Following up on our tips, it's time to talk about Product-Led Growth.
Based on the research and text created by Josiah Oliveira , Amplifica Digital brings everything you need to know about the subject!
What is Product-Led Growth
In a free translation, we can say that Product-Led Growth means product-led growth. Basically, Product-Led Growth is the evolution of the customer acquisition process, where the product is prominent and the main driver of acquisition and retention.
First, to understand Product-Led Growth, it is necessary to go deeper into the evolution of the customer acquisition process.
In the Sales-Led Growth (SLG) model, the salesperson is the main figure in the customer acquisition process. The result of the SLG model is what is known as SQL (Sales Qualified Lead), that is, the Lead who was qualified by the sales team.
The progress of this model is known as Marketing-Led Growth (MLG), where all marketing efforts induce the acquisition and qualification of new Leads. As a result of this process we have what we call MQL (Marketing Qualified Lead). Compared to SQL, MQL is a Lead that has a much lower acquisition cost and the MLG model itself is much more scalable. The Lead is the main asset.
Finally, we come to the Product-Led Growth (PLG) model. Here, all efforts are focused on allowing the Lead to have the first contact with the product quickly. A product-qualified lead (PQL) is radically different from MQLs and SQLs. He uses the behavior in the product to find out exactly when a lead is ready to buy.
Lead remains the main asset, however with PQLs the acquisition costs are much lower and the model itself is much more scalable than MQLs and SQLs.
Entry must be made easy (easy-in) and the product itself needs self-service characteristics. In other words, the product needs to be extremely easy to use and with an incredible UX. There is a significant reduction in the service layer, which reduces functions when teaching the user to push buttons.
In this context, Customer Success it has a more strategic and less operational role within companies, as it will not make up for the deficiencies that their product may have. The product needs to solve self-service problems.
Why PQL is so interesting in the SaaS market
In summary, this is a much more efficient model. The conversion rate of a PQL to sales can be 5 to 10 times higher than that of an MQL. In addition, in the SaaS market, 98% of the MQL generated never results in sales. We can say that the PQLs demonstrated the purchase intention based on the interest, use and behavioral data in the product. In this way, Leads that are qualified for use within the product provide a more accurate method of tracking customer journeys.
In this scenario, despite its importance, user behavior is only one of the factors that must be taken into account. It is necessary to ensure that your sales team invests time with Leads who have been correctly qualified by the product.
What are the types of Leads qualified by the product:
- Free users who have met a certain PQL criteria.
Whether because they were able to identify something that is really perceived as value, or because they are already using the product on an ongoing basis and have reached some activation criteria.
- Raised by hand inside the product.
They are users who requested assistance to buy the product or upgrade (upgrade). These are cases that need some help to go to the next level and asked for assistance from the sales team. They want to clear up doubts before actually closing the purchase.
- Users who have reached a limit on their free plans.
Literally, they are users who hit the ceiling of the product. They are using it well and have found the pre-established limits. These limits can be related to the use of features or some other established limit (Examples: number of Emails sent, Landing Pages created, Imported emails, etc.). The criterion depends on the nature of each product.
- Self-service users who purchased without sales involvement.
In this case, the payment for the use of the product took place autonomously, without the involvement of a seller. The customer paid to use the product and was granted access immediately, without human intervention.
Why PLG is so important for those working with user experience
You will need to challenge design paradigms and explore new scenarios, new concepts and new ways of thinking about the product.
The product needs to be self-sufficient in several aspects. Especially if you intend to build a self-service experience that allows for self-service by the user.
The product needs to be easy to use, which does not mean that it will be easier for those who plan to develop. There is a significant shift in the concept of MVP (Minimum Viable Product) to another way of delivering value, which many authors call MLP (Minimum Loveable Product). In this sense, interface elements that in another context would be depreciated end up gaining strength and extreme relevance.
One of the biggest challenges is how to make the UX incredible enough that the user is willing to pay to use it. And that involves a lot of investment in UX research and development. Therefore, the role of the designer in this process ends up being much more of leading and engaging several people, within the team that works and outside it.
The result is that this change in concepts makes the teams that work with PLG strategic for the company. Generally speaking, the product and engineering teams cease to be cost centers and become investment centers, as their results directly reflect on the company's billing and revenue.
What are the advantages of Product Led Growth?
Building on PLG is a natural move for startups, especially when talking about SaaS companies that sell recurring products and services.
This is a robust strategy and compatible with the current consumer, who wants enchanting experiences and products that really solve everyday problems. All of this, without a salesperson “pushing” that solution at all costs.
Among the biggest advantages of implementing Product Led Growth, we can highlight:
Decrease in CAC
Especially if your audience is SMB, that because you have a lower average ticket and need volume to pay, PLG can be very powerful.
In this way, delivering to these customers a process of more automatic and that only involves the CX and CS team at very specific times, its acquisition cost will also decrease. A customer pays for himself faster, increasing profitability.
Efficiency in the onboarding process
With Product Led Growth, the customer is not lost in the implementation and start-up phase, since his education process was done before hiring.
In addition, we can also include at this point the optimization of some areas within the company, since the Product team, when educating the lead, makes the process more scalable.
That way, the customer needs less support and the CX team in the long run. This is because the massive work is concentrated before his entry and at the beginning of the journey.
Alignment between teams
As we saw in the first point, it is necessary for teams to be repositioned, with a view to guaranteeing maximum productivity in all of them.
The idea is not to overload Product and leave CX and Customer Success idle, but to fit the talents in the best areas. With PLG, Engenharia, for example, is totally linked to acquisition and retention.
Likewise, Sales and Marketing need to be aware that the guidelines are focused on the Product and the Experience offered. Teams, in general, are more optimized and, in most cases, smaller with this alignment.
However, even with leaner and more optimized teams, the strategy is clear around revenue, making everyone look at the same place.
Lead maturity
As we are talking about a customer who has been educated since he knew the Product, and knows the experience he will have with that company, it is possible to visualize another stage of maturity in the leads that are qualified. More conversion and improved retention, we have a successful match for the growth of the company's revenue.
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Source: RD Design