November 28, 2023

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Product-led growth is about enhancing the customer onboarding experience while adhering to a low-touch or no-touch model to encourage a self-serve approach. This article covers how product-led development is utilized to create a positive brand experience leading to better customer success.
Product-led growth is a enablement method that has gained traction from its significantly lower customer acquisition cost (CAC) compared to other strategies. It’s a strategy focusing on your core product as the main selling point and the key to acquiring and retaining customers. Because of the nature of this strategy, it works best for SaaS companies, which can put product demos at the forefront as a form of experiential marketing.
At its core, product-led growth enhances the customer onboarding experience while adhering to a low-touch or no-touch model to encourage a self-serve approach. Customer communication is done digitally in a low-touch model, using data like engagement rates, health scores and product usage to respond to customers, especially those at risk of churning.
The SaaS market size is growing by 18% each year. Still, the complex code environment of these companies remains a challenge to product-led growth since this environment presents a lot of back-end and front-end interactions that can lead to issues in both customer acquisition and retention. A product can’t please everybody, but product-led growth aims to create a positive brand experience that will lead to increased product adoption and usage and, ultimately, more recurring customers.
A customer-focused approach isn’t only beneficial to customers and has been proven suitable for business operations. Product-led growth companies tend to scale faster because they don’t face the artificial constraints of traditional and lead generation processes. As such, they can grow efficiently with a lower customer acquisition cost than average. How does a company adopt a product-led strategy? They can start by focusing on the three pillars below.
Design focused on the end user.
Customers are in the driver’s seat of business growth. They aren’t looking at returns on investment, but how they can solve the problem they are facing right now. The goal of every business is to be the one to help customers do this and you need to guide customers in making the most of your product to address their current problems. Designing for end users means having a deeper understanding of who they are and what they do. Ultimately, this means that customer enablement should drive product-led growth. Put money in the backseat and listen to the needs of real people first, committing to product improvements that solve their problems effectively.
Deliver value before acquiring value
At its heart, business is a give-and-take relationship. To get value, you must first provide value to your customers. Product-led growth aims to deliver this value faster by making time to value (TTV) as short as possible. Essentially, customers must realize the value of your product themselves before you can expect them to pay for it. Some companies do this by providing a self-serve free trial or a freemium model, but this often frustrates customers because it merely delays the paywall. Usually, the paywall blocks customers from realizing the product’s value and how it can be an effective solution to their problem.
From a business perspective, delivering value should be seen as introducing customer success before making a sale. The realization of value or the “Eureka moment” should happen between when a customer signs up for your service and when they provide credit card information. In this decisive moment, customers should realize how your product could help improve their day-to-day life.
Go-to-market intent
The secret behind SaaS companies’ success is the lower cost of delivering value to customers. The upfront costs of creating an application may be higher than that of providing professional services, but this is only true for the first customer. After that, the marginal cost of delivering the same value to other customers is almost zero. On the other hand, the cost of providing professional services remains the same throughout.
It’s the same case for bringing a product to market. The marginal cost of creating, distributing and acquiring value from an application is significantly less than in the case of professional services. As such, product-led growth companies approach their go-to-market (GTM) strategies by investing in robust product data that will help drive acquisition, build a growth team, and conduct GTM experiments to help improve the user journey.
Product-led growth companies have a wider top of the funnel and a tech-driven approach to sales enablement that help them scale more quickly than their competitors. Enterprise-grade solutions providers, however, often have customer success teams that handle customer onboarding as a manual task, especially in startups that use the MVP (model-view-presenter) model. This leads to tension between customer success and sales teams, resulting in lower renewals and pilot fail rates.
Companies often turn to research teams for assistance but often get little to no help because of the inherent culture within startups. Research and development teams are often busy working on the product itself, such as fixing bugs or adding features. This process leads to a vicious cycle of “fix-renew-onboard” that can be a sore point for customers and lead to the pilot’s failure.
To address this dilemma, startups should focus on making available technologies work for them, especially in customer enablement. The customer enablement landscape is experiencing constant growth, with many companies providing solutions that address various challenges in different areas. In today’s data-driven business environment, product teams and managers should strive towards tech-enabled customer enablement instead of putting all the pressure on sales and customer success teams. Leveraging programs like this knowledge-sharing platform helps early-stage startups disseminate information, share best practices, and improve product adoption at scale while still retaining their margins.
By taking a “tech first” approach, product-led growth companies should be able to achieve the following:
Companies founded on the principles of product-led growth have an advantage compared to other companies. Still, any SaaS company can adopt the core tenets of product-led development to improve the overall and increase the efficiency of GTM strategies. It’s better to start sooner rather than later.
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