The Benefits of Product-Led Growth

What are the benefits of product-led growth?

The list of advantages of the product-led growth approach is long. We will, therefore, delve into only the most important ones. Apart from that, we will try to explain how putting the product in the center leads to such benefits. So, what effect can product-led growth have on your business?

User centricity

The first benefit of product-led growth is that it’s closely intertwined with customer-centric product development, which is highly beneficial. Allowing people to use the product and then selling it based on their experience is exactly in line with customer centricity. The product is built around this initial encounter with the customers and may be adjusted based on their feedback and willingness to switch to paid options.

The fact that product-led growth has its roots in customer experience has quite an advantage – it takes over all the benefits of the regular customer-centric approach.

These include:

• Higher customer satisfaction
• Higher customer retention rates
• Increase in revenues
• Faster product development
• Better market fit

Broader target market

Providing a basic version of the product for free allows companies to reach out to more potential customers. This opens them to a broader market since the product might become popular and desirable among groups that were not initially considered as the target marketing personas.

This also fuels another popular approach – making data-driven decisions. Collecting information on who has used the basic version of the product and who has converted through the premium subscription is a way to acquire cold facts about potential customers. This allows the marketing and sales teams to adjust their strategies, therefore creating a much more accurate and effective lead-to-cash flow.

Word-of-mouth marketing

Due to user-centricity, the main benefit of a product-led process is increased customer satisfaction. But this also leads to another advantage – word-of-mouth marketing.

Customers who are happy with a product are bound to spread the news about it and recommend it to their colleagues. Such actions make it possible to acquire new customers with little-to-none advertising. What is more, it costs far less than a regular marketing strategy, especially at times when customer acquisition is a fairly expensive process.

Rapid time to value

Product-led growth is quicker than other approaches. It does not require extensive efforts from marketing and sales teams, the results of which are often visible only a few months after their introduction (e.g. SEO). If the product is in the lead, the growth happens naturally, and the more users your product has, the faster the whole process. The value of your product becomes visible to new customers immediately as they hear and download your digital product.

We should also mention here that there are actually two value checkpoints for your customers to go through. The first is the initial usage of the free version of the product; the second is the switch to the premium plan. Upgrading from one to the other requires money only, and the customer usually knows what to expect from the extended version, so if they need it, they simply purchase it.

Enhanced product development

There is no such thing as a completed SaaS product – it should be developed constantly. This is exactly what companies tend to do – implement updates and fixes whenever possible. But, to introduce changes, they first need to know what should be modified. Answering that question is one of the main benefits of product-led growth.

The best way to find out what should be altered is to talk to the users of your product. You don’t have to communicate directly with the customers, but you should communicate frequently. By adopting the product-led approach, you will have a broad range of clients. All that is left is to encourage them to leave feedback and reviews. These will be a source of knowledge that will point out the direction in which the product development should go to make the product better. As the Future of Product Management report stated – the only way to keep your customers loyal is by giving them high-quality products, so this is a major benefit.

Better team alignment

With the product in the center, it is easier for different teams to cooperate. Marketing, sales, engineering – they all have different responsibilities, but they need to work together. Often it is quite difficult to make them do so in traditional sales-led companies.

When each of the teams wants to do their tasks only with little regard to the other departments, it is almost impossible to get the work done. By putting the product in the center, you give your teams a doorway through which they will go in different directions. This will be their starting point, making it easier for them to cooperate – they will all have one thing in common: the product.

Higher revenue

All of these benefits lead to one final, huge advantage of product-led growth: higher revenue per employee. The product requires some level of supervision, updates, and marketing efforts as well, yet far less than in sales-led models. This means that your employees may focus on different activities, like preparing other products. The company will earn more with slightly less effort.

Our final thoughts on the benefits of product-led growth

As you saw, product-led growth has an exceptionally long list of advantages. This is exactly why this concept is so willingly adopted by the major tech companies nowadays. Higher customer satisfaction, cheaper marketing, better product quality, and shorter time to value – all of these are arguments for putting the product in the center of your company.

Did you find this article helpful? Then you should definitely read about product vision, strategy, and roadmap!