Product Marketing
Product Led Growth Marketing

The Marketer's Guide to Product-Led Growth Marketing

Jayakumar Muthusamy
|
September 12, 2024
The Marketer's Guide to Product-Led Growth Marketing

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Key Takeaways

  • Product-led growth marketing prioritizes customer-product interactions and uses the data to build a better problem-solving product.
  • Product-led strategies, such as freemium models and incentivized referral programs, are effective in growing a brand’s customer base and overall revenue.
  • OpenAI’s ChatGPT gained over 100 million users thanks to the adoption of a freemium subscription model in its early phase.
  • Sales-led growth marketing is cost-ineffective and shouldn’t be used in silos.

You’ve spent thousands of dollars building a minimum viable SaaS product and selling it to your audience through traditional marketing strategies. But getting the visibility and sales you deserve is proving daunting. You’ve considered product-led growth marketing but have not committed to it yet because you wanted to give the current approach more time.

Meanwhile, your open rate for cold emails barely moves up, sales calls are no longer hitting the mark like they used to, and enterprise buyers are considering switching to your competitors. That’s because the aggressive, shove-it-down-the-customer’s-throat approach of sales-led growth no longer moves the needle.

SaaS audiences now expect a more personalized and solution-centric experience before they commit to a sales intro call. And that’s where product-led growth marketing comes in.

In this article, we will explain product-led marketing (PLG), explain why it is preferred over a sales-led approach, and offer compelling tips to scale your ROI with PLG.

What Is Product-Led Growth (PLG) Marketing?

Product-led growth (PLG) marketing is a growth strategy that involves using your product as the main driver for customer acquisition, retention, and business expansion. This approach places your product at the center of “selling” by providing a more “personalized experience.”

Key principles to consider when starting to implement the PLG model: 

  • Little to no financial commitment from the customer: Freemium plans and free trials.
  • Emphasis on great user experience: Frictionless navigation and product adoption
  • Low barrier to entry: Single sign on options, minimal financial commitments, self-serve model. Usually, there is no need for tech support
  • Quick time to value: Users immediately see the benefit of using a product (the “aha moment”). No curtains!
  • Leveraging existing user community: Brand expands mainly through customer referrals and advocacy.

Quite a number of SaaS businesses use these principles. 

  • Basecamp: Focused on customer autonomy and simplicity, the popular project management company launched with a free trial and later introduced a freemium model paired with direct user feedback loops. This allowed small teams to adopt the tool with minimal onboarding.
  • Slack: Slack scaled by revolutionizing internal communication, making real-time messaging the norm for teams. The freemium model allowed easy adoption without executive approval. Coupled with free plan limitations and robust integrations, Slack grew virally, embedding itself as an essential tool for businesses.
  • Trello: Trello leveraged its extensive user base and implemented a freemium model that encouraged upgrades. By introducing Business and Enterprise plans, expanding premium features, and limiting free options, the web-based project management and productivity tool effectively transitioned users to paid plans, solidifying its role in project management.

Benefits of Product-Led Growth (PLG) Marketing

Product-led growth marketing offers benefits such as effortless and independent product adoption, a high conversion rate, and data-driven product iteration. Here’s how:

1.Autonomous product adoption

The PLG model leverages a do-it-yourself (DIY) or self-serve approach, which allows users to independently access, evaluate, and integrate a product or service into their workflow, often without direct assistance from a sales or support team.

  • Step 1: Users sign up for your product’s free trial or freemium plan.
  • Step 2: Effective support like in-software product tours and interactive prompts aid their onboarding and successful product integration.

Both steps 1 and 2 have one thing in common—the experiences are self-guided. Your sales team only comes into play when users want to upgrade their plan. This helps your customers adapt and learn at their own pace while also reducing the need for human support, though it is always available when needed.

Slack is a perfect example of a SaaS that uses the self-serve method to boost and offer a personalized user experience. The communication and collaboration platform offers a freemium plan with limited functionalities. Once users sign up, their onboarding is handled by in-app tours, pre-recorded tutorials, and in-app prompts. 

No persistent calls or spammy emails from the sales team. Upgrade when you’re ready to go.

2.Frictionless user experience and satisfaction (USAT/CSAT)

The easier users can adopt and integrate your product into their processes, the higher their overall satisfaction will be. High customer satisfaction leads to improved retention and can help nurture your most loyal buyers into brand advocates.

While product adoption is self guided, the user experience doesn’t stop there. The product should also be frictionless to adopt. 

One way Airtable does this is by reducing the barrier to entry through: 

  • Simplifying sign-up process with a single sign-on (SSO) (global accounts like Google, Facebook, LinkedIn, etc.)
  • Eliminating complex installation or setups and convoluted integration settings.
  • A free trial or freemium plan to help users start with minimal to no financial commitment.

3.Data-driven product iteration

Product-led growth marketing taps into product-customer interaction data and uses the knowledge acquired to improve your product. Once your product is well-polished to solve demands, it easily becomes a lead magnet - even after introducing a premium plan. Real-time data collection from your customers also enables faster time-to-market product development.

The more you know about your audience or potential customers’ needs, the more effectively you can tailor your product to solve their problems. That’s why user feedback is critical. 

And the most efficient marketing method for collecting this feedback and putting it to use is PLG.

Take Dropbox as a case study. The product-led company used only a freemium offering to acquire hundreds of thousands of users, but that wasn’t the only goal. 

Dropbox’s other aims were to:

  • accumulate sufficient data about its cloud software usage,
  • dig out the problems users encounter from this data,
  • figure out how to best solve these problems, and
  • turn the software into a leading solution provider in the market.

Sure enough, the product-led strategy was successful; today, the cloud storage company has over 700 million satisfied users.

4.High conversion rate and retention

Autonomous product adoption, frictionless user experience, and improved customer satisfaction all contribute to a high conversion rate because:

  • Users interact directly with the product rather than relying on demos or theoretical explanations by an aggressive sales team. This allows them to see the value and functionality of the product firsthand.
  • They love the results they’re getting with your product/solution.
  • They want to continue living that experience even if it means paying to upgrade.

Ultimately, these factors create a compelling case for the product, leading to a higher likelihood of conversion.

When Product-Led Growth (PLG) May Be Better Than  Sales-Led Growth (SLG)?

Another marketing model that’s just as popular as PLG is the sales-led growth (SLG). Let’s explain why you may consider a product-led growth model as an alternative to sales-led growth:

When you seek to lower your Customer Acquisition Cost (CAC)

SLG marketing primarily involves leveraging seasoned sales professionals to identify potential customers, engage them, and convert them into paying clients via cold calling/emailing, networking, and direct sales.

While this approach often works, it’s expensive - especially for small and medium-sized businesses - because:

  • The sales cycle in B2B/SaaS is complex and long.
  • An elite sales team costs big bucks and needs more expensive tools.
  • You can expect to spend even more money talking to your audience via luxurious ads.
  • Number of customers acquired is disproportionate to the number of leads converted. The marketing-qualified leads (MQLs) to sales-qualified leads (SQLs) ratio is not uniform and is largely dependent on sales rep productivity, quality of leads (which depends on quality of your ads and targeting), lead scoring, and the alignment between marketing and sales teams. All of it makes calculating CAC unpredictable when using an SLG approach to marketing. 

These factors result in an expensive customer-acquisition cost (CAC).

On the other hand, product-led growth marketing projects your product as a must-have and can-have solution. 

  • Your product does most of the talking and showing instead of a sales team - from freemium pricing and free trials to gamified onboarding.
  • Good product UX, referral programs, and low-barrier entry together form a loop that turns your existing customers into raving brand advocates. Customer A refers B, B recommends your product to C - the cycle continues.
  • Product-qualified leads (PQLs), which are qualified using product activation and engagement scores, are more product-aligned and are generally easier to convert. This reduces your customer acquisition budget and helps you focus on delivering value through your product.

Your CAC eventually gets lower, and the model results in high ROI.

When you seek to increase your team’s cross-departmental collaboration

SLG can exaggerate the effects of organizational silos as every team is busy hitting team-assigned targets instead of working together to improve the overall customer experience.

Marketing is fixated on generating as many leads as possible for the sales team to convert. Your sales team is laser-focused on converting every prospect that comes their way. Product teams are only brought in when “a new high-value customer wants you to add some features” or “make a few tweaks to the interface.”

Source: Productled

In contrast, the product-led growth model focuses on:

  • How can our marketing team turn this product into a high-performing lead magnet?
  • How can our sales team use this product to convert our acquired leads?
  • How can our customer support team use this product to empower users to become more autonomous?
  • How can our product team enhance this product to provide even more value?
Source: Productled

This creates a converging point between your marketing, sales, customer success, and product teams, with a single end goal: solving customers' problems more effectively and efficiently.

Other differences between PLG and SLG (Summary)

Sales-led Growth Marketing Product-led Growth Marketing
Primary growth driver Sales team and direct outreach Product experience and user satisfaction
Customer acquisition focus Targeted by sales reps to specific accounts Users discover and adopt product organically
Customer onboarding Guided by sales reps or account managers Self-service onboarding with minimal guidance
Sales cycle Longer, driven by case studies, demos Shorter, driven by user experience
Product improvement Lengthy, based on sales and market feedback Rapid, based on user behavior and analytics

4 Fundamentals of Product-Led Growth Marketing (+ Examples)

We’ve seen how product-led growth marketing can supercharge your business. But how do you practically implement it? What are the fundamentals to implementing this strategy? 

1.Focus on your customers first

Before putting your product at the forefront of marketing, it should be able to solve a problem no one else is solving, or solve it more efficiently. So, focus on your customers first and understand their pain points.

  • Conduct  comprehensive market research on your target audience
  • Highlight their common queries and note the solutions available in the market
  • Identify the gaps your product solution can fill

If you’ve already launched your product, you can send out a public survey and ask people what problems they want you to help them solve and how. Then Integrate this feedback into your product.

Another way to maximize data collection for product iteration is to adopt a hybrid growth model: PLG + SLG. Dropbox implemented this approach, according to Giancarlo 'GC' Lionetti, the former CMO of Confluent and VP of Self-Serve Growth at Dropbox.

Dropbox initially leveraged a PLG (Product-Led Growth) approach, focusing on user acquisition through a freemium model and viral features like referral programs. Data collected from feedback was used to refine the cloud-storage software and scale offerings.

As Dropbox’s user base grew, they adopted the SLG (Sales-Led Growth) model to target enterprise clients and optimize monetization opportunities. This allowed them to collect data from both users on the free model at the early stages of launch and unbiased feedback from paid enterprise users afterward.

2.Offer value-driven free trials and freemium plans

Giving your customers the option to experience your service or product live without paying first reduces the entry barrier. This builds an instant positive impression about your brand, and if your product delivers on its value promise, you’ve easily earned a high lifetime-value (LTV) customer and possibly an advocate.

You could also combine both free trials and freemium to form the reverse trial strategy. 

Here’s how Trello did that.

Step 1: Users sign up for a freemium plan with limited functionalities.

Step 2: Trello wants you to enjoy all its functionalities, so the next page offers a 30-day free trial.

Step 3: If a user wants the freemium plan, they click “Take me to Trello”. If not, they go ahead with the free trial.

Even to the last stage, users can still choose between a freemium or free trial. 

Step 4: Once users exhaust their free trial and are not ready to upgrade, they can always switch back to the freemium plan. However, there’s a higher chance they will upgrade after enjoying Trello’s full functionalities.

3.Leverage growth loops

A growth loop is a self-reinforcing process where user actions generate outputs that fuel further growth, creating a sustainable expansion cycle. 

  • Initial action: Users engage with a product or service in a way that triggers a specific action or output.
  • Growth mechanism: This action generates something of value that is shared publicly, such as content, referrals, or data, which can attract more users.
  • Feedback loop: The growth mechanism outputs increase the product visibility, leading to more acquired users.
  • Reinvestment: As new users engage with the product, they contribute to the cycle, creating additional outputs and reinforcing the growth loop.

While there are different loops, the commonly used ones include referral and product use loops.

Referral loops: Payoneer

Payoneer uses a referral program to drive growth by rewarding users who refer new customers. When existing users invite friends or business partners to sign up, they receive bonuses or credits once the new users complete certain actions or transactions. 

This incentivizes current users to refer more people, increasing sign-ups and engagement. The cycle continues with new Payoneer users who reinforce the referral loop with every share. 

Product use loop: SurveyMonkey

SurveyMonkey leverages users’ activities to generate more customers. Here’s how:

Step 1: Company A registers to use the software and sends surveys to employees, customers, other businesses, etc., to collect user feedback.

Step 2: After completing the survey, the respondents receive a page encouraging them to send out their own survey. This leads to new registrations, and the loop continues.

Source: Reforge

Note that you can combine as many loops as possible to achieve the desired results.

Encourage user-generated content

Your brand advocates are 70% more likely to influence a purchase than any of your marketing tactics.

So imagine dozens of your existing users sharing their positive experiences using your product on their social media handles. That’s social proof with an infinite value compared to website reviews and testimonials.

Since UGC is based on customers’ successful interactions with your product, you can safely ask them to share their best experience using your product on their social accounts.

Unify all UGC posts by providing a common hashtag for everyone to build sufficient momentum and unify your efforts. It should be as simple as possible and memorable. For example, #MyAsanaJourney, #SalesforceandSalesforce, #ScaleWithHubspot, etc.

Geegpay, a payment platform for businesses and freelancers, used this method to build awareness after asking customers to share their customized image on social media with the branded hashtag #GrooveWithGeegpay.

You might also need to provide incentives to encourage maximum participation. Depending on your marketing budget, this could be a full-month subscription to a discount at checkout or other incentives.

3 Real-life Examples of Product-Led Marketing

Let's examine a few more product-led companies that have implemented the same strategies we discussed.

TripleDart: Product-led marketing strategy for our client Freightify

Freightify is a logistics SaaS company for freight forwarders to compare freight prices, streamline logistics operations with a customized storefront, and track vessels in real time from over 30 ocean carriers.

While Freightify boasts a feature-rich unified product, their customers - the freight forwarders  - can only access it after making a purchase. Hence, Freighify couldn’t fully tap into the available market demand and their lead generation wasn’t very effective.

That’s where TripleDart came in. Our team assessed Freightify’s product and tied it to the needs of its potential customers. We realized that most of these leads would ultimately become buyers if they could interact with the product directly without having to pay a dollar at first.

We proposed a freemium model: free usage of Freightify’s container shipping rate calculator for two to three times. The aim was to create a good impression on leads and help them see the benefits of using the product’s full package, which would eventually make conversion much easier.

After implementing this strategy, Freightify’s user engagement and lead acquisition skyrocketed, boosting overall ROI and customer lifetime value.

OpenAI's ChatGPT: chat bot and virtual assistant

product led marketing by chatgpt

ChatGPT is perhaps the most revolutionary software of the past century. As we all saw, it gained much momentum and rapidly scaled in size after its initial launch in November 2022. However, what most people ignored was that it was a PLG marketing motion - free use of ChatGPT in the early days - that contributed most to its success. 

In return, OpenAI got valuable data from people’s interactions with the bot. This data was used to train and improve ChatGPT, alongside other resources, to become much smarter and more efficient at solving user problems.

Although ChatGPT is now offering other paid and advanced models, the freemium model helped scale its customer base to over 100 million users. Currently, the bot has over 200 million users, with over 3.9 million paid users. Additionally, the freemium model continues to serve users who don’t need the capabilities of a paid model or can’t afford it - and the OpenAI product gains data to update its product every day. 

Dropbox: a file hosting service

product led growth marketing by dropbox

At the early stages of launch, Dropbox needed a better growth strategy to compete against existing cloud storage hegemons like Google and Microsoft. 

It chose a hybrid subscription method—freemium with premium. Users could use a limited amount of storage space—2GB—for free, and they could pay to get more capacity if/when they needed. Freemium users could experiment with Dropbox’s features, compare them to other competitors without any financial constraints, and choose a premium plan once they had exhausted their free storage capacity. 

But Dropbox enhanced this model with a referral loop. They introduced an incentivized referral program. Users could get an additional 500 MB of space for each friend they refer, which turned on the referral frenzy for more storage capacity.

And it worked phenomenally well!

Today, Dropbox has over 700 million users, recording over $2.5 billion in revenue in 2023.

Wrapping up This Product-Led Growth (PLG) Guide

There’s more market competition than ever before, and relying on your big pocket is no longer sufficient to gain an edge. If you want good results, you need to show, not tell, potential customers that your product can solve their problems.

And the first step to do that is  to build a product they need, not the product you think they want. Various versions of the freemium model, viral growth loops, and positive social proof can then help you boost product retention and conversion. Lastly, optimize your product to make it a better lead magnet by integrating your sales and marketing teams with customer success teams, and invest in customer support.

Stuck with PLG? Let Us Help You Out!

You now have a clear understanding of product-led growth marketing, its significance for your business, and actionable steps to implement it for accelerated growth.

However, we understand how complex the whole process can be, and that’s why we want to help you. At TripleDart, we’ve developed a one-hit SaaS product-led growth marketing approach drawing on our decades of experience with various SaaS brands. 

Our team analyzes your customers’ needs, evaluates your product, and aligns it with your brand goals to design a result-oriented PLG that moves the needle.

Ready to start? Let’s hop on a call!

Jayakumar Muthusamy
Jayakumar Muthusamy
Jayakumar is the Co-Founder and Head of Revenue Operations at TripleDart, where he leads the development of scalable marketing engines and Marketing & Sales Operations for B2B businesses. Jayakumar is dedicated to helping B2B companies with demand generation and streamlining their sales processes to enhance sales closure rates.

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