Product-Led Growth: The Strategy Everyone Is Watching

Written by Maria Geokizas, COO and Vice President of Customer Services at Heinz Marketing

Content marketing has defined the past two decades, but there is a go-to-market strategy that has attracted a lot of attention – product-led growth.

As a growth strategy, product-led growth removes the traditional sales cycle and, instead, allows the product to sell itself. Product-led growth relies on trials and freemium models to prove the product and convert leads into loyal users.

So, does that mean a product-led company can scrap its sales team? not exactly.

The product-led approach is a comprehensive approach. Instead of individual teams—marketing, sales, and customer success—working on separate pieces of strategy, teams work in unison to support users throughout the product lifecycle. Sales teams are there to share and show curious potential customers just what the product can do, especially at the enterprise level.

How do you know if you can incorporate a product-led growth strategy?

Product-led growth is not for every technology company. It entails a product for the end user that is self-evident in its core. The strategy only works if users can orient themselves from discovery by setting up with minimal instructions. If your users are struggling to get ahead without a salesperson or support, your product isn’t ready to implement a product-led strategy. Before you consider product-led growth, ask yourself:

  1. Is your product compatible with a free tier or demo? One of the most common features of product-led growth is allowing users to test the product extensively before making a commitment. But to generate revenue, you have to strike a balance. You need your free product features to attract users without offering much value and there is no reason to pay for advanced features.
  2. How do users find your product? Sales prospecting and outreach are not essential components of product-led growth. Instead, the goal is for customers to be the ones talking about your product. Oral user referrals and viral interest are the ultimate drivers of product-led growth.
  3. What is the purpose of customer activation of your product? Since ease of use is a core tenet of product-led growth, acquisition and activation point can expand. For example, a user might stay on the free version for months, and use it only occasionally, until one day they discover a distinct feature that solves their pain point and eventually upgrades.
  4. What percentage of users are past setup? Again, signing up for a product and adopting it as your solution isn’t necessarily the same thing. Not all users will bypass the setup stage. Moving users through product adoption is where marketing and sales can create or break your product-led strategy. You must provide content and sales support to give the customer the resources to succeed.
  5. What is your churn rate? A high change rate indicates a flaw in your product that customers cannot overcome. Keeping the rate of change low is fundamental to product-led growth.
  6. What are the friction points that cause disruption or interference from customer support? Once you know what’s causing the interventions or support the interventions, you can improve your product, marketing, and sales strategy to guide your customers through common issues.

Product-led growth is a new way of thinking about customer acquisition and retention, along with the metrics used to define success.

How is product-driven growth different from content-driven growth?

Content- and product-led growth differs markedly. So, what are the main differences between the two popular strategies that you should consider?

lead the generation

Content-led growth relies on marketing and sales teams to generate, qualify, and convert leads through a combination of paid advertising and audience outreach.

Conversely, product-led companies use their marketing to fuel diffusion – as the backbone of their marketing strategy. Reaching a large base of potential users through word of mouth and media attention is critical to gaining potential customers ahead of the competitor. This does not mean that content cannot go viral and attract potential customers, but it is less important.

Since qualified leads for marketing and sales are not part of the product-led process – the leads must qualify themselves by reaching specific points of use in the product. That’s why products have to be essentially flawless for the strategy to work because there’s no one there to overcome obstacles and objections along the way.

acquisition

With a content-driven strategy, converting leads can take longer. Since you typically use content to change the status quo and educate before a buyer realizes the need for your product, the selling process begins much earlier than product-led growth.

Product-led growth has a low barrier to acquisition. There is virtually no risk in testing the product for a short trial period or signing up for a free plan. Product-led companies rely on the user to explore the product and decide if it is right for them. It cuts through the middle of the funnel steps. The end goal is not to get a customer; to activate it.

Content

Content brings in leads through a sales-led strategy and moves them through the conversion funnel. Before committing to a product, potential customers interact with a lot of marketing content—browsing technical papers, reviewing case studies, ordering demos.

But product-led growth uses content less as a conversion tool and more as a user guide for the product. Therefore, marketing materials such as product guides and use cases are more important than white papers and data sheets.

For example, the all-in-one app Notion creates content that focuses almost exclusively on teaching users how to integrate the product into their daily tasks. Once you sign up for Notion, you will immediately receive emails associated with how-to guides and videos. No push for sales, no marketing emails with social proof, and no content that isn’t based on the core product. Instead, it is all about supporting users to get more out of the product and keeping them for the long term.

metrics

Content-led and product-led growth strategies have some unique success metrics. Undoubtedly, revenue and customer lifetime value predominate, but the profit path is measured differently.

Companies that focus on a content-based approach must track how the lead moves through the conversion path to becoming a customer. The goal is to seal the leaks along the way. According to Salesforce, core content metrics include:

  1. Share content
  2. Lead conversion cycle
  3. he won
  4. life value
  5. customers satisfaction

On the other hand, with product-led growth, metrics revolve around where the product may be falling short in attracting and retaining customers. According to the Product-Led Growth Group, the product-led strategy needs to track:

  1. Qualified potential customers for the product
  2. It’s time for value
  3. he won
  4. life value
  5. pure froth
  6. Network Effects and Diffusion

Whether your company is using a content or product-led growth strategy, metrics are important, and knowing which metrics provide the most insight is crucial.

Ultimately, deciding whether product-led growth will work for you depends on the strengths of your product and team. It takes more than a superior product to work. For example, a complex product that targets only enterprise-wide customers will not work with the strategy, no matter how great the product is. But if your product is straightforward with a careful onboarding process, product-led growth may be just the strategy you need.

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