The ability to build a self-serve product has brought a new perspective to how businesses and customers look at SaaS products.
Many companies have realized that their products would enable them to run their business processes remotely through their products. In line with this ability, customers have realized that they didn’t have to talk to salespeople to identify their problems and educate themselves about a product.
This is a change that has come up interrelatedly with the SaaS product developments and the needs and expectations of users.
Report has shown that B2B buyers would like to self educate rather than talk to salespeople by a factor of three to one.
Especially with the influence of the COVID-19 in users’ buying decisions, there is now a high demand for self-serve products.
Here is McKinsey’s analysis of how the COVID-19 impacted the relationship between buyers and sellers:
As a result of the ability to run your business process through a self-serve product and the demand for such products from buyers, product-led growth has become the go-to growth strategy; and there are now more and more companies that adopt the product-led approach.
What is a product-led growth strategy?
Product-led growth strategy (PLG) can be best defined as the effort to achieve growth through a strong desire to provide an excellent user experience. Compared to other growth strategies PLG strategy aims to increase user satisfaction through a self-serve product that can run the marketing, sales, and after-sales processes by itself for the most part. In short, it is the effort to bring your product to the point where it is an all-around self-serve product that can sell itself and help you grow.
There is a misconception that product-led companies don’t attach importance to their sales teams because their product can sell itself. This is simply NOT true!
Especially if you are a recently established company that wants to adopt a product-led growth strategy, you may think that you wouldn’t need salespeople until way further down the road. However, this is not a good idea because when you come to the point where you have to do business with large enterprises, you will need experienced salespeople to help run cross-functional buying decisions.
These large enterprises have more concerns about integrating new products into their businesses. Their concerns vary from security concerns to further concerns about onboarding users or employees to your product. This is why these concerns should be taken care of with an experienced sales representative.
Another critical point in achieving growth through the product-led approach is product-led onboarding.
If you want to achieve product-led growth, then you have to provide a flawless user onboarding experience.
Without an all-around user onboarding process, your product will never come nearby being a self-serve product that can help you achieve product-led growth.
Having talked about the fundamental of PLG, now let’s see some examples of successful product-led companies.
5 Examples of Product-led Companies
Here are some of the most successful product-led companies that you are probably familiar with.
After mentioning how the COVID-19 affected the decisions of buyers and sellers, it’s time to show you a real-life example. Koan’s transition from a sales-led to a product-led strategy is a perfect example in this sense.
They’ve recently published an article that explains how and why they switched to a product-led growth strategy.
The article elaborates that Koan was built to help teams solve their alignment problems because it is a big and universal one.
However, as the circumstances started to change, and they wanted to find a way to join the competition with all the large enterprises, they started looking for ways to improve their growth strategy.
Here is how they elaborate on the process in switching to a PLG strategy:
“But when the 2020 global pandemic hit, we were forced to adapt to challenging circumstances. The alignment software market is saturated, with all our competitors raising large amounts of capital, building huge sales teams, and spending tons of marketing dollars. To thrive, we had to approach the problem in a different way. We were going head to head with our competitors but recognized that we couldn’t beat our competitors at their own game. We needed to play to our strengths, which was Reflections. We discovered that when new users filled out a Reflection once, they became repeat users 92% of the time. This was our ‘ah-ha’ moment of realizing our GTM strategy was all wrong. Koan was better positioned for product-led growth.”
From this point on, they realized that they had to change their growth strategy to make the most out of their product, and they did so.
Slack is the rockstar of product-led growth companies. They have one of those products that no one started using as a result of getting cold calls from salespeople. Instead, they simply have a fantastic self-serve product with a perfect user onboarding that solves users’ problems.
This is why they were able to reach $7 billion in valuation in just five years.
Apart from having a great product, Slack’s PLG approach does not disregard the sales team. On the contrary, they are aware that their sales team is a crucial part of their growth strategy, especially when they need to integrate their product into the teams of large enterprises.
You need to know that freemium or free trials are must-haves for product-led companies because they are great at showing the potential long-term paying customers the value of your product.
And Slack nails it perfectly!
This is why you have the option to “talk to sales” in the top right corner of the product. Slack has companies of all sizes that want to be their customers. Slack is aware of that, and they give the utmost importance to their sales team.
As you can see from this example, product-led companies should not disregard the advantages of other strategies. Instead, if a product-led company wants to achieve growth, the combination of strategies and practices should be used while the product is leading the way.
Don’t forget, you aim for growth, and this is why you should make use of every possible practice that you think will contribute to your growth.
Dropbox is another excellent example of nailing the product-led mindset in line with the end-user mindset. They are so good at providing value and coming up with the customer needs; this is why Dropbox has crossed $1 billion in sales in the last ten years.
What distinguishes Dropbox from its competitors is that they use their product to enhance their virality. That is to say, sharing files is so easy and accessible to all users. However, if users want to get more credit for storage, they need to share the referral page with their peers.
This is a great practice to attract new users and keep the existing ones more engaged with your product.
Looking at Dropbox’s effective practice, you can see that product engagement is another crucial point in making your product-led strategy work!
Doing surveys, or collecting feedback, in general, is another vital practice for a product-led company. It is a great way to build a strong relationship with customers and find out about your weaknesses and strengths and improve them.
When you have this in mind, you can understand that it is only natural that a company like SurveyMonkey chooses a product-led growth strategy.
Let’s elaborate more on why:
When the customers of SurveyMonkey do surveys through their product, it is a win-win practice.
Well, because when companies make surveys using SurveyMonkey’s product, the customers of those companies also learn about SurveyMonkey, and the virality of SurveyMonkey increases exponentially.
It is a snowball effect from that point on!
It makes perfect sense that a company with a great survey product would be a product-led company, then, doesn’t it?
Calendly is another company that collects the fruits of its product-led approach. Their product’s virality is achieved in two ways that are similar to Dropbox’s and SurveyMonkey’s.
It is effortless for users to schedule a meeting that is very crucial for many people, especially after the COVID-19. Also, the value they provide is organically distributed among the customers, which means that to have a meeting, the user needs to send links to Calendly for the others.
What a beautiful strategy, isn’t it? The virality of the product increases as more people start to use the product.
To Sum Up
Product-led growth can indeed be a game-changer for your business if you think you are eligible for this strategy.
What you need to know to understand whether you are eligible or not goes through deciding whether your product will enable you to do so.
If you have a self-serve product that can guide users in learning how they can solve their problems, can achieve virality through its practices, and can provide pleasing customer support, then you should not hold yourself back from taking your first steps towards being a product-led company.
All in all, all of the points mentioned above go through an excellent onboarding process. This is why, after having a great product that solves users’ problems, working on your user onboarding is the absolute first step in achieving product-led growth.
Frequently Asked Questions
What is a product-led product?
A product-led product is a self-serve product that provides a perfect user onboarding experience and does the marketing, sales, and after-sales process on its own for the most part. It is a product that users can start using without the need of any salesperson and keep using it without the need of customer support people to a high extent.
What are product-led growth companies?
Product-led companies build their customer acquisition and retention processes on their product. That is to say, these companies have a product that provides value to customers, and their product is a self-serve product that users can start using easily and keep using without the need of learning how they can find value in it from a real person mostly.
What is product-led transformation?
Product-led transformation refers to companies switching their growth strategies from traditional strategies such as sales-led or marketing-led to a product-led growth strategy.