What is Product Led Growth—and Why is it Here to Stay?
Business growth is the ultimate goal of any company, but the path to business growth isn’t always clear. There are many different models and strategies that business owners use to build their brands and expand their reach. In recent years, product-led growth has become a larger point of discussion. In this article, we are going to discuss the strategy behind product-led growth—and why so many companies are choosing it.
Defining Product-Led Growth
Product-led growth is a popular business strategy that is being used by brands in every industry to attract and maintain customers. While traditional business strategies involve looking for a customer to understand the value of a product and invest in it, product-led growth leads with the product first.
With product-led growth, companies take the guesswork out of winning over their customers. Most commonly seen in technology-based industries, like app design and video games, product-led growth is all about kicking off a business cycle by trusting that the customer will love the product. Now, these strategies are being used by companies all around the world.
In most cases, product-led growth models offer a completely free product or version of a product with paid upgrades. When businesses offer these free options, it gives customers a chance to confirm that they really do love the product or service and that it is worth the money. This strategy is so effective that 91% of companies plan to invest in product-led growth initiatives within the year.
How Does Product-Led Growth Work?
There is no denying that product-led growth strategies are a huge twist on traditional sales strategies. Offering a free product might not seem like a way to make money, but it really is. Businesses that use this model win over their audiences effectively and create brand loyalty simply by trusting that their customers will love what they offer.
When a customer tries a free trial or limited version of a product, they are able to get hands-on experience with it. They can explore the interface if it is an app or test out the mechanics if it is a game. Companies that specialize in physical products can even use this model by offering freebies or early discounts.
Customers often use discretion when it comes to purchasing products are services, particularly if they can’t confirm the quality of the experience. Product-led growth strategies allow customers to actually try the products to confirm that it works for them. Then, customers are more likely to choose to pay them because they know it is worth the money.
Common Paid Offerings Include:
- Premium App Subscriptions
- Video Game “Battle Passes”
- Pay-Per-Use Systems
Why Product-Led Growth is Here to Stay
Product-led growth is always a leap of faith. At the end of the day, brands still need to figure out how to create a viable product that customers feel is worth the investment. The good news is that brands that do have a product that sells itself are able to receive quite a few benefits with this method. When asked, 60% of consumers said they purchased a product after trying a free version.
It is a common belief that product-led growth is the future of business, particularly for technology companies. Offering customers a chance to try a product might seem like it would discourage paying for more, but that really isn’t the case. Product-led growth offers all of these great benefits and more.
Market Research and Audience Knowledge
A great benefit associated with product-led growth is the fact that you really do get to know your target audience. Since you are allowing customers to use your products or services for a period of time, you will have a much better gauge regarding what kind of experience they offer.
Free products and services can tell you a lot about what works and what doesn’t for your business. As long as you can get your product in front of an audience, you should be able to gauge very quickly what does and does not catch their interest. This can be great for refining product features and marketing efforts, allowing you to capture the attention of even more potential customers.
Enhanced Conversion Rates
For most standard business strategies, conversion is about catching attention and making a sale. With product-led growth strategies, you already have that customer interest. Systems involved in product-led growth strategies experience three times the conversions from free to premium offerings. Since people are able to try your products and services, you will find that they are more likely to feel comfortable making the purchase. They already know they like what you have to offer, which makes it easy for them to pay for it.
Customer Acquisition is Easy
Most business models make it so you need a sales representative to convince customers to buy your products. With most product-led growth models, you can skip the need and cost of a sales team at all. All you have to do is provide the free version of the product or service, then offer your customers the chance to make the purchase or upgrade. With this model, the product quite literally sells itself. Leads from this strategy turn to paid customers 25% of the time.
An Experience Customers Love
Everyone knows the frustration of complicated how-to guides and training sessions, but product-led growth models are made to skip it all. Instead of demanding too much from your customers, you can make it easy to allow them to try out what you have to offer on their own.
As long as you have created a user-friendly process, you make it easy for customers to feel empowered when they choose your brand. From start to finish, they are completely in control of the process, allowing them to decide what is right without the pressure of sales or a difficult onboarding process. They can simply try, then buy.
Lead with Your Products
Giving customers the chance to experience what you have to offer is a great way to convince them to pay for it. Whether you choose to offer a free product or service or a free trial version instead, you can trust that your customers will feel empowered when they choose your company. If you have a great product, you can use product-led growth to let it sell itself!