Long practiced in emerging companies, product-led growth (PLG) has been touted as one of the fastest ways for B2B firms to grow. Perhaps even more compelling than rapid growth is the lower cost of sales in PLG motions. Because the methodology is based on simplified products targeting individual users for self-serve purchase, initially, there is no need for business development reps or sales outreach.
Traditional sales-driven firms, don’t despair! You can still get in on the action by adopting PLG strategies that complement your sales efforts at each stage of the customer growth trajectory — and drive faster and more profitable growth. Here are five steps to drive customer growth with PLG:
Step 1: Drive user growth to seed the market.
PLG can generate rapid user growth by relying on users to do the selling. Offer free trials and make sure that the product has a network effect where users gain more value the more others are using it — by collaborating within their team (e.g., Jira), across their company (e.g., Slack) or even across companies (e.g., Calendly). Create user referral programs where users are incentivized to share the product. These network and viral effects can drive “exponential growth” across markets and accounts.
Step 2: Turn heavy user companies into product-qualified accounts.
With users seeded across multiple companies, segments, and even regions, it’s easy for PLG organizations to identify the accounts where more users have adopted their product. Accounts with enough active users become new opportunities in the pipeline for a sales rep to close. This process is typically less costly than traditional top-of-funnel marketing efforts, and these product-qualified accounts are considered to be “better than the best” of traditional pipeline opportunities.
Step 3: Leverage product telemetry to optimize the experience and build loyalty.
A product that delivers fast time to value is foundational to PLG success and will help drive growth and retention for all selling motions. Build in product analytics so you can pinpoint user friction and optimize the time and effort it takes users to achieve their desired outcomes. This type of product telemetry can be used across small and simple or large and complex software modules and is instrumental in improving the user experience and building ongoing loyalty.
Step 4: Use in-product, personalized messaging to upsell customers to higher tiers.
In PLG motions, the product is the primary marketing and selling method. Create contextual, personalized messages that both provide tips for specific activities and showcase additional offerings that could extend the value that users receive. In the context of existing workflows, alert users to new features, product extensions, or higher-tiered offerings. Offer trials for premium capabilities to make it easy for users to experience the value before expanding their purchase.
Step 5: Combine product- and sales-led efforts to expand into new buying centers.
Now that you’ve set up a PLG motion, use it to extend to new buying centers with the support of traditional sellers. Account teams should scout out new buyers and identify new use cases for offerings within accounts. Gain cross-sell business through PLG motions using trials and referral programs to incentivize users to share across buying centers.
PLG strategies, while practiced successfully at smaller firms, have become additional arrows in the toolkit of go-to-market practices for many larger B2B firms. Pursuing a bottom-up PLG strategy in conjunction with traditional sales efforts has been shown to have the best results for rapid and scalable revenue growth. Just look at the success of Atlassian, Airtable, Dropbox, Calendly, HubSpot, and others to see how well the PLG and sales combination works.
This post was written by VP, Principal Analyst Beth Caplow and it originally appeared here.
