Product Led Growth

Product Led Growth

Is your product so good it sells itself? Companies that focus on product led growth let what they make do the heavy lifting to convert and retain customers.

What is Product-Led Growth?

Product led growth (PLG) is a strategy where the product itself is the primary acquisition, retention, and expansion channel. This strategy has led to the success of many of today’s leading SaaS companies, and focuses on successfully building products for end users.

With product-led growth, existing customers are fully leveraged to expand product use. The idea is that you create an experience so amazing customers want to share it with others. 

The PLG process looks something like this:

  • Make an amazing product that provides value.
  • Allow users to try the product or parts of the product for free.
  • Users tell others about your amazing product helping it go viral.
  • Referred users begin using the product and referring others.
  • The cycle continues for the life of the product.

Above is the ideal scenario, but it doesn’t always play out that way. A number of things can derail a PLG strategy starting with the product itself. 

The PLG strategy tends to work best for products that:

  • Are intended to be used on a regular basis to enhance operations or daily life. 
  • Allow for collaboration or social interaction.
  • Give users the ability to invite others.
  • Are easy and intuitive to use.

If your product is complex or very expensive you may be better off using a sales led or marketing-led growth approach. 

Product Led Growth vs Sales Led and Marketing Led Growth

The two other common growth strategies are sales-led growth and marketing-led growth. Both rely on messaging and the promise of what a product can do rather than giving users access to try the product. The messaging should create a need in the customer’s mind, therefore the marketing-led and sales-led growth strategies hinge on how well you know your customer base and their needs. 

With a marketing-led growth strategy, a user will discover the product through an advertising campaign. They will check out the product online conducting top-level research. If they are interested they’ll schedule a demo or download a white paper with more information. The user is passed on to the sales team for a personal touch and to seal the deal on a conversion.

As you can see, this is almost the polar opposite of product-led growth that begins with giving users access to use the product and then analyzing the use. Rather than promising value, PLG lets users experience the value in order to retain customers, gain referrals, and generate revenue. 

This is not to say that the marketing and sales teams are obsolete when a product-led growth strategy is used. They are still an important part of the process. 

For example, product-led growth can help the sales team narrow down leads to better qualify them before reaching out. These are what’s known as product qualified leads – users that have tried a free trial or freemium version of the product and enjoyed it. Salespeople can analyze product data to identify actions that suggest a user is likely to convert to a paying customer.

Advantages of Product Led Growth

Is product-led growth the best strategy for your business? While it isn’t optimal in all cases, PLG does provide some distinct advantages.

Faster Growth

The number one reason businesses use product-led growth is to speed up adoption and expansion. You’re cutting right to the chase and lowering barriers of entry by giving users access to the product for free. 


Most companies want to reach the level of Slack and Dropbox, but scaling up is a serious hurdle. PLG is used whenever a company aims for rapid growth.

Lower Acquisition Costs

Using a PLG strategy drastically reduces the marketing budget since the customer acquisition avenues are built into the product. This, in turn, has a positive effect on acquisition costs. 

Higher Retention Rate

In addition to knowing who is getting value from a product, analytics can also tell you which users aren’t engaged. These are the users who are on the cusp of churning. In addition to figuring out ways to create a better user experience, the sales team can also know when they need to intervene to retain a customer.

Customer Approval

Product led growth is based largely on word of mouth advertising. The company isn’t the one convincing you to use a product. It’s other users that encourage adoption. 

Because the product is so focused on delivering value, the majority of customers should have positive feedback. Those reviews and opinions are then read by other consumers, creating an acquisition cycle. The fact that consumers prefer to research products online that they’ve heard about offline plays to the favor of companies using PLG.

Why PLG Relies on Product Value

Providing value is important with any product that’s developed. If customers don’t see the value upfront or get value from using a product it won’t be on the market long.

Freemium models are very common with product-led growth. You give customers something of value for free, but then they must pay a fee to unlock other features that bring even more value. Using a freemium model also gives users the ability to try before they buy, which will help you capture a segment of users that would otherwise drop off without using the product. 

However, freemium strategies require a keen sense of what value the product delivers. 

Discovering where the real value lies and how to showcase the value of a product may not be readily apparent. Or you may not realize how valuable a particular feature or capability is to the target market. Tapping into the true value of your product requires analytics.

Metrics to Track for Product Led Growth

Product led growth isn’t possible without behavioral analytics. The strategy relies on creating the best user experience possible and firmly understanding how consumers are using your product. Those types of deep insights come from data. 

The metrics to track for product led growth include:

Free Trial/Freemium to Paid Account Conversion Rate – You’ll want to know how many of the users that have tried the product decided to buy it. The free trial to paid account conversion rate tells you whether or not the majority of users find value in the product.

Activation Rate – This is a measure of users engaging with the product after being given access and completing certain steps. Many companies will create an activation checklist with specific actions that ideally will be taken. How far along a user gets in completing the checklist gives you the activation rate. So, if an activation checklist included 10 actions and 8 are completed the activation rate is 80%. 

Churn Rate – How many people are discontinuing use of your product for a given period? The answer is your churn rate. The churn rate indicates how happy customers are with a product over time.

Daily, Weekly and Monthly Active Users (DAU, WAU, MAU) – These metrics indicate the number of active users for a given day, week or year. You can track the metric that applies most or all three. 

Engagement – In general, metrics that help measure engagement are worth tracking. How customers are engaging with the product can be used to create an engagement score

These are just some of the most important metrics to track when you’re using a product led growth strategy. Based on what you find, you may need to make adjustments to the product or offering in order to boost the conversion rate and turn more free users into paying customers. 

Metrics that matter

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