Alrighty, I was trying to explain the yung’uns in my team how PLG motion works. So naturally, thought a lot about what this article should be about and how driving growth would be best tied with PLG.

So let’s dive into the exciting (maybe not exciting?!) realm of Product-Led Growth (PLG) motion. Think of PLG motion as a growth strategy where the product takes center stage, leading the charge towards customer acquisition.

Most PLG companies are masters of a diverse array of user acquisition tactics, from your run of the mill word-of-mouth marketing to the good ol’ free trials, all designed to draw in new users. This reduces the importance of sales teams, as the product does all the selling.

I gotta stop writing nonsense about anything against Sales-Led. My job depends on it being popular ha.

Once the prospects are in, they are essentially shown what the product can do by well…letting the product do all the talking. Or showing? or showcasing? word salad.. uggh…point being, the users are set to eventually transform into loyal paying customers, all without the need for a traditional sales team. It’s like watching a magic show where the product itself performs the tricks and seals the deal!

Product-Led vs. Sales-Led?

This is a hot topic when founders are starting a new company. Whether the product should be more reliant on sales teams aka Sales-Led or more PLG focused. So let’s dig in to the clash of titans.

PLG vs. Sales-Led Growth. Picture two opposing forces locked in a perpetual struggle for supremacy. On one side, you have the stalwart Sales-Led Growth approach, where sales teams reign supreme by qualifying prospects and charming potential customers into submission. Umm correction, we basically just figure out their needs and deliver on them.

On the other side, the PLG strategy reigns supreme, relying on the product to do all the talking and wooing users into becoming loyal patrons. It’s like watching a high-stakes game of chess, with each move calculated to outwit the opponent and claim victory.

There is another however another go-to-market motion that is popular in B2B SaaS.

Ever since the start of SaaS, Marketing-Led Growth shook up how buying decisions are made. Suddenly, it’s not just the tech folks calling the shots anymore. Nope, now we’ve got C-level bigwigs getting in on the action, deciding which software systems to throw their money at.

Problem is, a lot of these big shots aren’t exactly tech wizards. They’re more like fish fresh out of water, trying to wrap their heads around the hefty price tags attached to these software solutions.

Enter the software companies, swooping in like knights in shining armor to save the day. How? Well, they’re not just about selling anymore; they’re all about educating these decision-makers. Think big events like Dreamforce, where they pull out all the stops to dazzle and inform. And let’s not forget the online webinars and those info-packed campaigns flooding your inbox.

Yep, it’s a whole new world of marketing, my friend. Forget the old-school “click here, click here” tactics. Nowadays, it’s more like, “Hey there, let us show you the ropes.” After all, there’s plenty of information to go around.

What factors led to the rise of product-led growth?

Today’s marketplace is a place where everyone is vying for your attention. Suddenly, the floodgates open, and it seems like there’s a never-ending stream of newcomers eager to join the fray. Yep, that’s market saturation for you. With barriers to entry lower than ever, it’s like a free-for-all out there.

But wait, there’s more! Access to data? It’s practically a dime a dozen these days. And with that comes a whole new level of insight and the ability to customize on a massive scale. Sounds great, right? Well, not so fast.

With all this noise and clutter, standing out becomes a Herculean task. My blog itself a task of it’s own, I need to constantly come up with ideas of what will attract folks to come read my ramblings 😀

Back to the topic. Think about it, how many programs can one person realistically juggle? And let’s face it, trying to convince folks that your shiny new tool is better than the tried-and-tested favorite? Good luck with that.

So, what’s a small fish in a big pond to do? Enter PLG, the knight in shining armor for the underdogs. It’s like finding a secret weapon—a cheaper, smarter way to get noticed and carve out your own little corner of the market (similar to my blog, right?!).

With PLG, suddenly you’re not just another face in the crowd. You’re a game-changer, ready to take on the big boys and carve out your own path to success. Who said David couldn’t take on Goliath?

With PLG you let your product make all the noise. Think Notion. I mean at it’s core it’s a pretty basic product but boy does it have a following and worth over a Billion dollas. Yes, that’s a Billion with a biggggg B.

So Why Focus on Product-Led Motion?

Why should one choose the path of PLG, you ask? Ah, young padawan, the benefits are plentiful! For starters, PLG has the potential to slash those dreaded Customer Acquisition Costs (CAC), allowing companies to expand their customer base without breaking the bank. And once the PLG wheel is set in motion, there’s no stopping it!

Satisfied customers become enthusiastic ambassadors, spreading the word far and wide through the magical realms of WOM (word-of-mouth) and referral schemes, fueling further growth with every glowing recommendation. Think Notion, Figma, Gong, Miro, etc.

And let’s not forget the self-service model, a cornerstone of PLG that’s as scalable as it is irresistible to modern buyers. Gone are the days of endless sales pitches and pushy tactics; today’s customers prefer to explore products at their own pace, without the need for hand-holding from a sales rep.

Have you noticed why folks nowadays don’t want to talk to the sales reps? Surprise surprise.

But perhaps the most dope aspect of PLG is its ability to inspire organizations to build better products. When success hinges on customer satisfaction, there’s no room for mediocrity or BS features being built for the sake of being built. PLG encourages companies to listen to their customers, address their pain points, and tailor their offerings to meet their needs.

So, amigos, if you find yourself at a crossroads in your business journey, thinking about which path to take, remember this: Well first off, pat yourself on the back on making it to this stage, you did good. And with that, with PLG, the product itself becomes the hero of the story, leading you towards growth and prosperity with every step.

How is Product-Led Growth Measured?

I will be writing a blog post with all the metrics that you could possibly need pretty soon, so be on the look out for that.

In the meantime how to gauge the success of your Product-Led Growth (PLG) strategy? Here is a comprehensive guide to help you navigate the maze of metrics and optimize your path to customer acquisition.

Let’s start with the basics

Customer Acquisition Cost (CAC). This little gem tells you how much moolah you’re shelling out to snag a new customer. Think banners, articles, social media ads—the whole shebang. Crunch the numbers and find out if your investment is paying off.

Next up, Activation Rate. This nifty metric measures the percentage of users who’ve taken the plunge and completed a specific action, signaling their status as active users. Whether it’s creating an account or mastering a tutorial, activation rate gives you the lowdown on who’s diving in headfirst.

Then there’s Adoption Rate. This beauty tells you how many users are moving beyond just poking around and actually getting down to business. It’s all about those folks who’ve embraced your product or feature and are using it like nobody’s business.

Now, let’s talk cash flow with Monthly Recurring Revenue (MRR). This little number includes all your subscription-based revenue, from upsells to renewals. Keep an eye on this one to ensure your revenue stream is flowing smoothly.

But wait, there’s more! Annual Recurring Revenue (ARR) steps in to give you the big picture. It’s like MRR’s older, wiser sibling, measuring the predictable revenue generated by your subscription model over the course of a year. It’s the KPI that investors and execs love to see.

Monetization Rate is up next, shining a light on conversions from free to paid, renewals, and upgrades. It’s your go-to metric for evaluating the effectiveness of your pricing strategy and overall revenue generation.

Last but not least, we’ve got Retention Rate (aka churn rate). This bad boy tells you how many customers are bidding you adieu, expressed as a percentage. Keep tabs on this one to ensure you’re keeping those customers happy and sticking around for the long haul.

So there you have it, folks! With these metrics in your toolkit, you’ll be well-equipped to measure the success of your PLG strategy and steer your business towards growth.

How do I know if Product-Led Growth is right for my product?

• Are we riding the wave of favorable product-market conditions? Are we fostering an environment within our product that encourages users to spread the word, triggering word-of-mouth referrals ?

• How seamless is our sign-up process? Is our product user-friendly and intuitive enough for users to jump right in and start reaping the benefits? How much friction are users encountering just to get started?

• Is our product offering a truly unique and valuable solution? Are we making bold promises about abstract benefits, or are we directly addressing the real pain points of our target audience?

• Are we delivering value to users before they hit the paywall? Can users grasp the essence of our product immediately and experience its benefits right off the bat?

• Do our unit economics allow for users to start small? Are we pricing our product in a way that’s accessible to users, either within their budget or within their discretionary spending limits?

• Are our marketing funnels leading to meaningful engagement? What specific actions do we want our customers to take at each stage of their journey with us?

• Can we create content growth loops around templates, best practices, and listings similar to platforms like Yelp, Miro, or Notion? How can we leverage user-generated content to fuel our growth engine and enhance the overall user experience?

By asking these questions, you can gain valuable insights into the product-led growth strategy and identify areas for improvement to drive sustainable success.

At the end of the day, the most important thing is to select a motion and run with it. Iterate, iterate, iterate as much as you can. Keep throwing things at the wall and see what sticks.

And most importantly, keep trying and don’t give up.