What Is Product-Led Growth (PLG)?
Product-led growth is a go-to-market strategy that relies on using the product itself as the main vehicle for customer acquisition, activation, and retention. Product-led businesses typically utilize a free trial or freemium model to get prospects to try out the product and convince them to make a purchase.
Take Netflix as an example. If you’ve used the platform, you know that you don’t need to schedule a demo before being able to watch and, eventually, buy the service. Essentially, the whole process – from onboarding to upgrading – is handled by the product itself.
As a no-code builder for in-app onboarding, Userflow enables SaaS businesses to be more product-led. It allows you to build product tours and checklists inside your product so that your potential customers can guide themselves to find what they’re looking for.
Esben, Userflow’s co-founder and Chief Growth Officer, explains: “Product-led growth is a big trend. People are buying it to better convert customers, bus also to onboard existing users and highlight new features.”
Because the product experience drives the buying process, adopting a PLG approach can reduce customer acquisition costs (CAC) without the need to increase sales headcount or advertising spend.
While your competition is busy hiring more and more sales reps, you can focus on creating a SaaS onboarding plan to effectively – and efficiently – serve more customers. By leading with the product, you’ll also benefit from a wider top-of-funnel, shorter sales cycles, and, ultimately, faster growth.
When to Consider Moving to PLG
When you have a new market, you are essentially creating a new category. In SaaS, this is known as trailblazing.
What you’ll often have to do in these cases is invest heavily in educating people about this new problem that your product is solving.
If you’re in that blue ocean, and you’re creating new demand, having a strong sales team can make a massive difference to the bottom line.
Along with Userflow, Esben is an important part of Cobalt (a Pentest as a Service (PtaaS) platform). Because the company was – and to an extent, still is – in the blue ocean, they’re focused primarily on a sales-led motion.
He sums up: “[Cobalt] needed a bit more explanation. It needed to explain why we are better than other consultancies and what makes us different. So that was a blue ocean; the category already existed but it was a brand new way of doing it.”
Eventually, as the market starts heating up and getting more competitive, you’ll need to move down the product-led path before the competition catches up.
The key is to first make sure you have successful customers and really understand what it takes for them to succeed. This way, you’ll decrease the chances of having a high churn rate.
Product-Led and Sales: Can You Do Both?
One of the most common misconceptions about PLG is that it shuns sales teams.
While the product is doing a lot of the selling, that’s not to say that product-first companies don’t need good sales reps. Businesses can still do sales, but they’ll need to use the product as a sales mechanism a lot more to get new users up to speed.
Enabling your product to drive growth often entails that all teams within your company should turn to the product as the first place to generate growth and reach business objectives.
For sales, this means looking for ways to use the product to qualify prospects and have more meaningful conversations with people who already understand its value.
The Four Elements You Need to Master Product-Led Growth
With a close to 200:1 ratio of customers, Userflow is undoubtedly a unique business in its own right. As their Chief Growth Officer puts it: “We are only 2 employees and 1 freelancer but we’re truly product-led ourselves, so we eat our own dog food. We’re trying to be as product-led as possible; working with a very limited headcount but being able to support and manage for hundreds of customers.”
The free trial is how the company sells its product. “We know we have a really great product and that’s what I love about PLG – the best products win. I think it’s kind of an integrity move that you can actually push your product that much that early in the sales process.”
So what is their secret?
Let’s walk through some of the milestones you need to hit to run an effective product-led company.
Focus On the ‘A-Ha’ Moment
While users are trying out your product, you need to give them an experience that takes them to the ‘a-ha’ moment where they realize the value of your product.
The core principle here is to deliver value before you ask a prospect to make a purchase. When trying out Userflow’s product through a free trial, users are encouraged to build a flow as soon as possible.
Ideally, “customers will then realize ‘ah, I can actually buy the flow myself without involving developers’. The great thing is that if they stay around and build more stuff, that’s where we see the real retention.”
One way to track these ‘a-ha’ moments is through your product-qualified leads. Focusing on these product-qualified leads can help you determine the actions that led prospects to become qualified leads.
Esben shares: “We have a very simple strategy. If we can get users to spend more than 30 minutes building inside our product, almost all of them will buy (unless there’s a pricing issue). The other thing we look at is how this relates to our ICP.”
Make It Easy to Engage
As a rule of thumb, you should eliminate unnecessary friction points as much as possible. After all, the more friction you add before the free trial, the less likely it is that users will actually end up in the trial.
To help find frictions within the usage patterns of the customers, consider tried-and-true methods such as using a good analytics tool and building a robust customer team.
Allow Buyers to Self-Educate
Think about this: when you’re looking at a software product, would you like to see and use it before purchasing or would you rather go through a lengthy sales process to learn about the product from a sales representative?
Naturally, most people will opt for trying the product on their own, so enabling them to self-educate while in the free trial or freemium model is essential.
Esben shares that they try to think product-first in everything they do. To illustrate with an example: when it comes to scaling without increasing the support load, one strategy Userflow is using is looking at the UX and changing it to be more explanatory.
Additionally, they’re employing their own tool (Userflow) to guide customers more effectively and leveraging a self-service knowledge base so users can easily find information on their own.
Uncover Your Competitive Advantage
Competitive advantage is what makes your products or services superior to all of the other choices available to your target audience.
For Userflow, the real competitive advantage lies in the extent to which they can do product-led growth without building a huge, expensive sales team.
To create a competitive advantage, you need to really understand your value and why people buy your product. Knowing what motivates the purchase of your product is key to helping people come out of the “Messy Middle” of decision making, as well as creating authentic connections with your customers.
Building a Website That Supports Product-Led Growth
Your website is the entry gate into your product. It’s where you show prospects the value of your product and entice them to give it a try.
On Userflow’s homepage, you’ll notice a plethora of social proof, including featured customer logos, happy customer testimonials, and third-party reviews.
Perhaps the biggest highlight on their homepage, however, are the two CTA buttons. Along with the primary CTA (start a free trial), there is a separate one that allows users to view a demo.
Esben explains: “We prefer getting people on the free trial, but we know that some people are not comfortable doing that right away. For them, you don’t want to just shut them off, you want to give them a possibility to explore. For the secondary CTA [view a demo], why do a call if users can just watch a video or a demo?”
Combining a product-led experience with a demo motion is an excellent strategy to make sure that prospects have gone through a certain product information cycle before scheduling a demo. By doing so, you’re ensuring a more productive sales process, as well.
Create Separate Use Cases
Having great features is the crux of driving demand. That said, that isn’t going to be all you need. For your strategy to work, the customers need to know that you have those features.
While a well-thought-out homepage is a must, you can’t bank only on it to do all the heavy lifting. Craft different messages for different situations and showcase what your product does and its features on separate pages. Userflow, for instance, has different solution pages that they use for different intent, including product-led growth, trial conversion, user onboarding, and in-app surveys.
As Esben points out, it’s important to remember that most customers coming to you already know they have a problem and now they’re looking for a solution. Even more, “they are not looking to be told why they have that problem. They already know that. They know what they want, so don’t underestimate the buyer in that way.”
At a Glance: Userflow’s Acquisition Strategy
Client acquisition is the lifeblood of any SaaS business. While the best channels for acquisition marketing vary from brand to brand, Esben shares that paid search is one of their key channels.
According to Userflow’s co-founder, “if you have something that people search for, PPC is amazing. In our cases, SaaS onboarding and product tours are things people are very actively searching for because that is a real problem they have.”
By pushing people who click-through into free trial motions, while the competition is focusing on expensive sales demo motions, Userflow has a noticeable CAC advantage that enables them to outbid competitors.
The Increasing Need for New CRM for SaaS
CRMs are the go-to solutions when it comes to keeping track of a business’s current sales pipeline, moving deals through, and building long-lasting, meaningful relationships with customers.
SaaS companies, however, are ever-evolving. Today, with the changing consumer behavior and higher demand for digital solutions, they need to be as adaptable as ever to meet the changing business requirements.
This leaves many marketers wondering whether traditional CRMs are capable of meeting the unique needs of SaaS and PLG companies.
Esben argues that dominant players in the CRM market, such as Hubspot and Salesforce, were created 15-20 years ago and their models haven’t changed much since then.
Built to be more person-driven, these solutions fall short for many SaaS companies. He adds: “SaaS businesses just work in another way. We, for instance, have the free trial concept and we have more things to look at (such as product-driven metrics).”
Another argument Esben points out is that “neither Salesforce nor Hubspot are very good at handling subscriptions, which is the most dominant model in SaaS.” Even more so, with subscription-based models rising in popularity in other industries as well, the increasing need for a new SaaS-oriented CRM solution is becoming hard to ignore.
Put Your SaaS Business on High Ground
Customers across all industries now expect a seamless, self-serve product experience before buying (or being sold to). By placing your product at the heart of your growth strategy, you can skyrocket customer satisfaction, while lowering acquisition costs and boosting sales.
Ready for more PLG inspiration? Check out how Smartsheet has combined product-led growth with ABM to enhance UX and business efficiency.
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