How Product-Led Growth Trends Impact Business Strategies

Staying current with marketing and sales trends is key to succeeding as a business professional. One of the top trends currently is product-led growth strategies. Knowing how to implement this type of growth plan can help you stay competitive in today’s market.

Interested in learning what product-led growth is and why it’s becoming more popular? Keep reading to find out how it differs from other models and what it can do for your business.

What Is Product-Led Growth? 

Product-led growth is a business strategy that makes a company’s product(s) the cornerstone of its marketing strategies. Revenue is driven by the product rather than by the user experience. Ideally, in a scenario that uses this strategy, the product should be so outstanding that it sells itself.

Product-led growth strategies can be used by traditional e-commerce companies, but they are also trending business strategies in the tech industry, especially for software-as-a-service (SaaS) companies. As consumers become more confident in making online purchasing decisions, brands are increasingly called upon to improve their products and provide solid social proof that what they’re selling is better than anything their competitors are offering.

This strategy is an alternative to more traditional sales-led growth, which relies on sales teams and customer service operatives to sell products and services. It’s also an alternative to user-led growth, which relies on user feedback and data to improve the customer experience.¹

Why Is Product-Led Growth on the Rise? 

Several factors may have led to the expansion of this growth strategy, including increased familiarity with online shopping due to COVID-19 and decreased satisfaction with the overall customer experience. Product-led growth has proven itself to be significantly more beneficial than sales-led growth for both companies and consumers. Let’s take a closer look at these benefits.

Benefits for Companies

Companies choosing a product-led growth model, which can sometimes be referred to as a PLG model, receive such a leg-up on their competitors that Forbes Magazine said in 2022 that, PLG is not a choice.² At that time, companies with a PLG model showed 50% more growth than other companies.² This trend has continued in the ensuing years.

One reason for the massive growth spike with a PLG model is the much lower marketing costs.² When companies have a product that sells itself or a product that customers are eager to talk about for them, marketing can capitalize on this, driving customers deeper into the marketing funnel rather than spending money to get customers to the top of the funnel.

This mode also encourages customer self-service, which means companies spend less money on customer service. What’s even better is that one study showed that 53% of buyers would prefer to make a purchase without any interaction with a salesperson.³

Benefits for Consumers

Customers are more capable of doing product research today than in the past, and it shows in their readiness to do a lot more self-service than before. In fact, more than half of consumers would prefer to buy products without ever having to speak to a customer service representative.⁴ By employing product-led growth strategies, businesses are encouraged to highlight more features and answer more product-related questions directly on their website. This means there’s more information available for customers who prefer to do their research.

When products are expected to market themselves, customers expect them to work, which means companies using this strategy have to create exceptional products to stay competitive. In this model, products are designed with the end-user in mind and customers are more likely to enjoy the product and are less likely to end up with buyer’s remorse. In fact, research shows companies that employ a product-led growth strategy enjoy a 30% higher customer feedback response rate.⁵

What Are the Business Implications of Product-Led Growth?

For companies that have always used a sales-led growth strategy, switching to strategies can be jarring. Marketing tactics that worked for a sales-led growth strategy will no longer be effective. Companies hoping to thrive in this new landscape need to be willing to change the way they’ve always done things and implement new strategies.

One of the first steps most SaaS companies make when switching to a PLG model is to offer free software trials or a “freemium” model where limited features are offered for free and more robust features come with an upcharge.⁶ Approximately 9% of free accounts eventually convert to paid accounts, which means the biggest challenge businesses using a product-led growth model face is convincing participants to sign up for the free trial.⁶

Convincing someone to try something for free is a much smaller first step than convincing someone to pick up a phone and call a sales team. Because the barrier to entry is low, PLG companies experience 50% higher acquisition rates than their competitors.² And since customers have already tried the product before buying it, they’re much less likely to experience buyer’s remorse. PLG companies also boast a 45% higher customer retention rate than their competitors.²

Of course, these benefits come with their own costs. Switching to a self-service model for customers means investing in high-quality FAQ pages and robust content pages. Experienced freelancers charge anywhere from $80-$100 per hour to create this type of content, which can be an investment when you’re first changing over to a PLG model.⁷ And if a company is hoping a product will sell itself, the product needs to be impeccable, with better features and ease of use than any competing products. This puts added pressure on businesses on the back end but leads to an overall better experience for customers.

Changing from a sales strategy to a product-led growth strategy is no easy feat, but the cost of not doing so is exponential. With product-led growth’s proven track record for success, companies need to get on board if they want any hope of staying competitive in the coming years. From updating product descriptions to offering seamless free software trials, companies can begin to pivot toward a PLG model while enhancing their product on the back end.  

Zoom: A PLG Leader

Zoom is one of many companies that have found success with product-led growth strategies. The company’s strategy emphasizes delivering a user experience that naturally drives adoption, engagement and expansion within its user base.

Zoom achieves this growth via:⁸

• User-Centric Design: Zoom offers and intuitive interface that minimizes the learning curve for new users
• Freemium Model: Zoom offered a free tier that allowed unlimited one-on-one meetings and 40-minute group meetings, enabling users to experience the product’s core features without any financial commitment. Then, as individual users see the value in Zoom, the company makes upgrading to paid tiers easy 
• Network Effect: Users inviting others to meetings created a natural viral loop for the company. This exposure led to organic growth, as new users then became frequent users and potential paying customers
• Customer Feedback Loop: Zoom continuously gathers feedback from users and integrates requested features and improvements, keeping the product aligned with user needs and preferences

Today, Zoom is so ubiquitous that it’s often used as a verb, as in: “Do you want to Zoom?”

Stay on Top of Business Trends With an Online MBA From MSOE 

Are you looking to grow your technical and business skills to take on leadership roles or make a bigger impact in your career? Milwaukee School of Engineering’s online MBA program positions you to stay ahead of emerging trends with solutions-oriented leadership that you can immediately apply within your current company.

Choose from the general MBA track or one of our three optional specializations—MBA in Analytics, MBA in New Product Management or MBA in Education Leadership—to maximize the impact of your education. The online MBA in New Product Management specifically provides you with a framework to enhance an organization’s ability to identify, develop and deploy new products and services. As you know, strong products are a key element of product-led growth. Learn how to apply the tools and knowledge needed to find the products and/or services that are aligned with the unique strengths and position of an organization.

Ready to pursue a worthwhile MBA? Get started on your application today.