What Is Product-led Growth Marketing & Why Switch To It (2023 Guide)

Adi Patel
January 29, 2023
5 mins

The product-led era has drastically changed the marketing landscape in recent years. Businesses using a product-led strategy grow faster by leveraging their products to build an active user base which can then be funneled into paying customers.

Product-led growth is not just a go-to-market formula associated with viral, freemium, and bottom-up distribution. Any company can use PLG principles to enhance user experience and optimize their go-to-market process even in an enterprise or niche vertical market.

There's no doubt that product-led growth is here to stay. In order to succeed today, software companies must rise to meet the demands of the new consumer.

In this guide we'll discover all about product-led growth marketing.

What is product-led growth?

PLG stands for Product-led growth. Using PLG companies use their product as their main source of customer acquisition and revenue growth. This approach is different from the traditional way of growing a business, which is focused mainly on customer acquisition through traditional sales and marketing strategies.

The concept is that when you design a valuable and user-friendly product, it will bring in and retain customers automatically, leading to expansion. In today's world PLG strategy is usually employed by businesses with a Software as a Service (SaaS) or recurring payment model.

Using PLG, product teams focus on creating an exceptional product that entices and keeps customers. The key to a successful PLG strategy is to have a deep understanding of your target customers and their needs, and to continuously improve the product based on customer feedback.

This continuous improvement by product-led companies increases customer satisfaction and retention, which in turn leads to organic growth through word-of-mouth and viral marketing.

Product-led growth definition

Product-led growth (PLG) is a business strategy that emphasizes the development and improvement of a company's product as the primary driver of customer acquisition and revenue growth. 

What is product-led growth marketing?

Product-led growth marketing (PLG marketing) is when product teams focus on the features, quality, and usability of a product to draw customers in and increase a company's revenue stream.

Sales teams in product-led companies are product oriented because this market strategy has the product at its center and the goal is usually to get more customers by enhancing the customer experience.

Product-led growth marketers allow potential customers to try the product before committing to a purchase by offering freemium or trial versions. 

They provide educational content, such as tutorials, webinars, and case studies in order to help potential customers understand how to use and get the most value out of their product. 

This kind of product-related educational content can be a powerful way to generate interest and build trust with potential customers while increasing the user experience.

Marketing teams using PLG marketing also make use of customer testimonials, reviews and case studies to showcase the value of the product to prospective customers.

Why is product-led growth marketing the future?

As more and more companies are moving towards a SaaS or subscription-based business model, product-led growth marketing is becoming increasingly relevant for marketing teams because of the use of freemium plan and trial offer business models.

Shoppers of today are more likely to do their research and experimentation before making a purchase. Through PLG marketing, customers can get hands-on experience with the product which helps sales teams increase the likelihood of turning them into paying customers.

In order to stay ahead of the competition and capture customers' attention in a saturated market, companies take a product-led approach to offer a product that is not only valuable, but also user-friendly and so easy to use that customers will naturally want to use it and share it with others.

Customer success teams using a product-led growth strategy emphasize on the importance of understanding customer requirements and constantly refine their product according to the customer input.

Product-led growth marketing can be a more economical alternative to traditional sales and marketing methods as it shifts the focus of sales reps to the product instead of costly sales and advertising operations to acquire customers and generate more revenue.

Why do SaaS businesses need PLG marketing? 6 benefits of product-led growth marketing

Recent surveys prove that more and more SaaS companies are adopting product-driven growth because it provides several benefits over traditional marketing strategies. 

Listed below are some of the main benefits that product-led growth marketing offers.

1. Faster Growth and Scalability

With product-led growth customers are more likely to recommend the product to others when they find it valuable and easy to use. That can lead to viral marketing which helps spread the word about a company's product in a very short period of time. 

Product-centric marketing is more scalable than conventional sales and marketing approaches, as the product itself can be utilized to capture and maintain customers.

2. Focused Product Development

Product-led growth enables companies to focus on product development through real insights from customers about the features and services they prefer, allowing them to make changes and refine those aspects of the product.

Through product-led marketing, companies may be able to save on expensive and unpredictable customer acquisition methods such as advertising and redirect those resources towards product development.

3. Higher Customer Lifetime Value

Businesses with a product-centric growth strategy are likely to attract long-term, loyal customers due to a heightened level of customer satisfaction. This, in turn, can contribute to an increase in customer lifetime value as these individuals are more inclined to keep using the product, share it with others, and make subsequent purchases.

4. Lower Customer Acquisition Cost (CAC)

Product-led growth companies usually have a viral component built into the product, allowing users to easily invite their friends and family to try the product. This results in an increase in user base and brand recognition, which lowers customer acquisition cost.

A product that is attractive and valuable to customers will be more likely to experience organic word-of-mouth and viral marketing, which results in lower customer acquisition cost for companies.

5. Shorter Sales Cycles

When utilizing product-led strategy as a growth model, customer satisfaction can increase, resulting in positive reviews and ratings on online platforms. This increased visibility helps to attract more customers and builds trust and credibility. Ultimately, this can shorten the sales cycle.

The product-led growth approach revolves around developing a useful and desirable product which can result in an increase in the demand for it. Having a high perceived worth can help speed up the sales process as buyers will be more inclined to make a purchase right away.

6. Higher Customer Satisfaction

A product-led growth approach emphasizes knowledge of the target users and the issues they wish to address, which can facilitate the development of a product that more precisely caters to their desires. Taking this approach leads to more satisfied customers since their needs are better fulfilled.

Product-led growth strategies typically leverage a free trial experience, allowing customers to sample the product and better understand its value prior to committing to a purchase. This factor also helps increase customer satisfaction due to their lack of uncertainty about their purchase decision.

What are the main principles of product-led growth marketing?

Here are the main principles of product-led growth marketing that you should be focusing on while creating this strategy.

Create valuable products

Focus on creating a highly desirable and valuable product. In product-led marketing, since the product itself is the primary driver of customer acquisition and revenue growth, therefore focusing on creating a product that is desirable and valuable to customers is critical.

Prioritize customer needs

For rapid growth customer needs should be given top priority. Get to know your target customers and their needs, then make sure that the product you create is providing a unique solution that is applicable to the specific needs of potential purchasers.

Offer Trials

In order to make it simpler for customers to try the product, you should offer a self-service sign-up process or a freemium or free trial model which will enable them to test out the product and determine its value before they buy it.

If free trials aren’t feasible, consider providing a way for your customers to play around with an interactive demo, which are a great way to show the product right on your website without any technical lift. 

Encourage Virality

Incorporate viral features and referral systems into the product to encourage virality and organic promotion.

Create Feedback Loops

By constantly gathering feedback from customers throughout their customer journey, businesses should strive for continuous improvement to make their products more valuable for the buyer personas they are targeting.

Empower Users

Empowerment encourages customers to take the initiative and have input in product development by providing feedback and controlling their user experience.

Prioritize Engagement

Designing a product with high engagement potential is key for keeping customers engaged and prompting them to make additional purchases.

Collect & Use Customer Data

Adopting a data-driven methodology, use analytics to monitor customer behaviors and usage of the product so that data-based decisions can be made for further product optimization.

What are some important key metrics to measure the success of product-led growth marketing?

The success of product-led growth marketing can be analyzed through various metrics. Some of the most important metrics to track are:

Customer Lifetime Value (LTV)

Measure Customer Lifetime Value (LTV) to estimate the total revenue that a customer generated over his entire lifetime. This will help you calculate the value that your customers bring to your business and you will be able to use this metric to identify and prioritize customer segments for marketing and sales efforts in the future campaigns.

Natural Rate of Growth (NRG)

NRG is a metric that will help you identify where most of your users are coming from. Once you know that you can allocate your marketing budget to double down on the channels that are performing for you.

Customer Acquisition Cost (CAC)

It's essential for you to understand the cost of acquiring a new customer. CAC will provide you with measurable insights into the efficiency and effectiveness of your customer acquisition strategies, allowing you to increase your customer base with informed decisions.

Conversion Rate

The conversion rate measures the number of users who take a desired action, such as making a purchase or filling out a form on your website or app. For continued success, B2C as well as B2B companies should always have their eyes on their conversion rates.

Churn Rate

Churn rate, also known as attrition rate, is the rate at which customers stop doing business with a company over a given period of time. Use this metric to track how long users continue to use your  product and how often they return.

Engagement Rate

This metric tells you how active and involved users are with your product, such as the number of sessions per user or the number of features used. Use this metric to further refine your product for higher engagement.

Referral Rate

Referral rate is the percentage of customers who are referred to a business by current customers. Use this metric to measure the effectiveness of your referral program or to track the success of your word-of-mouth marketing efforts. 

Total Revenue

Total revenue is a financial metric that calculates the total amount of money your business has earned over a specific period of time. Use this metric to measure the overall performance of your business and to compare it to previous periods or to other businesses in your industry.

Also keep in mind that It's essential to observe these metrics over a long period and compare them to standard benchmarks and business objectives. Recognizing patterns and trends can aid in the recognition of areas to be improved and monitor the effectiveness of growth marketing tactics.

What are some good examples of product-led growth marketing?

There are many examples of companies that have successfully used product-led growth marketing to drive customer acquisition and revenue growth. Check out our post highlighting some brilliant examples of product-led growth marketing that companies have used successfully to drive growth.

Growth marketing vs product marketing vs product-led growth marketing: What is the difference?

Growth marketing, product marketing, and product-led growth marketing are all interconnected ideas with distinct focuses and strategies.

Growth marketing is about achieving rapid and sustainable growth by identifying and testing different marketing channels and tactics.

Product marketing is the process of positioning and promoting a product or service to a specific  market.

Product-led growth is a strategy that uses the product itself as its main source of customer acquisition and revenue growth.

Product-led growth vs marketing led growth: What’s the difference?

Product-led growth models are more concerned about leveraging the product as the primary means of gaining customers and increasing revenue, while marketing-led approach relies on traditional marketing strategies to reach clients and increase profits. Both can be effective strategies; however, they differ in their focus and execution.

Final points on product-led marketing

  • Shift your marketing focus from traditional marketing to product-led growth marketing as it is the future.
  • Gain an in-depth understanding of the target customers' challenges and develop your products and services to cater to their specific needs and digital experience.
  • Let your product lead your marketing efforts and make use of the customer data.
  • Track your product-led marketing progress with the right metrics.


How do I know if product-led growth marketing is right for my product?

If your product is easy to use and understand, product-led growth is the right choice for your growth team. On the other hand with complex or difficult to use products, it may be more challenging for you to drive customer acquisition through this strategy.

Product-led growth marketing works best when the product is solving a specific problem or need that is relevant to your target market and potential customers. So if that is true for your product choose to go with the product-led approach.

Growth teams using product-led strategy should also be willing to continually improve their products based on customer feedback. 

What are the product-led growth marketing tools?

Product-led growth marketing tools are software that can monitor and analyze quantitative product-led growth metrics and collect qualitative product experience insights to see how people are using a company's product. 

Such tools are also used to optimize the product experience to increase customer engagement, retention, and satisfaction.

What is product-led growth marketing software?

Product-led growth marketing software, are tools that help businesses with analytics, in-app messaging, user onboarding, and user segmentation abilities -all with the aim of enhancing the user experience to increase product usage and drive customer acquisition and revenue growth.

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Adi Patel
January 29, 2023
5 mins

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