Product led-growth (PLG) is a business model that considers the product the main driver behind acquisition, activation, engagement, retention, and scalable expansion. A business focused on PLG is primarily focused on creating sticky in-product experiences and features instead of relying only on sales and marketing to achieve success.
With a sales-led or marketing-led approach to growth, prospective customers are told the product’s value before they even gain access to it. PLG flips that idea on its head and lets the product do the talking. Prospects gain early access to the product through things like free trials and freemium accounts in the hope that they see the value in becoming paying customers.
PLG does not mean that sales and marketing efforts are forgotten. In order to succeed, PLG requires the involvement and input of all teams, from sales, marketing, product development, and more. Each team is tasked with finding the best ways for customers to see a product’s value immediately through early access.
PLG ensures that businesses develop high-quality products that their end-users will love. PLG companies also have lower sales and marketing costs, which means lower customer acquisition costs (CAC). In addition, PLG companies tend to enjoy accelerated growth compared with their competitors.
- At the core of the product-led growth model, you have acquisition, retention, and monetization.
- You can drive acquisition through PLG by focusing on community-based content and product artifacts.
- You can drive monetization through PLG by showing a product’s value to a new customer (usually through a free trial or freemium account) in a way that encourages them to sign up for a paid subscription.
- To drive retention through PLG, you must first identify what constitutes a retained user in order to personalize their experience to encourage them to keep coming back to your product.
- Drive engagement by awarding power users with things like recognizable skills certification (e.g., AWS certification) while also encouraging other users to increase their own engagement.
The customer journey stages of PLG
To succeed, PLG should be rooted in each stage of the customer journey.
- Acquisition occurs when prospects turn into customers.
- Monetization involves gleaning revenue from the value users find in your product, such as by turning free users into paying ones.
- Retention, the result of activation and engagement, occurs when users build a habit with your product and return to it after their initial use.
- Activation is when a user experiences their first “aha” moment and finds value in the product.
- Engagement measures how “sticky” a product is or how much users interact with it.
In product-led growth: Your current users drive acquisition through word-of-mouth and referrals. Monetization is self-serve because the product is purchased without the involvement of sales teams. And usage triggers within your product drive retention and engagement.
PLG tactics for each stage of the customer journey
There are a number of tactics organizations can use in order to maximize their product-led growth strategy. Each stage of the customer journey requires different tactics and approaches to ensure success.
Below, I have outlined some tried and tested PLG tactics your organization can try out.
PLG tactics for driving acquisition
In the early stages of your customer journey, content is key to acquiring new customers. Aimed at helping new users make the most out of your product, this content allows them to see the product’s value immediately. This could include long- or short-form content that provides prospective customers with the information they need to get started.
Community is also a big driver at this stage. Leveraging community involves the creation of content such as product-related videos.
Finally, product artifacts are a great way to pull prospective clients toward your product. An artifact is a byproduct that is created during the development of a bit of software. This could be a diagram or setup script. While a product artifact is not your main product, it can be used to draw people’s attention toward it.
Notion templates are a great example of this. A Notion customer who creates or uses a project management template can pass it on to a colleague who is not a Notion user. That colleague might like what they see and choose to explore the product even further.
PLG tactics for driving monetization
There are a number of different monetization approaches you can take, and each one depends on the philosophy you want to adopt as a company. Generally speaking, this will come down to answering one of three questions:
- Will you provide value for free to your users and take it away after a trial period?
- Will you provide baseline value for free and offer a premium version that customers can pay for?
- Do you plan to show your customers the value of a product, but they would then need to pay for it in order to access it themselves?
Knowing which one of these approaches to use depends on knowing your customers and your market segment.
LinkedIn is a good example of a business that has figured this out. Its InMail Messages feature allows users to send direct messages to other LinkedIn members even if they’re not directly connected to them. These can be very valuable, particularly for sales teams. But the number of InMails you can send depends on your LinkedIn plan. A free plan doesn’t allow you to send any InMails. Other plans can range from five to 50 InMails per month.
LinkedIn’s approach with InMail Messages reflects a hybrid of philosophies, and it works well at targeting customers at different stages of their journey. These include free users looking to reach prospects outside of their connections but who cannot see the value of the product without having access to it. It’s also effective at reaching users with a lower-tier paid subscription who see the value of InMail Messages through direct usage and would like to upgrade to a plan that would allow them to send more messages.
PLG tactics for driving retention
The trickiest part of driving retention is knowing if a user has been retained or not. Using LinkedIn as an example once more, you can see this front and center directly on user profiles. If a user hasn’t been fully onboarded, they see a progress bar at the top of their profile every time they log in, reminding them that their profile is incomplete.
So the first step in developing PLG tactics for retention is to define what retention means for your product and then identify the factors or actions that a customer needs to take that will lead them to be retained.
Knowing the stage of retention your customer is in will allow you to personalize their experiences in a way that will encourage them to complete their onboarding. You can also encourage them to engage with the product in a way that will bring them into contact with features designed to make them stick around.
PLG tactics for driving engagement
Similar to the acquisition stage, your current users and community are your main drivers for activation and engagement. Through your PLG approach, you have built a high-quality product that is reaping value for your users to the extent that many have become power users.
At this stage, you need to identify your power users and understand their typical customer journey and what behaviors they engage in. This helps you recreate these experiences more easily and, in turn, create more power users.
You should also champion and reward your power users in a way that is beneficial to them while also being visible to other users. This makes it more attractive for other customers to become power users themselves.
Some companies have turned power usage into a certification that users would want to put on their resumes because it makes them more hireable. Some examples include Salesforce Admins and AWS certification.
In these cases, being a Salesforce or AWS power user is more than just an internet badge with no real value. It gives your most valuable users something back, and it makes it more attractive for other users to increase their own engagement.
Identify your company’s PLG strategy with our free worksheet
To help you get started and build your own product-led growth strategy, we’ve created this free worksheet. Use it to map out your customer journey and PLG tactics.
Filling this worksheet out as a team exercise can help you:
- Identify any possible barriers or points of friction.
- Develop techniques to increase monetization.
- Design the loops within your product that are likely to drive engagement and retention.