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Understanding how Product-Led Marketing (PLM) works is critical for your company growth.
There are thousands companies claiming to be product-led.
But how do you know if they really are?
I've run 450+ winning experiments around PLG motion and in this guide want to walk you through everything you need to know about Product-Led Marketing.
Product-Led Marketing (PLM) is a strategy where an outstanding product drives your business growth. It's also known as user-generated growth—users naturally promote your product simply by using it.
Take Loom or Paypal, for example. You likely heard about them not through an ad or a sales pitch but because someone shared a Loom video with you or used PayPal for a quick money transfer. Remember, PayPal wasn't always a default payment option like it is in 2023.
In this approach, the focus shifts from aggressively chasing new leads to enhancing your product's user experience. This improvement drives users to share it with others, boosting Share of Wallet (SOV), product penetration, and referral rates.
It's important to note, however, that PLM isn't universally applicable. While it can enhance marketing strategies in many sectors, it can't always replace traditional top-funnel acquisition methods and drive
In product-led companies, every team matters, not just the product team. Whether you're in sales team or marketing, you can add huge value by using the product-led growth model. This approach needs a strong focus on analytics and a willingness to experiment. It's crucial for all departments to adopt this mindset. That's what makes great companies stand out from the rest.
In industries like manufacturing or transactional businesses, PLM is a supplement, not a sole market strategy. Yet, there are product-led companies like HiHello, Airbnb, and Figma that generate most of their new revenue through this market strategy.
Product Led Marketing vs. Product Led Growth
Product-Led Growth (PLG) is a broader concept that covers not only acquisition but also activation and retention stages. Product-Led Growth challenges the traditional sales-driven model, offering people the chance to experience a product's value for free before committing to a purchase.
This approach is common across various industries. For instance, you wouldn't buy a car without test-driving it first, right? People seek value upfront, and Product-Led Growth caters to this expectation.
On the other hand, Product Led Marketing (PLM) is more focused on acquisition. It revolves around these key questions:
How can your product help you acquire more customers?
What benefits do users gain by sharing your product with others?
How can you enhance the experience of spreading the word about your product?
While Product-Led Growth is about embedding value in every stage of the customer journey, PLM zeroes in on leveraging your product to draw in new users.
Why You Should Start Product Led Marketing
If you run your math and calculate how much does it cost you to acquire new customers you will most likely come up with a number that accumulates a good half or third of the revenue you’re getting from them (and that’s in a good scenario).
Now when the actions your users take on your product include the marketing element in their nature, the in factual cost to win the new customers in this way are zero. Sure you can attribute the spent resources on developing and implementing the PLM strategy, but you usually don’t account the time your marketing team spent on configuring google ads, do you?
So when we all know this formula saying it costs 5x more money to acquire new customers than to retain them, the upside for PLM coming from user generated growth is close to infinite as your expenses are zero.
How to Understand if Your Product is a Good Fit for PLM
To figure out if the product has potential for product-led marketing (PLM), I follow a two-step framework:
Step 1: Answer these questions:
Does my product have an inbuilt shareable functionality?
If not, would adding such a feature make sense?
If you answer "no" to both, PLM might not be the right strategy for you. While your product can still benefit from Product Led Growth (PLG), the marketing aspect might need a different approach.
Take e-commerce as an example. Beyond word-of-mouth, there’s limited scope to add value to users during their product experience. The shopping process is usually a solitary activity, with no inherent PLM elements.
Referral discounts, for instance, aren’t truly product-led; they’re discount-led.
You can indeed creatively apply PLM in manufacturing if the product naturally involves multiple users. Imagine selling cars designed specifically for taxi drivers. You could implement a feature like a mileage screen visible to passengers, showcasing the gas savings – a direct engagement with the product. (I want my commission if you’re going to implement this. Just kidding :D)
Step 2: This is where it gets interesting, especially if you had a 'no' then 'yes' response earlier. Here's where the real magic happens. Many products aren't initially designed with PLM in mind but hold great potential. This is your cue to step in. Evaluate what returns you could see and consider reallocating your budget from underperforming marketing efforts.
But there's another scenario. Sometimes, founders nail it by building their product with PLM in mind right from the start. However, if they miss out on optimizing, that's a gold mine of opportunity for you. If your answer to the first question in Step 1 was a 'yes', dive into optimization. That’s where you can make a significant impact.
Product Led Marketing Strategy Structure
If you've spotted a big opportunity in the last section, it's time to dive into strategy. Here's how to start:
1) Calculate the Natural Referral Rate: Begin by figuring out your activation-to-referral conversion rate. Focus on referrals that happened naturally, without any incentives from your side. Remember, referrals don't always mean direct invites.
Sometimes, a user's influence can be more subtle, leading others to your product. Setting this up might need a bit of technical know-how and assistance from your engineering team, but it's crucial.
This step is vital for understanding the innate appeal of your product. Based on the rate you discover, you can gauge the potential financial impact of your PLM efforts. A solid benchmark I've seen companies achieve is above 60%. It could be frustrating to get the real number first, but you have to develop your culture around the real metrics and not fall into "vanity metrics gurus" bucket.
Make sure to measure this among paying customers rather than free users. This ensures you're capturing those who truly see the value in your product.
2) Analyze Revenue by User Count: If your platform includes a user management feature, start analyzing revenue based on user counts in accounts. How much revenue are you pulling in from accounts with 1, 2, 3, or more users? Look for a link between the number of users in an account and its lifetime value (LTV).
This approach is a powerful tool for estimating potential returns from boosting product adoption rates. Imagine your average account currently has two users. Through targeted experiments and optimizations, you manage to increase this average to three users. What does this mean for your revenue?
Understanding this correlation isn't just about strategy, it's also about getting buy-in. When you can show potential revenue increases from PLM strategies, you make a compelling case for financial approval. This data becomes your key to securing the budget you need from your CFO team for your Product-Led Growth Model initiatives.
3) Begin ideatation. With a solid understanding of the potential returns from PLM, it's time to brainstorm actionable strategies. Set up a test ideas table in your project management tool and start jotting down any initial thoughts. Struggling for ideas? Here's how to get the ball rolling:
Empathize with Your Users: Put yourself in your users' shoes. Trace their journey from the first market interaction to regular product use as a customer. Focus on the actual product usage. Are there features or aspects that would naturally encourage sharing with others? Talk to your support and sales team. Sales reps and customer success teams are great customer voice aggregators
Refine User Invitations and Referrals: Assess how effectively your product communicates the benefits of team sign-ups during the buying process and active product usage. Is the value of having a team on board clear and communicated regularly throughout the customer journey?
Conduct Customer Interviews: Dive deep by interviewing customers and observing their user journey. At the end of the journey, ask if they'd invite others and why. Watch for natural sharing behaviors. If they don't emerge, these interviews should spark plenty of ideas.
Use Behavioral Tracking Analytics: Implement analytics to track user behavior. Are your current sharing options catching users' attention? Watching recordings of user interactions can be incredibly insightful.
Successful Product Led Marketing Examples
Loom: Sharing as a Growth Engine
Loom, a video messaging tool, serves as a prime example of PLM in action. The nature of the product itself drives its marketing at a very low customer acquisition cost. How? By design, using Loom means creating and sharing videos. Every shared video is a potential touchpoint for new customer acquisition.
Users often share these videos with colleagues or clients who haven't used Loom. This natural sharing cycle, powered by well polished customer experience piques interest and drives new users to the platform.
Analysis: Loom's strategy capitalizes on the inherent virality of its product. By making the act of using their service synonymous with marketing, they've crafted a seamless growth mechanism. The outcome? Insane 717% revenue growth in one year:
Figma: Collaborative Design as a Magnet
Figma takes a similar, yet distinct, approach with its collaborative design platform. The core of Figma's offering is its ability to let users share and collaborate on design projects in real-time.
As users invite colleagues to collaborate on a design, they by default promote Figma. This not only showcases the platform's capabilities but also encourages new account creation which grows the customer base insanely fast.
Analysis: Figma's strategy lies in the collaborative nature of design work. By making collaboration effortless and central to the product experience, they've turned each shared project into an opportunity for organic growth, leading to extremely short sales cycle.
The outcome? A growing user base, fueled by the product's collaborative features, attracting new users who see the value firsthand during joint projects. Here just look at this chart:
Leveraging Product-Led Marketing for SaaS Growth
For many saas companies, adopting a product-led go-to-market strategy powered by a freemium model can be a great way to generate qualified leads and accelerate growth. By offering an easy free trial with unlimited access to core product features, saas companies can demonstrate their product's value, engage end users, and convert them to happy, paying customers.
The key plg strategy here is to remove friction from the onboarding and activation process so that users can easily experience the product’s primary value. If a saas product does the heavy lifting to deliver value upfront, end users will drive growth organically by sharing and promoting the product within their social networks.
This viral, user-generated growth through word-of-mouth referrals and social media sharing will far surpass results from traditional marketing campaigns.
To measure the effectiveness of this approach, saas companies rely heavily on product analytics, tracking key metrics like activation rate, retention rate, average revenue per user (ARPU), and customer satisfaction (CSAT) scores.
These metrics highlight whether the freemium model is working to demonstrate the product's value, convert free users to paid plans, retain happy customers long-term, and fuel business growth. When optimized, this flywheel of product usage driving viral growth and upgrades to premium plans is extremely scalable.
The key is finding the right mix of free features and premium features that entice users to convert and continue deriving more value from premium access over time. SMART targeting of potential high-value customer segments is also critical so product demo videos, blog content, and free trials resonate with the target audience and their pain points.
Done right, a well-designed freemium saas product can gain traction with remarkable speed and deliver higher revenue at lower customer acquisition costs than traditional lead generation.
Capitalizing on digital content and social networks for distribution with a stellar product tailored to solve core user pain points is what powers this product-led motion. Series C companies like Slack, Dropbox, Canva and Calendly prove how transformative this plg strategy can be for growth.
Now, it's your turn
Equipped with these insights, I encourage you to start your own PLM journey and craft the Product-Led Strategy if you haven't already. Remember, the key is in leveraging your product's unique qualities to fuel user acquisition and growth.
The path to a successful PLM strategy lies in understanding your product deeply, empathizing with your users, and being creative in your approach. Dive in, experiment, and watch as your product becomes not just a tool, but a growth engine.
Understanding how Product-Led Marketing (PLM) works is critical for your company growth.
There are thousands companies claiming to be product-led.
But how do you know if they really are?
I've run 450+ winning experiments around PLG motion and in this guide want to walk you through everything you need to know about Product-Led Marketing.
Product-Led Marketing (PLM) is a strategy where an outstanding product drives your business growth. It's also known as user-generated growth—users naturally promote your product simply by using it.
Take Loom or Paypal, for example. You likely heard about them not through an ad or a sales pitch but because someone shared a Loom video with you or used PayPal for a quick money transfer. Remember, PayPal wasn't always a default payment option like it is in 2023.
In this approach, the focus shifts from aggressively chasing new leads to enhancing your product's user experience. This improvement drives users to share it with others, boosting Share of Wallet (SOV), product penetration, and referral rates.
It's important to note, however, that PLM isn't universally applicable. While it can enhance marketing strategies in many sectors, it can't always replace traditional top-funnel acquisition methods and drive
In product-led companies, every team matters, not just the product team. Whether you're in sales team or marketing, you can add huge value by using the product-led growth model. This approach needs a strong focus on analytics and a willingness to experiment. It's crucial for all departments to adopt this mindset. That's what makes great companies stand out from the rest.
In industries like manufacturing or transactional businesses, PLM is a supplement, not a sole market strategy. Yet, there are product-led companies like HiHello, Airbnb, and Figma that generate most of their new revenue through this market strategy.
Product Led Marketing vs. Product Led Growth
Product-Led Growth (PLG) is a broader concept that covers not only acquisition but also activation and retention stages. Product-Led Growth challenges the traditional sales-driven model, offering people the chance to experience a product's value for free before committing to a purchase.
This approach is common across various industries. For instance, you wouldn't buy a car without test-driving it first, right? People seek value upfront, and Product-Led Growth caters to this expectation.
On the other hand, Product Led Marketing (PLM) is more focused on acquisition. It revolves around these key questions:
How can your product help you acquire more customers?
What benefits do users gain by sharing your product with others?
How can you enhance the experience of spreading the word about your product?
While Product-Led Growth is about embedding value in every stage of the customer journey, PLM zeroes in on leveraging your product to draw in new users.
Why You Should Start Product Led Marketing
If you run your math and calculate how much does it cost you to acquire new customers you will most likely come up with a number that accumulates a good half or third of the revenue you’re getting from them (and that’s in a good scenario).
Now when the actions your users take on your product include the marketing element in their nature, the in factual cost to win the new customers in this way are zero. Sure you can attribute the spent resources on developing and implementing the PLM strategy, but you usually don’t account the time your marketing team spent on configuring google ads, do you?
So when we all know this formula saying it costs 5x more money to acquire new customers than to retain them, the upside for PLM coming from user generated growth is close to infinite as your expenses are zero.
How to Understand if Your Product is a Good Fit for PLM
To figure out if the product has potential for product-led marketing (PLM), I follow a two-step framework:
Step 1: Answer these questions:
Does my product have an inbuilt shareable functionality?
If not, would adding such a feature make sense?
If you answer "no" to both, PLM might not be the right strategy for you. While your product can still benefit from Product Led Growth (PLG), the marketing aspect might need a different approach.
Take e-commerce as an example. Beyond word-of-mouth, there’s limited scope to add value to users during their product experience. The shopping process is usually a solitary activity, with no inherent PLM elements.
Referral discounts, for instance, aren’t truly product-led; they’re discount-led.
You can indeed creatively apply PLM in manufacturing if the product naturally involves multiple users. Imagine selling cars designed specifically for taxi drivers. You could implement a feature like a mileage screen visible to passengers, showcasing the gas savings – a direct engagement with the product. (I want my commission if you’re going to implement this. Just kidding :D)
Step 2: This is where it gets interesting, especially if you had a 'no' then 'yes' response earlier. Here's where the real magic happens. Many products aren't initially designed with PLM in mind but hold great potential. This is your cue to step in. Evaluate what returns you could see and consider reallocating your budget from underperforming marketing efforts.
But there's another scenario. Sometimes, founders nail it by building their product with PLM in mind right from the start. However, if they miss out on optimizing, that's a gold mine of opportunity for you. If your answer to the first question in Step 1 was a 'yes', dive into optimization. That’s where you can make a significant impact.
Product Led Marketing Strategy Structure
If you've spotted a big opportunity in the last section, it's time to dive into strategy. Here's how to start:
1) Calculate the Natural Referral Rate: Begin by figuring out your activation-to-referral conversion rate. Focus on referrals that happened naturally, without any incentives from your side. Remember, referrals don't always mean direct invites.
Sometimes, a user's influence can be more subtle, leading others to your product. Setting this up might need a bit of technical know-how and assistance from your engineering team, but it's crucial.
This step is vital for understanding the innate appeal of your product. Based on the rate you discover, you can gauge the potential financial impact of your PLM efforts. A solid benchmark I've seen companies achieve is above 60%. It could be frustrating to get the real number first, but you have to develop your culture around the real metrics and not fall into "vanity metrics gurus" bucket.
Make sure to measure this among paying customers rather than free users. This ensures you're capturing those who truly see the value in your product.
2) Analyze Revenue by User Count: If your platform includes a user management feature, start analyzing revenue based on user counts in accounts. How much revenue are you pulling in from accounts with 1, 2, 3, or more users? Look for a link between the number of users in an account and its lifetime value (LTV).
This approach is a powerful tool for estimating potential returns from boosting product adoption rates. Imagine your average account currently has two users. Through targeted experiments and optimizations, you manage to increase this average to three users. What does this mean for your revenue?
Understanding this correlation isn't just about strategy, it's also about getting buy-in. When you can show potential revenue increases from PLM strategies, you make a compelling case for financial approval. This data becomes your key to securing the budget you need from your CFO team for your Product-Led Growth Model initiatives.
3) Begin ideatation. With a solid understanding of the potential returns from PLM, it's time to brainstorm actionable strategies. Set up a test ideas table in your project management tool and start jotting down any initial thoughts. Struggling for ideas? Here's how to get the ball rolling:
Empathize with Your Users: Put yourself in your users' shoes. Trace their journey from the first market interaction to regular product use as a customer. Focus on the actual product usage. Are there features or aspects that would naturally encourage sharing with others? Talk to your support and sales team. Sales reps and customer success teams are great customer voice aggregators
Refine User Invitations and Referrals: Assess how effectively your product communicates the benefits of team sign-ups during the buying process and active product usage. Is the value of having a team on board clear and communicated regularly throughout the customer journey?
Conduct Customer Interviews: Dive deep by interviewing customers and observing their user journey. At the end of the journey, ask if they'd invite others and why. Watch for natural sharing behaviors. If they don't emerge, these interviews should spark plenty of ideas.
Use Behavioral Tracking Analytics: Implement analytics to track user behavior. Are your current sharing options catching users' attention? Watching recordings of user interactions can be incredibly insightful.
Successful Product Led Marketing Examples
Loom: Sharing as a Growth Engine
Loom, a video messaging tool, serves as a prime example of PLM in action. The nature of the product itself drives its marketing at a very low customer acquisition cost. How? By design, using Loom means creating and sharing videos. Every shared video is a potential touchpoint for new customer acquisition.
Users often share these videos with colleagues or clients who haven't used Loom. This natural sharing cycle, powered by well polished customer experience piques interest and drives new users to the platform.
Analysis: Loom's strategy capitalizes on the inherent virality of its product. By making the act of using their service synonymous with marketing, they've crafted a seamless growth mechanism. The outcome? Insane 717% revenue growth in one year:
Figma: Collaborative Design as a Magnet
Figma takes a similar, yet distinct, approach with its collaborative design platform. The core of Figma's offering is its ability to let users share and collaborate on design projects in real-time.
As users invite colleagues to collaborate on a design, they by default promote Figma. This not only showcases the platform's capabilities but also encourages new account creation which grows the customer base insanely fast.
Analysis: Figma's strategy lies in the collaborative nature of design work. By making collaboration effortless and central to the product experience, they've turned each shared project into an opportunity for organic growth, leading to extremely short sales cycle.
The outcome? A growing user base, fueled by the product's collaborative features, attracting new users who see the value firsthand during joint projects. Here just look at this chart:
Leveraging Product-Led Marketing for SaaS Growth
For many saas companies, adopting a product-led go-to-market strategy powered by a freemium model can be a great way to generate qualified leads and accelerate growth. By offering an easy free trial with unlimited access to core product features, saas companies can demonstrate their product's value, engage end users, and convert them to happy, paying customers.
The key plg strategy here is to remove friction from the onboarding and activation process so that users can easily experience the product’s primary value. If a saas product does the heavy lifting to deliver value upfront, end users will drive growth organically by sharing and promoting the product within their social networks.
This viral, user-generated growth through word-of-mouth referrals and social media sharing will far surpass results from traditional marketing campaigns.
To measure the effectiveness of this approach, saas companies rely heavily on product analytics, tracking key metrics like activation rate, retention rate, average revenue per user (ARPU), and customer satisfaction (CSAT) scores.
These metrics highlight whether the freemium model is working to demonstrate the product's value, convert free users to paid plans, retain happy customers long-term, and fuel business growth. When optimized, this flywheel of product usage driving viral growth and upgrades to premium plans is extremely scalable.
The key is finding the right mix of free features and premium features that entice users to convert and continue deriving more value from premium access over time. SMART targeting of potential high-value customer segments is also critical so product demo videos, blog content, and free trials resonate with the target audience and their pain points.
Done right, a well-designed freemium saas product can gain traction with remarkable speed and deliver higher revenue at lower customer acquisition costs than traditional lead generation.
Capitalizing on digital content and social networks for distribution with a stellar product tailored to solve core user pain points is what powers this product-led motion. Series C companies like Slack, Dropbox, Canva and Calendly prove how transformative this plg strategy can be for growth.
Now, it's your turn
Equipped with these insights, I encourage you to start your own PLM journey and craft the Product-Led Strategy if you haven't already. Remember, the key is in leveraging your product's unique qualities to fuel user acquisition and growth.
The path to a successful PLM strategy lies in understanding your product deeply, empathizing with your users, and being creative in your approach. Dive in, experiment, and watch as your product becomes not just a tool, but a growth engine.
Understanding how Product-Led Marketing (PLM) works is critical for your company growth.
There are thousands companies claiming to be product-led.
But how do you know if they really are?
I've run 450+ winning experiments around PLG motion and in this guide want to walk you through everything you need to know about Product-Led Marketing.
Product-Led Marketing (PLM) is a strategy where an outstanding product drives your business growth. It's also known as user-generated growth—users naturally promote your product simply by using it.
Take Loom or Paypal, for example. You likely heard about them not through an ad or a sales pitch but because someone shared a Loom video with you or used PayPal for a quick money transfer. Remember, PayPal wasn't always a default payment option like it is in 2023.
In this approach, the focus shifts from aggressively chasing new leads to enhancing your product's user experience. This improvement drives users to share it with others, boosting Share of Wallet (SOV), product penetration, and referral rates.
It's important to note, however, that PLM isn't universally applicable. While it can enhance marketing strategies in many sectors, it can't always replace traditional top-funnel acquisition methods and drive
In product-led companies, every team matters, not just the product team. Whether you're in sales team or marketing, you can add huge value by using the product-led growth model. This approach needs a strong focus on analytics and a willingness to experiment. It's crucial for all departments to adopt this mindset. That's what makes great companies stand out from the rest.
In industries like manufacturing or transactional businesses, PLM is a supplement, not a sole market strategy. Yet, there are product-led companies like HiHello, Airbnb, and Figma that generate most of their new revenue through this market strategy.
Product Led Marketing vs. Product Led Growth
Product-Led Growth (PLG) is a broader concept that covers not only acquisition but also activation and retention stages. Product-Led Growth challenges the traditional sales-driven model, offering people the chance to experience a product's value for free before committing to a purchase.
This approach is common across various industries. For instance, you wouldn't buy a car without test-driving it first, right? People seek value upfront, and Product-Led Growth caters to this expectation.
On the other hand, Product Led Marketing (PLM) is more focused on acquisition. It revolves around these key questions:
How can your product help you acquire more customers?
What benefits do users gain by sharing your product with others?
How can you enhance the experience of spreading the word about your product?
While Product-Led Growth is about embedding value in every stage of the customer journey, PLM zeroes in on leveraging your product to draw in new users.
Why You Should Start Product Led Marketing
If you run your math and calculate how much does it cost you to acquire new customers you will most likely come up with a number that accumulates a good half or third of the revenue you’re getting from them (and that’s in a good scenario).
Now when the actions your users take on your product include the marketing element in their nature, the in factual cost to win the new customers in this way are zero. Sure you can attribute the spent resources on developing and implementing the PLM strategy, but you usually don’t account the time your marketing team spent on configuring google ads, do you?
So when we all know this formula saying it costs 5x more money to acquire new customers than to retain them, the upside for PLM coming from user generated growth is close to infinite as your expenses are zero.
How to Understand if Your Product is a Good Fit for PLM
To figure out if the product has potential for product-led marketing (PLM), I follow a two-step framework:
Step 1: Answer these questions:
Does my product have an inbuilt shareable functionality?
If not, would adding such a feature make sense?
If you answer "no" to both, PLM might not be the right strategy for you. While your product can still benefit from Product Led Growth (PLG), the marketing aspect might need a different approach.
Take e-commerce as an example. Beyond word-of-mouth, there’s limited scope to add value to users during their product experience. The shopping process is usually a solitary activity, with no inherent PLM elements.
Referral discounts, for instance, aren’t truly product-led; they’re discount-led.
You can indeed creatively apply PLM in manufacturing if the product naturally involves multiple users. Imagine selling cars designed specifically for taxi drivers. You could implement a feature like a mileage screen visible to passengers, showcasing the gas savings – a direct engagement with the product. (I want my commission if you’re going to implement this. Just kidding :D)
Step 2: This is where it gets interesting, especially if you had a 'no' then 'yes' response earlier. Here's where the real magic happens. Many products aren't initially designed with PLM in mind but hold great potential. This is your cue to step in. Evaluate what returns you could see and consider reallocating your budget from underperforming marketing efforts.
But there's another scenario. Sometimes, founders nail it by building their product with PLM in mind right from the start. However, if they miss out on optimizing, that's a gold mine of opportunity for you. If your answer to the first question in Step 1 was a 'yes', dive into optimization. That’s where you can make a significant impact.
Product Led Marketing Strategy Structure
If you've spotted a big opportunity in the last section, it's time to dive into strategy. Here's how to start:
1) Calculate the Natural Referral Rate: Begin by figuring out your activation-to-referral conversion rate. Focus on referrals that happened naturally, without any incentives from your side. Remember, referrals don't always mean direct invites.
Sometimes, a user's influence can be more subtle, leading others to your product. Setting this up might need a bit of technical know-how and assistance from your engineering team, but it's crucial.
This step is vital for understanding the innate appeal of your product. Based on the rate you discover, you can gauge the potential financial impact of your PLM efforts. A solid benchmark I've seen companies achieve is above 60%. It could be frustrating to get the real number first, but you have to develop your culture around the real metrics and not fall into "vanity metrics gurus" bucket.
Make sure to measure this among paying customers rather than free users. This ensures you're capturing those who truly see the value in your product.
2) Analyze Revenue by User Count: If your platform includes a user management feature, start analyzing revenue based on user counts in accounts. How much revenue are you pulling in from accounts with 1, 2, 3, or more users? Look for a link between the number of users in an account and its lifetime value (LTV).
This approach is a powerful tool for estimating potential returns from boosting product adoption rates. Imagine your average account currently has two users. Through targeted experiments and optimizations, you manage to increase this average to three users. What does this mean for your revenue?
Understanding this correlation isn't just about strategy, it's also about getting buy-in. When you can show potential revenue increases from PLM strategies, you make a compelling case for financial approval. This data becomes your key to securing the budget you need from your CFO team for your Product-Led Growth Model initiatives.
3) Begin ideatation. With a solid understanding of the potential returns from PLM, it's time to brainstorm actionable strategies. Set up a test ideas table in your project management tool and start jotting down any initial thoughts. Struggling for ideas? Here's how to get the ball rolling:
Empathize with Your Users: Put yourself in your users' shoes. Trace their journey from the first market interaction to regular product use as a customer. Focus on the actual product usage. Are there features or aspects that would naturally encourage sharing with others? Talk to your support and sales team. Sales reps and customer success teams are great customer voice aggregators
Refine User Invitations and Referrals: Assess how effectively your product communicates the benefits of team sign-ups during the buying process and active product usage. Is the value of having a team on board clear and communicated regularly throughout the customer journey?
Conduct Customer Interviews: Dive deep by interviewing customers and observing their user journey. At the end of the journey, ask if they'd invite others and why. Watch for natural sharing behaviors. If they don't emerge, these interviews should spark plenty of ideas.
Use Behavioral Tracking Analytics: Implement analytics to track user behavior. Are your current sharing options catching users' attention? Watching recordings of user interactions can be incredibly insightful.
Successful Product Led Marketing Examples
Loom: Sharing as a Growth Engine
Loom, a video messaging tool, serves as a prime example of PLM in action. The nature of the product itself drives its marketing at a very low customer acquisition cost. How? By design, using Loom means creating and sharing videos. Every shared video is a potential touchpoint for new customer acquisition.
Users often share these videos with colleagues or clients who haven't used Loom. This natural sharing cycle, powered by well polished customer experience piques interest and drives new users to the platform.
Analysis: Loom's strategy capitalizes on the inherent virality of its product. By making the act of using their service synonymous with marketing, they've crafted a seamless growth mechanism. The outcome? Insane 717% revenue growth in one year:
Figma: Collaborative Design as a Magnet
Figma takes a similar, yet distinct, approach with its collaborative design platform. The core of Figma's offering is its ability to let users share and collaborate on design projects in real-time.
As users invite colleagues to collaborate on a design, they by default promote Figma. This not only showcases the platform's capabilities but also encourages new account creation which grows the customer base insanely fast.
Analysis: Figma's strategy lies in the collaborative nature of design work. By making collaboration effortless and central to the product experience, they've turned each shared project into an opportunity for organic growth, leading to extremely short sales cycle.
The outcome? A growing user base, fueled by the product's collaborative features, attracting new users who see the value firsthand during joint projects. Here just look at this chart:
Leveraging Product-Led Marketing for SaaS Growth
For many saas companies, adopting a product-led go-to-market strategy powered by a freemium model can be a great way to generate qualified leads and accelerate growth. By offering an easy free trial with unlimited access to core product features, saas companies can demonstrate their product's value, engage end users, and convert them to happy, paying customers.
The key plg strategy here is to remove friction from the onboarding and activation process so that users can easily experience the product’s primary value. If a saas product does the heavy lifting to deliver value upfront, end users will drive growth organically by sharing and promoting the product within their social networks.
This viral, user-generated growth through word-of-mouth referrals and social media sharing will far surpass results from traditional marketing campaigns.
To measure the effectiveness of this approach, saas companies rely heavily on product analytics, tracking key metrics like activation rate, retention rate, average revenue per user (ARPU), and customer satisfaction (CSAT) scores.
These metrics highlight whether the freemium model is working to demonstrate the product's value, convert free users to paid plans, retain happy customers long-term, and fuel business growth. When optimized, this flywheel of product usage driving viral growth and upgrades to premium plans is extremely scalable.
The key is finding the right mix of free features and premium features that entice users to convert and continue deriving more value from premium access over time. SMART targeting of potential high-value customer segments is also critical so product demo videos, blog content, and free trials resonate with the target audience and their pain points.
Done right, a well-designed freemium saas product can gain traction with remarkable speed and deliver higher revenue at lower customer acquisition costs than traditional lead generation.
Capitalizing on digital content and social networks for distribution with a stellar product tailored to solve core user pain points is what powers this product-led motion. Series C companies like Slack, Dropbox, Canva and Calendly prove how transformative this plg strategy can be for growth.
Now, it's your turn
Equipped with these insights, I encourage you to start your own PLM journey and craft the Product-Led Strategy if you haven't already. Remember, the key is in leveraging your product's unique qualities to fuel user acquisition and growth.
The path to a successful PLM strategy lies in understanding your product deeply, empathizing with your users, and being creative in your approach. Dive in, experiment, and watch as your product becomes not just a tool, but a growth engine.
Discover the 'why' behind your data today
Think about the last time you had a business question. How long did it take to answer it?
Discover the 'why' behind your data today
Think about the last time you had a business question. How long did it take to answer it?
Discover the 'why' behind your data today
Think about the last time you had a business question. How long did it take to answer it?