How to Build a Successful PLG Strategy
To create a successful product-led growth (PLG) strategy, you need to focus on three main
pillars.
Understand your ideal user
Understanding your users’ needs, pain points, and behaviors is key in product-led motions.
This is important because it lets you…
- Create a quality product for your ideal user, shortening time-to-value and increasing
user satisfaction
- Create a PLG-optimized sales funnel that guides users from trial to referring new
users
- Support users with onboarding content and other resources they need to get more out
of your product
- Choose the right sales pricing models, such as freemium or subscription-based, to
maximize adoption
You can gather this information through usage data, competitor research, surveys, user
testing, and user feedback. Dedicating time and effort to identifying your ideal user cannot be overstated.
Critical!
Build a product-led growth
funnel
A product-led sales funnel is very different to a traditional sales-led one. The goal
isn’t to grow your pipeline and convert it into sales. It’s to maximize usage and referrals. The classic
product-led sales funnel looks something like…
- Acquisition: Attracting your ideal clients with a frictionless
sign-up process and attractive marketing.
- Activation: Guide prospects through the onboarding process and show
the value of your product.
- Retention: The most important step. You must provide ongoing value,
support, and satisfaction to prevent churn.
- Referrals: Use your product as a platform to drive referrals (as
well as up-sells and cross-sells)
Since the funnel is mostly built directly into your product, the focus is on things
like…
- A free (and easy) trial sign-up process
- Easy, quality onboarding that makes the product easy to use
- No friction points during usage
- Pricing models that are attractive and easy to opt into
- Offering useful upsells and cross-sells
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Experiment, collect data,
and iterate
Experimentation, iteration, and data analysis are three broad functions. That being said,
they should look like one fluid motion in a PLG approach.
Thoughtful experiments show you which product and
marketing funnel changes drive more growth. Data from your experiments gives you valuable insights on product and
marketing. Insights gleaned from data help you…
- Understand which features and UX elements customers like and use
- Which funnel and product features produce friction that slows growth
- Which targeting and messaging combinations work best for
- Users’ overall preferences (demographic, psychographic, etc)
There are many ways to run experiments. You can do so via A/B split tests, by giving
limited-access features to some users, etc. What matters is having an ongoing process where you try new things and
learn from them.
Scaling your PLG motion
A PLG motion requires continuous product development and optimization - especially if
you want to scale and expand it. Key focus areas are…
- Product Development: Continuously improve your product to meet
customer needs, add new features, and stay ahead of the competition.
- Optimize Pricing and Packaging: Experiment with different
pricing models and strategies. Make pricing attractive and fair for users - but also profitable enough to keep
the lights on!
- Focus on Customer Referrals: Encourage satisfied customers to
refer new customers by offering incentives, e.g. discounts or free features.
Examples of companies that have successfully scaled their PLG strategy:
- Slack: Slack's growth process has focused on creating a highly
engaging product that drives user adoption and encourages team collaboration. Their freemium model allows
users to try the product for free, which has helped drive rapid growth.
- Dropbox: Dropbox's strategy centers around making it easy for users
to store, share, and access files from anywhere. Their referral program, which offers additional storage space
to users who refer new customers, has been a smart scaling tactic.
- HubSpot: HubSpot offers a friction-free upgrade path and an
expansive feature set. This allows customers to start small, then scale up their product usage as they become
more familiar.
