sales cycle is long and complicated in traditional business, involving multiple parties like the stakeholders and decision-makers. With this approach, you can avoid targeted strategies, demonstrations, and onboarding.
Freemium or free-trial options enable users to try the software for a specific period before eventually purchasing it. The software itself helps them understand its working mechanism and features.
Considerably better user experience
A significant part of product-led growth is enhancing the user experience since customers will not buy the product until they find it convincing. SaaS companies that have sought to adopt this model have prioritized it. A satisfied customer who finds a service easy-to-use, helpful, and highly functional will eventually buy it, contributing to the overall revenue.
Do sales teams play a role in PLG?
Yes, despite the product being self-serve for customers and acting as a sales agent until a certain point, sales teams have a vital role in PLG. For example, self-serving products play a crucial role in creating the product’s awareness but sales intervention might be needed for huge accounts
PLG companies that have adopted this business strategy enjoy the benefits mentioned above. Interestingly, SaaS companies that work with a completely different sales model have also embraced it willingly and rapidly.