Is your business product led? It’s a bold business strategy that can pay off in certain circumstances, and luckily real-time data can help fill the information void as soon as a product launches.
What It Means to be Product-Led
If you’re questioning what exactly it means to be product-led you aren’t alone. The term can be misleading, and it’s been defined in a few different ways. The concept of being product-led is one that each company seems to make their own.
While there is inconsistency, there are a few common and accepted interpretations for what it means to be product-led.
Product Before Market Approach
Did your business develop a product (or service) before defining the product’s market? If so, you’re product-led.
Taking a product-led approach isn’t the norm for most companies. Investing the time and resources to develop a product without knowing if there’s a market for it is a significant risk. Even if there is a market, it may not be large enough to offset development and production costs. The marketing team is also flying blind while developing campaigns to attract customers.
The product before market approach is more common when a company is developing a completely new product that’s innovative enough to not have any competitors and limited market research.
The Business is the Product Approach
Another version of being product-led is more of a mindset. When a business is a product and vice versa it’s product-led. Businesses that take this approach typically shun silos that separate the product from the business.
In this interpretation, most things circle back to the product. It’s seen as the driving force behind customer engagement, retention, loyalty, and marketing.
Product Guided Approach
Another product-led approach that is becoming more common is products being the guide for customers. Either the product is so intuitively designed or it is instructional enough that customers don’t need the additional assistance of customer service or the sales team. The product provides everything that the customer needs.
How the product is used and the customer’s experience using it are meant to be the primary ways a company wins over more customers and retains the existing ones. This is what’s known as product-led growth. Using this approach is desirable for startup companies with self-serve products since the marketing budget is much smaller.
Keep in mind, this strategy typically works best for products that aren’t complex and are relatively low in price. A complex, expensive product warrants a higher-touch approach.
What Product-Led Doesn’t Mean
Because product-led is a somewhat ambiguous term, there are misconceptions about what it entails. Being product-led doesn’t mean:
- The product team is considered more important than any other team.
- That all decisions are based on a product.
- That the product itself is more important than customer service, marketing, etc.
- Product experience alone can convert all customers.
Successful product-led businesses understand that products are still part of a whole. Product development may be prioritized over market research at the onset, but many other factors go into actually selling a product for a profit. At the end of the day, very few products are able to sell themselves all on their own.
Where Customer Experience Fits Into the Product-Led Business Model
Many product managers and marketers will tell you that customer experience is paramount. Even the best products won’t do well at market (regardless of the customer base) if it provides a poor customer experience. That’s definitely the case when you take a product guided approach.
This is why companies that use a product-led strategy need real-time behavioral analytics more than most. The data gives you accurate information about how customers are using the product and whether they are engaged.
In a product-led company customer experience is so important product teams influence engagement loops that are in place before product use. In these loops, the company shapes the customer experience and encourages activity that draws them closer to the product.
Where Analytics Fits Into the Product-Led Business Model
Too often companies put so much emphasis on converting customers they forget how valuable those customers are after the purchase. Acquisition overrides retention. But that can end up being a costly mistake. One that product-led companies often avoid.
The customers you already have are 50% more likely to try new products compared to the general public. They also spend 31% more. Repeat purchases, loyalty, referrals, customer lifetime value – it all hinges on what happens after a customer starts using the product.
Once a customer is using your product that’s when you can get some of your best product-led analytics. If you are prepared to start gathering behavioral analytics immediately it can help your company overcome lack of market research before the launch.
Product led analytics should:
- Provide customer demographics
- Tell you where customers are coming from
- How customers travel down the sales funnel
- How long it takes them to purchase the product
- How much time customers spend using the product
- Which product features customers use the most
- How engaged customers are
- How easy it is for customers to use the product
- What incentives are most likely to keep them using the product
- Provide insight on how to improve the product
All of these things inform your marketing, onboarding, product development, sales pitches, and so on. Ultimately, analytics can help you gather all the information you need to know who your market is and what they value most about your product.
Being product-led doesn’t mean that a product team replaces marketing, sales, and customer service. Instead, the product and the team take on a leading role in attracting and retaining customers based on an exemplary experience. In doing so, product usage data becomes just as important as acquisition data for marketing and sales.
Product-led companies stand to gain more benefits from product usage analytics than a sales-led company. Being able to analyze exactly how customers are using your product can help you define the target market, develop new features and attract more customers using the product itself.