You know how it feels. If launching a SaaS product is rocket science, marketing is like navigating a black hole.
The SaaS landscape is becoming more and more competitive.
Guess what? You are competing with over 7,000 other products that share your target customer base and offer similar benefits.
Even if you manage to secure a sale, increasing the customer lifetime value and developing their loyalty is essential for your business's long-term health.
But let's be honest - traditional marketing tactics can fall flat, leaving you frustrated and searching for a better solution.
And that's where Product-Led Growth (PLG) marketing swoops in.
For SaaS businesses, it's like having a Gmail account; it's no longer a "nice to have," but it's a "must have."
This guide will look at what is PLG and how it can help your SaaS business.
It's long, but when you complete it, you can implement the following steps to increase your sales, customer satisfaction, and the overall value of your product.
What is PLG marketing in SaaS?
Wondering what is PLG in marketing? Well, let us explain this, loud and clear!
Product-led growth (PLG) is a strategy that promotes growth by focusing on the product rather than on sales-led or marketing-led efforts. It's an alternative to the traditional approach of growing a business by focusing on new customer acquisition.
Instead, PLG focuses on making sure that customers already using your product continue using it and recommend it to others.
And guess what? This approach has become a top priority for many B2B SaaS companies. According to a survey from Productled, 58% of businesses are embracing product-led growth strategies.
PLG taps into the power of word of mouth. Customers will become your biggest cheerleaders, spreading the word far and wide when you implement the right PLG marketing strategy.
But how do you get there?
That's what the entire article is all about. But before that, let's understand why PLG matters for SaaS businesses.
Why PLG Marketing Matters for SaaS businesses?
Hopefully, by now, you have a fair idea of PLG marketing. However, the significance of PLG marketing is different for different industries. Our focus is on B2B SaaS brands.
Here is what happens when SaaS brands incorporatePLG marketing:
1. PLG boosts user adoption
With PLG marketing, you'll be rocking the charts regarding user adoption rates!
By giving users a chance to explore your product organically through interactive demos, freemium models, or self-guided onboarding. This reduces friction and gets them hooked on the value your product offers.
A report from Edelman found that 81% of consumers would not try companies' products if they did not trust them. And to earn that trust, you need to show that your product works.
With PLG marketing, you'll be able to do just that!
2. PLG lets you turn your users into brand advocates
Now, here's a game-changer - product-led selling!
When your product delivers an exceptional product experience, you create user advocates who can't help but rave about it to others.
The State of Product Leadership report by Pendo found that 63% of PLG companies reported "more than half" of new customers coming from user-driven referrals.
Dropbox is a great example. Dropbox, a cloud storage platform, successfully implemented a product-led selling strategy by incentivizing existing users to refer the product to others. This PLG marketing strategy significantly increased their user base, with most new customers using user referrals.
3. PLG helps you attract and convert more prospects
PLG helps marketing teams to attract and convert more prospects because it allows potential buyers to get their hands on your product without the interference of your sales team.
"PLG marketing matters for SaaS businesses because millennials and Gen Z buyers trust product-led marketing more than traditional Sales and Marketing. SaaS buyer studies have shown that these younger buyers seek out product demos and trials more than any other information source, as they want to get their hands on the product and "see it to believe it." - Joe Kevens, Founder of B2B SaaS Reviews.
We agree with this! This is especially important for SaaS buyers constantly bombarded with new products and services, as they need to quickly evaluate whether or not yours will meet their needs before making any commitments.
Canva's self-serve design platform allowed them to scale rapidly while minimizing traditional marketing expenses. Isn't that what we all want?
4. Shorter sales cycles with product-led marketing
PLG marketing can significantly reduce sales cycles for SaaS businesses. Users can quickly understand the value proposition and make informed purchasing decisions with a self-serve model and a product that speaks for itself.
I asked Trevor Ewen, COO at QBench, how PLG helps helps to shorten sales cycles and increase customer lifetime value. He said,
"Our experience shows that it improves (shortens) the time to close for new contracts. Customers don't have to commit to everything up front, so the decision-making process is easier. Conversely, it does reduce initial deal size. A typical customer of ours will be in implementation for a month, that's thirty days they will not experience a ton of PLG, and therefore take a little longer to get to that point. It would be easier for us if customers knew everything they wanted up front. We would get nice huge annual contracts in place every month. PLG marketing helps our customers discover emergent workflows, particularly for those coming from no prior LIMS, they may not even be aware of what's possible. The flip side is that it slows down the process of landing huge contracts, and makes it so that customers grow as they use the system. From a customer experience standpoint, this is great, but we would be more than happy to have knowledgeable confident customers walk in the door and buy the buffet.”
This shows that PLG marketing has a dual impact on sales cycles for SaaS businesses. On the one hand, it can significantly reduce the time to close new contracts by making the decision-making process easier for customers.
Users can quickly understand the value proposition and make informed purchasing decisions with a self-serve model and a product that speaks for itself.
However, it's important to note that PLG marketing has some trade-offs. While it may shorten the sales cycle, it can reduce the initial deal size. This is because customers can discover emergent workflows and functionalities through their usage of the product, particularly for those with no prior experience with a similar system.
As a result, the process of landing huge contracts may be slowed down, but it allows customers to grow and expand their system usage over time.
5. Helps SaaS brands make data-driven decision
When it comes to enhanced analytics, smart data leads to smart decisions! SaaS leaders know the power of data, from customer journey KPIs to business metrics.
Learning about how your customers use your product can reveal valuable insights on which you can base upsell offers.
It is like building a group of product-qualified leads – customers who already love your product and are more likely to be interested in trying additional services. This strategy increases your potential for cross-selling and helps increase revenue.
Moreover, you can use these insights to enhance your product based on what your customers truly want, improving customer experience and higher retention rates. When you give users what they want, everybody wins!
PLG Marketing vs. Other Growth Models - What are the Differences?
Regarding marketing strategies, there are many different models to choose from.
Two popular models are
- Product-Led Growth (PLG) marketing and
- Market-led growth
Here is a comparison table to help you understand the key differences:
As you can see, PLG Marketing strategy focuses on creating a product that resonates with the user and drives growth through a self-serve model.
This PLG Marketing strategy is less costly upfront and may require more customer feedback. Traditional marketing relies more on outbound sales and lead generation to push products toward customers. The initial costs can be higher, but this method may create faster results.
4 PLG Marketing Strategies for SaaS Brands
Now that you know the importance of having a PLG marketing strategy, let's see how you can use it to grow your business.
The following are some of the best PLG marketing strategies:
PLG marketing strategy 1: Freemium model
Let's be honest; people can't resist something free, especially if it's something they want.
A free trial is a great way to get people interested in your product.
One of the most common PLG marketing strategies is offering a freemium model. This means providing a simplified version of your product for free, with the option to upgrade to a paid version for additional features or increased usage limits.
The freemium model allows potential customers to experience the value of your product firsthand, increasing the likelihood of conversion and long-term retention.
Take a page out of Slack's book - they implemented a freemium model and sailed to success with millions of users signing up and advocating for their platform.
PLG marketing strategy 2: In-app onboarding
Effective onboarding is crucial to providing a seamless user experience. In-App onboarding is a PLG strategy focusing on guiding users through the product's features and functionalities directly within the app.
This approach helps users understand the product's value and potential use cases, reducing friction and increasing adoption rates.
Let's consider Canva as an example.
Canva, a graphic design platform, provides in-app tutorials and interactive guides to help new users get started with creating designs.
This onboarding strategy lets users quickly grasp the platform's capabilities and encourages them to continue exploring and using the product.
✅ Simplicity + Productivity + Gamification = Success!
PLG strategies that simplify the user experience and increase productivity are especially effective. This approach lets users grasp the product or service's value quickly and encourages them to continue exploring and using it.
For in-app onboarding, you can use Userpilot. Userpilot is a user onboarding and engagement platform that enables PLG businesses to create personalized and interactive in-app product experiences for their users. With Userpilot, you can easily create step-by-step guides, tooltips, and surveys tailored to your users' needs, behaviors, and preferences.
PLG marketing strategy 3: Viral loops
Leveraging viral loops can be a powerful way to drive organic growth. Viral loops refer to users inviting others to join your product or service, creating a self-sustaining cycle of growth.
Rewarding users to invite their friends can help spread the word about your product or service and increase your customer lifetime value without relying solely on traditional marketing channels.
A great example is Dropbox. Dropbox has successfully developed a straightforward and efficient product that caters to the needs of its target audience.
As a clever customer acquisition technique, Dropbox allows new users to earn additional storage space by sharing a referral page, whereas existing customers receive enhanced service. This strategy has significantly expanded Dropbox's customer base while increasing its users' satisfaction.
You can do this by signing up with Rehook. Rehook is a growth hacking platform that enables PLG businesses to implement and optimize their viral loop strategies. With Rehook, you can easily create referral programs and incentivize users to invite their friends and colleagues to join your product or service.
PLG marketing strategy 4: Interactive demos
Interactive demos are a great way to showcase the value of your product and help users understand its features and benefits.
Let's say your lead is interested in a SaaS product like Slack, a team messaging app. If you were to send them an email with a link to learn more about the product, they would likely click it and then leave their browser open for hours trying to figure out how this new tool works.
Instead of just sending them an email with a link, why not create an interactive demo that walks them through all of Slack's features?
It shows them exactly how the product works and lets them play around with it. It also makes it easier for them to see how Slack differs from other tools they've used in the past, resulting in a better understanding of its value proposition.
In a recent report by TrustRadius, 61% of large companies' buyers said that their prior experience was the most commonly used resource while making a buying decision.
Product demos came in second, with 74% of respondents citing them as one of the most influential sources impacting a purchasing decision. But what's interesting is that buyers increasingly rely on their own experiences—which 72% cited as among the top three factors influencing purchase decisions.
Here's an example of an interactive demo built with Rivia:
Saw the difference? That's how your users feels when they interact with the demo of your product. And creating the demo is not rocket science; with Rivia you can create and publish a demo in under 10 mins.
That's it. Your demo is ready.
Three Easy Steps to implement PLG marketing
PLG marketing is not just about creating a demo. You have to have a strategy in place and implement it. Here are the steps we recommend you take:
Step 1: Identify north star metrics for your SaaS brand
When it comes to a product-led growth strategy, it is crucial to define and follow four North Star metrics. These metrics will help guide your efforts toward sustainable and scalable business development. Let's dive into each metric:
1. North Star Metric #1: Gain new customers by targeting prospects at the top of your sales funnel
You need a significant user flow at the top of the funnel to facilitate faster learning and experimentation. The goal here is to acquire as many new users as possible. Paid channels can be optimal for quickly developing the desired user base. This stage focuses on user acquisition and creating a solid user base for experimentation.
Identify and leverage paid acquisition channels to attract new users and create a viable user base for growth experiments.
2. North Star Metric #2: Prove the product value through retention metrics
After acquiring users, evaluating if your product delivers the promised value is important. There are two recommended approaches to assessing product value:
A. Retention by cohorts
Calculate user retention based on the acquisition date and define a retention metric such as
- Daily Active Users (DAUs),
- Weekly Active Users (WAUs), or
- Monthly Active Users (MAUs).
Plotting retention over time in cohorts will help identify if user retention drops off or remains sufficient for product growth.
B. Customer feedback via interviews
Conduct customer interviews and ask, "How would you feel if you could no longer use our product?"
Based on the responses ("Not upset," "Somewhat upset," or "Very upset"), evaluate the product's usefulness. Ideally, more than 40% of users should answer that they would be "Very upset" if they couldn't use the product. To leverage this, you can use tools like Askable.
Implement a system to track user retention by cohorts and analyze the data regularly.
Conduct customer interviews to gauge the product's value and identify areas of improvement.
3. North Star Metric #3: Scale the acquisition of quality product users
Once you have identified the audience segment for your product and validated its value, the next step is to scale user acquisition. Look for a scalable acquisition channel that brings in quality users at an acceptable Cost of Customer Acquisition (CAC).
Virality and content can be effective channels at this stage, while cold calling and paid promotion may require larger budgets.
Identify and optimize a scalable acquisition channel with quality users within an acceptable CAC.
Focus on strategies that leverage virality, content marketing, and referrals to attract new users.
4. North Star Metric #4: Prove product monetization opportunity
After acquiring users, the final step is to convert free trial users into paid customers and monetize the product effectively. Analyze the cost of converting users from the free trial to paid customers. Determine the most cost-effective strategies for converting and monetizing users.
Analyze the conversion process from free trial users to paid customers.
Test and optimize different strategies, offers, and channels for driving conversions.
Step 2: Align your marketing, sales and technical teams with the Northstar metrics
Once you've identified your Northstar metrics, the next step is aligning your teams. Each company department plays a crucial role in achieving your Northstar metrics.
Successful PLG Marketing requires cross-functional alignment from product, engineering, marketing, sales, customer service, and analytics.
Product: Prioritize your roadmap and measure design activities for what drives user value. Set realistic expectations around performance indicators when validating new features.
Engineering: Develop methods to measure usability. Engage with user experience feedback and establish a scalable onboarding.
Marketing: Design s integrated funnels and Viral loops to deliver user adoption and growth. Marketing must focus on the most impactful channels to grow key metrics.
Sales: Develop a self-service sales-led model replicating the one-to-many experience intrinsic to product-led organizations. Ensure customer success by offering support that considers the user's context.
Customer service: Implement a channel to listen to feedback and improve the end-to-end customer experience, driving user retention and new referrals.
Analytics: Create metrics that help determine whether users achieve their objectives through the product. Set up a self-contained, user-centric growth model that's scalable.
Step 3: Create a user-centric plan for your SaaS Company
A user-centric plan is a PLG marketing plan that showcases the product's value propositions while addressing the user's needs through the purchase journey. A user-centric plan encompasses the following actions:
Develop a content marketing strategy: Incorporate educational content into your customer’s daily work so users can learn how to use your product and achieve their goals.
Create customer onboarding videos: Create a series of how-to videos that walk your customers through the PLG marketing software.
Build exercises or activities that engage customers: Provide interactive exercises or activities that offer specific actions for your audience to take, which guide them through achieving value from your product.
Plan a self-service sales-led model: Implement a sales strategy that replicates users' one-to-many experience with your product. Encourage your customers who love your product to discuss it in their company or recommend it to colleagues.
With a self-service model, your customers can be their own salesteam. This will help you scale your customer base without hiring a team of salespeople and investing in expensive marketing campaigns.
PLG marketing examples from top SaaS brands
Here are the three key marketing strategies that the best SaaS companies use to grow their customer base:
ClickUp, a popular project management platform, has effectively embraced PLG marketing to drive user growth and adoption. They offer a freemium model that allows users to access a robust set of features for free, with the option to upgrade for more advanced functionality.
Key PLG strategies employed by ClickUp:
- Product-led onboarding: ClickUp takes pride in its simple and intuitive user onboarding process. New users can quickly sign up, explore the platform, and manage their projects without friction.
- In-app education: ClickUp provides in-app tutorials, videos, and documentation to help users understand and utilize all the features and capabilities of the platform effectively.
- Network effects: ClickUp enables collaboration and communication across teams, creating network effects that encourage existing users to invite more team members, expanding the user base organically.
HubSpot, a leading marketing automation and CRM platform, has built its success by leveraging PLG marketing strategies. They offer a free CRM, which allows businesses to manage their contacts, track leads, and nurture customer relationships.
Key PLG strategies employed by HubSpot:
- Freemium model: HubSpot provides a free version of its CRM, allowing users to experience the value of their product without any financial commitment.
- Inbound marketing: HubSpot's approach to content marketing has been foundational to their PLG strategy. They provide valuable educational content through their Academy, blogs, and webinars, positioning themselves as industry leaders and driving organic traffic and user adoption.
- Upsell through product usage: As users explore and benefit from the free CRM, HubSpot strategically offers additional premium features and services based on each user's needs and usage patterns.
Zoom, the video conferencing platform that gained immense popularity recently, is a shining example of PLG marketing done right. They disrupted the market by offering a freemium product with a streamlined onboarding process and outstanding user experience.
Key PLG strategies employed by Zoom:
- Frictionless onboarding: Zoom's signup process is simple and requires minimal steps, allowing users to get started quickly.
- Superior user experience: Zoom's intuitive and user-friendly interface makes it easy for users to join meetings, invite participants, and collaborate seamlessly.
- Viral growth: Zoom's "invite-to-meeting" feature, where users can invite participants by sharing a meeting link, has fueled viral growth. This feature simplifies the process and acts as an organic user acquisition channel.
Head to our latest article on Best PLG Examples to learn how top brands are killing their PLG game!
Is PLG your next growth driver?
Now you know everything about PLG and the potential it can bring to the table.
But remember, PLG marketing strategy is all about leveraging marketing strategies at every stage of product management, from onboarding and pricing to sales and expansion. It's a super effective way to drive user acquisition and product growth.
So, why not take the next step and create your interactive demo with a PLG marketing software called Rivia?
With interactive demos, you can prove to your prospects the value of your tool and help them decide whether or not to purchase.
After all, if you have that life-saving solution, why should people say no?
Want to see how your interactive demo looks? Let's make yours here.