Over the past few years, product-led growth has become jargon in tech companies. Working in the trenches of this I wanted to collect my learnings and channel my thoughts in a post.
Companies typically start to think about growth once they’ve achieved product-market fit. Product-market fit is that measure of the product when you know you’ve made something people want.
What is growth to begin with? Growth is simply an indicator and a measure of the value your product gives your current users and how that can unlock new users to find the same value.
Growth can come from various methods and requires an investment of capital and human resources, traditionally they involve huge marketing spends, sales folks, and public relations that come into the picture. This is the sales-driven flow, often there is a lead form that results in multiple follow-ups, then the education of the product by a human, a trial of the product to finally a conversion.
In the world of technology products, there has been a rise in a new proven channel of growth, that is the product itself. In this scenario the product itself speaks very well to the end-user i.e. the user is curious about a product tries it out for a while before making a purchase, this is also referred to as self-serve flow, a try before you buy model.
Product Led Growth is measured in terms of acquisition, conversion, and expansion. In simple words — how the product would be able to acquire new users, convert the new users to a paid user and expand their scope by offering additional features, products, or integrations to keep making them find value in your product. The teams typically think and solve end-user pain through the product, going bottoms up than putting folks in the field trying to lure the decision-makers in a company. And the bottoms up model is working, by the time a few teams start using a product it becomes so sticky that without it their work cannot be done.
With the focus on user experience, while trying out a new product becoming important aspects of decision making, you’re seeing SaaS apps such as Slack and Dropbox be even better than several consumer apps in the areas of messaging and note-taking.
The reasons why product experience has risen to prominence is mainly due to change in user behavior, hear me out on this. The number of millennials and gen Z currently account for 38% of the workforce in the US and is expected to rise to 58% through the course of the decade. This means a more youthful workforce, a workforce that has grown up, adapted new products unlike the previous generations, and have high expectations in terms of the experience for tools they use.
There are two parts to product-led growth in a company, first is identifying the need for it. This exercise also should heavily revolve around the customer persona and pain being solved. The second is that building the growth muscle requires three main ingredients: Cultural Changes, Internal Alignment, and Great Cross-Functional collaboration. This implies that there is needs to be a push to drive change from the product org with the product org being the nucleus of the company with marketing, engineering, success, and sales surrounding it.
Some companies that have been great examples of leading this change are Hubspot, Slack, Calendly, Luicdchart. In future posts, I’ll cover the underlying aspects of each function and some examples of great execution on growth.
Author: Amol Walvekar