Consumers have unprecedented access to products in a world where it has never been easier to set up a company.
Customer expectations are higher than ever, and their choices are endless. Modern consumers have little patience for products that don’t satisfy their needs. They expect freemium models, instant gratification, excellent service, undeniable results, and affordability. They expect easy access to the tools they require and to see the value of those tools immediately.
If a product doesn’t meet these expectations, consumers have no qualms about getting rid of it.
For B2B buyers, these demands are even more urgent. The push towards consumer-grade user interface, powerful service, intuitive design, and affordability is changing how companies develop their products.
These high expectations shape companies, moving away from market-led and sales-led growth towards PLG–product-led growth.
In this blog post, we’ll describe six common challenges PLG marketers and company face and how to address them to discover the secrets of a successful PLG strategy. We’ll also consider some pitfalls of relying exclusively on a PLG strategy and how to be on the right path to revenue acceleration.
Let’s get started!
What is PLG?
Product-led growth is a strategy that prioritizes the end product over everything else. The product itself is the driving factor behind acquisition, retention, and advocacy.
For B2B decision makers, the days of software acquisition taking months at the behest of less-than-tech-savvy higher-ups and convincing salespeople are gone. End users are the real target of a B2B PLG company, and those end users tell their higher-ups which software to buy.
For B2C companies, the days of being able to get away with shoddy service for high prices are over. Customers have high expectations; they want to know they’re getting value for their money and want proof.
Many consumers prefer to have zero interaction with another person when they research and trial new products. They trust their own expertise and that of friends and family. They know which tools they require to meet their goals.
So where does that leave companies developing or shifting to a PLG strategy?
Consider B2B companies like Slack and HubSpot or B2C companies like Spotify and Grammarly. They offer a version of their product for free, letting the user try it before they buy. This free trial or freemium model allows users to get hooked and integrate these products into their lives so that they can’t live without them.
Then the companies offer better features, upgrades, tiered plans, and more personalized services. They offer further value for money on a product from which the user is already getting value. The product is proving that value to the user, who wants more.
The product itself must drive every aspect of the customer journey. PLG companies must be data-driven, analyzing every part of the customer journey and utilizing that data to adapt to real-time customer expectations.
Say you want to convert a PNG to PDF online, and you’re exploring your options. One option offers you a spammy website filled with sales pitches, demands money up front, and takes you through a bunch of complicated instructions before getting to the point. The other option offers you an easy way to try the product for yourself, for free, in just a few painless clicks.
The choice is clear and shows how a PLG approach can be much more attractive to your customers.
Benefits of product-led growth
PLG can be a strong strategy for growing a company. Let’s look at some of the benefits.
- Easier onboarding. Products don’t require sales reps or consultants to onboard new customers. Customers locate and access the product by themselves, trial it, and purchase it through a checkout system. The time, cost, and resources used to acquire a new customer are minimal, and users looking for quick and efficient service are satisfied because the product works straight out of the box.
- Lower costs. The product is the selling point; it markets itself through the virality of try-before-you-buy models, great service, and customer advocacy. Your PLG motion may cut down on marketing budgets and sales consultants.
- Better product development. With less budget for marketing and sales, more can be funneled into the product itself. A data-driven PLG strategy offers a wide range of data throughout the customer experience, which can be used to improve the product.
- High-quality data. Product-led growth strategy is all about collecting and analyzing data to create the best product possible. This high-quality data comes directly from the source: the customers themselves and how they use the product.
- Scalable. A huge benefit of products developed with a PLG strategy is scalability. Based on user data, in-demand features can be added quickly and cost-effectively. New payment tiers can be developed based on what different users require and offered to users through a quoting service. The sky’s the limit for product development and, as a result, revenue.
- Better customer retention. Through trials and freemium models, the customer already knows how the product works. They’ve chosen it. And the amount of data utilized in improving the product can add much-requested new features, fix problems, and offer better customer success.
Pitfalls of product-led growth
While product-led growth strategies can produce significant results when executed properly, there are some drawbacks as well that need to be addressed before taking this route as your primary go-to-market approach.
- Failing to attract new customers. Depending too heavily on product-led growth can become unsustainable when a company grows too quickly or fails to continue innovating its product. If you solely rely on your existing customers, you won’t be able to bring in new ones at the same rate anymore.
- Lack of diversification. This single drive towards one particular channel often leads to limited customer segments due to a lack of diversification, meaning you lose out on tapping into previously untapped markets, such as enterprise organizations or affluent consumers who tend not to use self-service solutions as much as other customers do.
- Shorter customer lifecycles. Not diversifying your GTM strategy can lead to shorter customer lifecycles–since all those acquired via self-serve channels may churn quicker than those acquired through assisted Sales Channels.
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6 Challenges Marketers and Companies Face
Marketers and companies face countless challenges when creating a successful marketing campaign. From addressing customer needs to staying up-to-date with changing technology, these challenges can be difficult to navigate. Knowing the common struggles many businesses face is key to meeting customer expectations in a competitive landscape.
1. Understanding the customer
This might be the biggest challenge a PLG company faces. Since the product is the selling point and the customer is the end user, understanding the customer is the single most important step in creating that product.
- Target audience. The target audience of PLG companies tends to be tech-savvy online natives. They might work for huge companies, small startups, or as freelancers. They might even have hobbies that require using specific types of software. They know how to research products, which word-of-mouth information to trust, and the kinds of tools they need to achieve their goals. However, your ideal customer profile may differ, so it’s important to clearly define yours using a reliable framework.
Ideal Customer Profile (ICP) Worksheet
Learn how to create an Ideal Customer Profile and build a successful sales strategy with this Ideal Customer Profile (ICP) Worksheet.
- Expectations. This audience prefers to source their products through websites and apps rather than salespeople. They want easy-to-access products that don’t make them jump through hoops; tools that integrate seamlessly into their lives; refined user interfaces that are intuitive and simple to use; and good value for money. Knowing the target audience can help PLG companies work out their customer expectations and deliver.
- Acquisition. Once users have found a product, they want to jump right in, not be bombarded with sales pitches. They want risk-free trials at the click of a button, without any human interaction. Lead-ins like free trials, freemium models, and product tours can give users an idea of how the product works. But don’t make acquisition too complicated–remember that consumers are looking for easy access and instant gratification. Offer too many steps to this, and interest will taper. Research shows that users are 38% more likely to complete a shorter acquisition process. They’re craving an aha! moment–the thrilling realization that this product is exactly what they’ve been searching for. And they want it fast, ready to throw the product away if it doesn’t immediately prove its value.
- Usage. We live in an increasingly connected world where anyone, anywhere, can hop onto a device and access an ever-increasing array of online tools. PLG companies need to understand how their users use their products, from tasks to locations to devices. Is the customer a company with thousands of employees who can work from anywhere? Is the user base committed to one operating system or open to multiple? Does the product need to be cross-platform?
- Self-education. Consumers of these products expect said products to just… work. For any learning required, users prefer to teach themselves rather than have to contact customer service or sales consultants. PLG products can offer users the tools to make the product work for them through secure document sharing with written instructions or video tutorials.
2. Having the right product
Not all products benefit from a PLG strategy.
Companies selling SaaS are ideal for product-led growth strategies. Software is easy to deliver with just a few clicks, can be offered via free trials and freemium models, and can utilize intuitive design or written and video instruction to educate users.
Nowhere in this process is another human being required.
Companies selling physical goods can use some aspects of PLG strategy, particularly if they sell tech hardware, but as a whole, this strategy isn’t going to fit. Similarly, companies that sell products that are highly complex and require a lot of education and integration won’t benefit from the self-service approach a PLG strategy thrives on.
Think in terms of automation: how much of the buying process can be automated? If the answer is “all of it”, you’ve got a product ripe for a PLG strategy. If a product requires a high volume of human interaction, this strategy probably isn’t the right fit.
3. Creating or adapting a successful product
It can’t be stated enough: the product is the cornerstone of a product-led growth strategy.
For starters, without a product, there’s nothing to pin company growth on. Without a solid product that delivers on user expectations, there’s no subscribing to paid models, no selling point, and no customer advocacy.
Growth just isn’t going to happen.
The product must be able to sell itself, and so its immediate value must be highlighted to the customer in the fastest and most effective way. Developers must be able to offer some kind of free model for users to try, and that free model needs to hook the user quickly, funneling them into a paid version and further upgrades.
Developers must consider user expectations, creating a product that is attractive, intuitive, powerful, easily integrated, and offers good value for money.
4. Team collaboration
Aligning goals across all of the company’s teams is important, and it’s not as easy as using a simple shareholder agreement to get everybody on the same page.
A product-led growth strategy changes the structure of a company, democratizing the entire process from development to data analysis to marketing to sales. Instead of every team having their own separate goals and information, teams must be product-focused above all else.
Developers can be tasked with creating a product that sells itself; data is collected, analyzed, and shared amongst all departments as a tool to further improve the product; marketing departments can highlight the product’s strengths against their competitors.
It’s important to have regular meetings so that all members of all teams have clear and aligned goals every step of the way. No one person makes the final decision; all teams and employees are focused on making the product shine.
As we’ve discussed, a product-led growth strategy thrives on data.
It’s a cycle: the product drives customer acquisition and retention–data allows developers to improve the product–the product works well and gets great word-of-mouth–the product drives further acquisition and retention.
Current customers are vital to acquiring new customers. Therefore, it is critical to measure all metrics across the customer journey.
From what drives users to pick up the product in the first place, to usage statistics, to customer churn, to free trial-ending surveys, data will be a priority for any PLG company.
Data is a vital resource, but it also comes with challenges–like sifting through masses of it, adapting that data into workable solutions, and data storage logistics.
A product-led growth strategy involves a completely different approach to marketing to sales-led and marketing-led companies.
PLG companies and marketers don’t need expensive, gimmick advertising campaigns. The product itself acquires users and gives them their aha! moment, turns users into paid users and then turns paid users into advocates.
Customer advocacy is one of the strongest marketing tools in the business. B2C customer reviews and B2B buyer testimonials–from word-of-mouth eulogizing to online review sites–are worth their weight in gold.
Developing an excellent product inevitably creates users who go on to celebrate it. Customer advocacy is literally built into a product-led growth strategy.
Product-led companies can shift their focus from overinflated marketing campaigns to smaller viral campaigns that utilize a more organic approach to spreading awareness. Highlighting the product’s strengths, emphasizing positive reviews and word-of-mouth recommendations, and constantly improving the services offered are key to PLG marketing.
This kind of marketing can be more cost-effective than traditional marketing and helps to drive customer acquisition and retention in a much more natural way.
Lead Scoring for PLG
Lead scoring is a crucial part of executing a successful product-led growth strategy. By identifying high-value prospects and understanding their behavior, companies can target their efforts to the right customers and optimize results.
With the right lead-scoring tool, organizations can detect patterns in customer journeys that allow them to accurately predict customer behavior and develop more effective campaigns.
By leveraging insights into customer needs and interests, businesses can create triggered campaigns that are tailored specifically to each lead’s profile and level of engagement and ensure they are acquiring and retaining quality customers while expanding into new markets.
How Breadcrumbs can help
Breadcrumbs is a lead scoring tool that supports all go-to-market motions, from PLG to sales assisted. It delivers rocket-solid insights into customer behavior so you can focus your marketing efforts on the most valuable leads and maximize returns.
With easy-to-build lead scoring models, automated routing, and detailed reports, you can build a complete strategy for all the customer journey stages in any vertical or geography.
The best part? You can start for free in just a few steps:
- Connect your CRM/MAP to Breadcrumbs such as HubSpot or Salesforce.
- Determine who makes a product-qualified lead or a sales-qualified lead in the Fit model (e.g., CMO, $50M ARR, 100-500 employees)
- Determine what makes a product-qualified lead or a sales-qualified in the Activity model (e.g., logs in your product daily or visits the pricing page twice during the last week)
- Set your lead scoring threshold (e.g., 50)
- Run the scoring model
Breadcrumbs will send all scoring information back to your CRM, so you can create email or in-product campaigns to meet your leads where they are in the customer journey (i.e., nurture leads that are not ready to upgrade or move PQLs to the next step of your PLG onboarding flow)
Moreover, customer success teams can also use it to identify customers with cross- and upsell potential and identify at-risk customers before they churn.
PLG Strategy: Wrapping Up
Product-led growth can be a highly successful strategy–given the right product. Understanding some of the most common challenges and how to deal with them will give you a headstart when focusing on product-led growth.
Product-led growth has a few key principles:
- Easy adoption showcasing the product’s value
- That value translating into paid subscriptions
- Upgrading existing users with new and improved features based on high-quality user data
- Retaining customers through responsive development teams that quickly fix problems, assist users, and improve services
- Creating customer advocates through an overall excellent product
However, relying solely on PLG can lead to missing out on different verticals and increased churn rates, ultimately reducing potential revenue. Your best bet is to create a balanced go-to-market strategy combining PLG and sales-assisted approaches in order to target all potential addressable markets, and maximize long-term revenue streams and profits.