In today's world, where competition is at its peak, businesses strive to remain relevant by maximizing their growth rate. Product-led growth (PLG) is a business strategy that relies on creating the best product for the customer. It centers on allowing the product to speak for itself without any need for a salesman's intervention. According to Gartner, by 2025, 95% of software-as-a-service (SaaS) providers will employ a form of self-service PLG for new customer acquisitions.1 Customers experience a frictionless product onboarding process that delivers value immediately. Its approach creates an instant attraction to the product and generates a high level of trust between the brand and the customer.
Traditional sales models are centered around the sales team trying to sell as much as they can. These models rely on heavy marketing, cold-calling, and persuasion to convince customers to buy a product. Sales cycles are getting longer, and costs are getting higher, which is affecting the bottom line of businesses. Customers are becoming aware of their choices and do not want to be pushed into buying products they don't need. The product itself is often an afterthought, with limited emphasis placed on creating a product that sells itself. As SaaS technology continues to evolve, traditional sales models may no longer be enough to drive sustainable growth.
File hosting service Dropbox, operated by Dropbox, Inc., headquartered in San Francisco, California, U.S., offers cloud storage, file synchronization, personal cloud storage, and client software. SaaS growth has traditionally been accomplished by building a product and then employing a sales team to sell it manually to companies. It involves activities such as attending conferences, implementing complex marketing campaigns, and maybe even setting up some workflows for inbound inquiries. Dropbox's phenomenal growth can be attributed to its PLG strategy, which was pretty straightforward but very successful. As the company took advantage of up-market opportunities, monetization came later. At first, the company's emphasis was largely on growing its user base. Dropbox's success was initially due to its user-friendly interface and ability to solve an existing problem. With Dropbox, users no longer had to put up with the onerous process of using FTP or local file servers. Instead, they can access their files directly from any computer in the world with a simple, drag-and-drop interface. It was an incredibly powerful and useful tool, and it was free and easy to use. In a nutshell, it was the best tool for sharing files. By solving a problem for users and making it easy to share their solutions with others, Dropbox addresses a problem for users. The strategy employed enabled the product to effectively promote itself by having it utilized in real-world scenarios. Dropbox emphasizes the act of sharing, ensuring that it is a key feature that is always prominently visible. They've included a prominent sharing button on each file and a shareable showing everything other users have shared with the user. In less than 10 years, Dropbox's revenues have risen to $1 billion in 2018.2
Technological advancements are driving the rise of product-led growth. Emerging technologies such as AI and machine learning are making it easier for companies to analyze customer data, understand their needs and preferences, and build products that meet those needs. Companies that leverage these technologies to build customer-centric products are finding success with product-led growth. Customers want to be able to discover products themselves and get value from them before they commit to a purchase. Product-led growth (PLG) accomplishes this by allowing prospects to try the product first, lowering entry barriers, reducing the sales cycle, and increasing the likelihood of conversion to paid customers. Today's buyers are more self-empowered, knowledgeable, and demanding than ever before. By using PLG strategies companies can allocate more resources toward creating product pipelines, leading to even better products and increased growth.
Market leaders are tapping into this by designing products that offer trial periods with no commitments, providing freemium options, and user-friendly onboarding processes. PLG is helping achieve sustainable success by creating compelling products that deliver exceptional user experiences, leveraging data and analytics to gain deeper customer insights, scaling their growth without relying on expensive sales and marketing campaigns, and creating a sustainable market advantage. As SaaS companies prioritize user-centricity and product excellence, it is clear that PLG will remain a critical tool in the SaaS growth playbook, driving success for both companies and their customers.