WRITTEN BY Ben Marullo, product marketing CONSULTANT at Fluvio
If you are in technology, you have likely heard of Product-Led Growth or PLG. While this is a new trend in tech, the concept behind PLG is simple and has been around for a long time.
What is it?
According to Amplitude, “PLG is a business strategy and methodology that positions the product as the primary driver of customer acquisition, activation, satisfaction, retention, and scalable expansion.” (Amplitude)
Think about a Costco sample or a free first-time fitness class. The try-before-you-buy model is familiar but has yet to be widely adopted in B2B SaaS. Instead, outbound sales and traditional marketing channels have been the predominant revenue drivers.
The PLG approach differs from traditional sales and marketing strategies because the product speaks for itself instead of promising features and benefits. Prospects draw their own conclusions about why it’s valuable for them with little assistance. Additionally, PLG companies can have both non-paying and paying users, allowing for more data to help product teams understand behavior.
Why is PLG becoming so popular?
Put simply, PLG is one of the best ways to prove value. Unlike sales and marketing, users can experience the product at no risk, for free, before making a purchasing decision or even arrange a time to sit through a demo. This allows users to understand the value of a new product better and see if it fits their use cases. PLG is excellent for acquiring new customers, but what often gets overlooked is its ability to garner better customer retention. When buyers clearly understand how to use and implement the product before they buy, they tend to stick around. PLG can be executed in various ways, such as offering a “stripped down” product version or a time-restricted trial period.
Many roles benefit from PLG, but product marketers gain a unique advantage. Why? Because PLG is a gold mine of customer information.
The PMM’s Secret Weapon
Effective product marketing practices have a massive impact on customers and buyers. Without the PMM team, product features might lack clear value, and even the best-fit customers may struggle to understand new products. However, PMMs are only as effective as their understanding of customers' pain points and behavior. By adding unbiased data on user behavior to supplement customer interviews, win/loss programs, and other Voice of Customer inputs, PMMs can gain a new dimension of customer insights. And that’s precisely where PLG comes in.
Traditional sales and marketing strategies can make customers feel like they’re being tricked. But PLG has no tricks up its sleeves. Instead, it’s a taste of what's actually there, not what a salesperson tries to make customers believe.
In conjunction with the proper analytics tools, PLG tactics generate numerous unique data points, such as:
When the user signed up for a trial
How long it took the user from signing up to first logging in
What features are used the most
How much time is typically spent on the platform
The in-product actions that are most likely to result in a conversion
… and much, much more. It is, indeed, a massive amount of customer knowledge. And this is before the user even converts into a customer.
So, how do PMMs use this data? To fuel acquisition and retention. Some examples of this are:
A PMM knows how long it takes between a trial sign-up and using the free tool. They can now use that data as a bench point, so when they build a new user onboarding flow, they know what they need to compare it to
A PMM seeks to identify the features users care most about to adjust positioning and messaging. They use data from the free trial to see what users click on the most.
A PMM creates in-app messages and campaigns to encourage actions that are most likely to drive conversion to the paid version
A PMM leans that the product is being used unconventionally and works with PMs to build new features and prioritize the product roadmap
PLG is an excellent channel in a growth engine. As PLG becomes more popular, user data will elevate the value brought by PMM and help drive the product marketing function to be even more objective and data-driven.