Product-led growth (PLG) has been a rising strategy of late in the B2B sphere — especially within the private equity investment space when it comes to Software as a Service (SaaS) portfolio companies. According to the 2022 Product-Led Growth Index report, 58% of surveyed companies already were practicing PLG and 47% planned to double their investment in the year ahead. But what does this growth strategy actually entail?
Multiple variations of PLG definitions exist. Some describe PLG as a business methodology in which the product itself primarily drives user acquisition, expansion, conversion and retention. Another form of PLG describes it as an end user–focused growth model that relies on the product as a primary driver of customer acquisition, conversion and expansion.
Regardless of source, all definitions share one key element in common: To be successful, a company must drive growth by creating a compelling user experience with a market-relevant solution. Therefore, they must also commit to relentlessly analyze and act on usage data to increase their go-to-market efficiency.
What does this mean for your go-to-market approach? In this article, I will dissect what PLG is — and, importantly, help overcome any misconceptions by detailing what it is not.
WHAT PLG IS
In many ways, PLG aligns with a number of key product management strategies and practices the leading B2B organizations follow.
PLG increases focus on the Whole Product approach. Every part of your solution that impacts the user experience becomes more important. This includes considerations such as pricing and packaging, services, complementary products and adjoining solution ecosystems, support and break / fix — to name but a few. Every facet of how a product is bought, consumed and used needs to be defined and honed.
PLG requires companies to engage the market in strategy and roadmap development using approaches such as:
- Advisory boards: To understand market challenges and needs
- User groups: To understand how end users consume the product in the context of their business processes and daily life
- Early development cycle testing: To engage users for insights on interfaces and interaction points, and to understand how intuitive the solution is for accelerated ramp of a user base
- Embedded and intuitive support tools: Chats, videos, help desks, videos, etc. that enable users to educate themselves and quickly get help
PLG fundamentally relies on a foundation of a full understanding of your target buyer’s key problems issues to ensure 1) you are meeting those challenges and 2) you can create assets to properly market and demonstrate the capabilities and their value.
PLG puts a spotlight on effective governance, which becomes even more critical in this approach. Companies need to fully understand and obtain feedback through multiple channels — user inputs, ratings, usage patterns, etc. — and continuously adjust the product to those inputs (and to competitive responses) for success.
WHAT PLG IS NOT
PLG is not about selling a product without context of the market, the buyer and their issues. Products “sell themselves” only when the buyer believes you have a full grasp of their needs and pains — and then believes your solution addresses those needs better than your competitors’.
PLG is not a replacement for defining and articulating your differentiated value proposition. Rather, with full understanding of the market, you can align your product capabilities to those needs and articulate how you uniquely bring specific capabilities to answer these needs.
PLG is not effective without satisfied buyers and clients advocating for your solution. Take the time and expense to build an effective client reference base or rating system to capture and position success. Client stories and references are still the best sales tool.
PLG AS PART OF THE SOLUTION MANAGEMENT STRATEGY
PLG can support organizations’ success, as long as the rest of the solution management engine is working. If one part of the strategy is broken — from solution themes to validation to governance, pricing strategies and more — it may be holding you back from your full revenue potential.
We can help. At Mereo, we call PLG by another name, specifically the Whole Product approach. And our experts have written the executive guidebook for building a winning solution management engine around this. Get the expert guide to unstoppable revenue performance.