What is Product-Led Growth?

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🚀 What is “Product-Led Growth” (PLG)?

Product-led growth (PLG) is used to describe where acquisition, expansion, conversion, and retention are all driven primarily by the product itself. Where the product triggers a “growth action” in some part of the user journey.

PLG is about trying to build a product or service that sells itself.

For example;

➡️ Referrals and invitations - e.g. Dropbox’s “invite and get free space” or Facebook’s “friend finder”

➡️ Sharing and viral actions - e.g. TikTok’s video stamp when it’s shared to other platforms

➡️ Great user experiences - e.g. AirBnB or ChatGPT - something novel and amazing that people want to share

All these products have built in mechanisms to inspire users to take further action. Particularly sharing with or inviting others. This enables them to grow faster, and because it’s built into the product it doesn’t require more media. It acts as a compounding loop. As more people join, more people do it, the company grows faster.

💡 KEY IDEA: What products have you shared recently? Think about them. It’s most likely because of something built into the product to encourage you. That’s product-led growth.

🔧 One essential thing to start - analytics

To understand growth you have to know how people experience the value that your product has (the “aha moment”), and the journey that people take to get there.

This means that you have to have reliable data on how many people experience this value. How they got there. And where they might have had issues (e.g. people getting stuck).

The idea of product-led growth is giving people an easier path to experience that amazing and shareable thing in your product.

If you don’t have a good data strategy then you will never know!

🫶 The role that marketing plays

We now know that a great product is essential. But, marketing teams have an equally essential role in guiding people through the product.

They need to craft the right messaging and CTA’s to guide people through the product. To get them to experience the “aha moment” quickly and regularly, until they form a habit.

I came across a really nice example to illustrate this recently, shared by Robert Kaminski showing the importance of crafting your message to the “right moment”.

It’s a great example of where marketing and product teams work hand in hand.

📈 So, what tactics can we use for eCommerce?

eCommerce is all about getting people to purchase the right product in the most seamless fashion.

Sounds easy, but in practice it’s not.

Some ways that PLG can apply in eCommerce (aside from having a great product);

✅ “My Account” - essential if you want to build a relationship after a sale. Simply, this could be for tracking delivery or validating warranty, but could also include loyalty, subscription, contact preferences, or replenishing.

✅ Personalisation - think of Amazon’s “frequently bought together” tile. This uses machine learning to make the journey specific to that user, usually based on previous behaviour. This can has big benefits on AOV and cross-category shopping.

✅ Incentives - e.g. recommend a friend and we’ll give you X% off your next purchase.

✅ A/B testing - you can use your PDPs to test on ways to improve conversion or add to basket rates.

💡 KEY IDEA: think about products and features that will add value in people’s lives. Build them into your product. If you add truly add value then people will talk about you.

💁🏻 Useful links

Product Led Growth by Wes Bush [book] - a great understanding of PLG and how some of the best companies in the world use it to onboard and keep their customers. Very SaaS focused, but I still found it really interesting.

One final thing…

In summary

PLG is going to continue to grab headlines as we get deeper into a recession. Companies have tighter purse strings and are looking at ways to get more with less. It’s ideal if you can build this into your products, as it can pay back for months and years afterwards.

Thanks for reading. I really appreciate it.

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