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Product-Led Growth: The Best SaaS Scaling Approach in 2022 🚀

If you feel you have been missing the mark with your customers lately, you might need a switch-up in your business model. But how do you choose between all of the business strategies out there? What is the best tactic to use in today’s fast-paced market? Product-led growth (PLG) is a model that is user-centric and user-focused. Customer acquisition, expansion, conversion, and retention are product-driven instead of sales-driven. This method is quickly becoming one of the most popular business models for many companies. 

At Usersnap, we have dedicated quite a bit of effort into becoming more PLG-oriented ourselves. Even when we believed that we were already customer-centric, we quickly realized we had much to learn about PLG to make it actionable within our company and for our customers. What we’ve seen is that a product-led growth strategy can increase business retention by improving customer experience. Product-led growth companies are starting to pop up all over the world. Using PLG can help grow your business and further unlock a user experience that is hard to beat. That’s all fine, but what does having a product-led growth business look like? Let’s explore together.

What Is Meant By Product Led Growth And How It Can Help in SaaS Product Management? 

At Usersnap, we want to help you reach your customers and implement strategies to grow your business. A good example is our guide to product survey questions to understand what to ask to get the right insights. Gathering data directly from your users will help you build better products, and grow your companies. 

If you want long-term changes, though, it may be time to investigate how you’re leading the growth of your business. Are you using a sales-led or product-led growth method? What’s the difference between the two? And which one is best for your company? To answer these questions, look at your target audience, your product, and any other services you may offer. Then, familiarize yourself with product-led growth and how it can serve you and your business. Luckily, you’re not alone! Usersnap is here to help.

Product-led growth (PLG) is when an excellent product experience is the core foundation of your customer relationship. This product experience drives not only customer retention but also acquisition. Sales-led growth, however, is driven by the sales process. It centers on the customer-sales agent experience, which means that your sales team controls customer acquisition and retention. If you are looking for a method that focuses on customer satisfaction without heavy sales, PLG is for you. If you’re looking to become a product leader inside your company, PLG is also for you.

Representational image of SaaS product management and product-led growth

When it comes to SaaS product management, PLG is becoming the nomenclature of the day. Why? Because SaaS product management requires research, strategy, internal company alignment, product development, and continuous product refinement along the way. It just so happens that product-led growth overlays many of the same concepts. If you want to know more about SaaS product management, we’ve also got you covered 🫶.

The 8 main points to product-led growth

There are 8 main points regarding product-led growth in companies and how they should operate. If your company fits these criteria, a product-led growth playbook will be easy to implement in your business. If not, is it still possible to adopt the PLG mentality? Of course! The main difference? Where you believe your organization is lacking in PLG, these are the items you should focus on. Easy peezy. Here they are:

  1. The market must be in the right place for product-led growth. The cost for each user should be low and encourage the user to invest in your business.
  2. The solution your product offers should not be able to be found anywhere else. Only a unique solution draws in users, and competing on price alone doesn’t scale growth.
  3. Once the user has tried your product, the value of your product is clear. Many businesses use a free-trial method to promote this idea (although this is only 1 of 6 PLG models). While you might not generate revenue immediately through free trials, satisfied customers will become repeat customers.
  4. The user must see value in your product before making any payments. Set up your product so the user can determine the value and decide if they want to pay for it. 
  5. Your product makes it easy to sell, market, and bring on new users. Customer recommendations do wonders for user acquisition, so a product that customers can fully engage pays off long-term.
  6. Your product and marketing skills can increase engagement. Strategic methods should be implemented within the product to market and increase engagement. 
  7. The value of your product increases as user engagement increases. The more use a user gets out of your product, the easier it is to sell to them.
  8. You have a team of individuals who dedicate themselves to adopting your product. For product-led growth to work, you have to work together to transition your company to a place where product-led growth can thrive.
Dashboard showing customer engagement and response rates

To form a well-rounded business, you need to have different aspects that work together to grow your business. Your team, users, and metrics must positively influence your business if you want to see growth. By having a great team behind your product, success is sure to come easily. 

How is Product-Led Growth The Right Strategy For Your SaaS Business? 

In all SaaS businesses, the focus is on the customer (whether the employees of the company know it or not). Keep your user base in mind, and you’ll easily know which growth model is best for the business. What problem is your business solving for your customers? How do you know with confidence that your business is solving that problem? If you aren’t yet sure, learn more about how you can ask your customers in order to find out if you’ve achieved product-market fit. An example of how to ask the question and find out is below:

Usersnap's product-market fit template available for users

From there, ask yourself: is your product something that requires contact with a sales representative, or do most of your customers find their way to your company on their own? 

Answering these questions may seem tricky. If you decide that product-led growth is right for you, there are several guidelines that you should keep in mind when implementing product-led growth in your company. If you need an intro on product-led growth, this article is a great place to start!

Customers have more than one solution in mind from your feature set

Customers want their problems solved as quickly as possible, and you want your customers to be happy! Product-led growth is a great way to market your business simply and efficiently if your service is for a decentralized or parallelized problem. If your company offers multiple solutions to one problem, or multiple products to one user base, these products will be the driving force of your company. 

For example, Calendly fixes confusing scheduling processes by allowing people to send personal calendars to others to schedule meetings at their convenience. This gets rid of phone tags, email chains, and tedious back-and-forths. And when people who have never heard of Calendly click a link for the first time and become a user? That’s one of many examples of how Calendly approaches product-led growth

Customers send feature requests

Check out this blog if you need more information on how to get the right product features on your roadmap.

Fast-moving business as part of developing target markets!

In the world of modern technology, problems and their solutions are popping up faster than it takes you to do a Google search. If your product is for larger companies, it must be fully ready before you send it out. The way to hook large corporations is by leaving no room for doubt that your product is the best.

Large corporations focus on their return of investment, or ROI. If they are planning on purchasing your product, they’ll want to see data that shows that the money they pay is going to give them more business in the future. Even if your product doesn’t produce the best result on the market, if it brings in customers and keeps them satisfied, large corporations will show interest. 

customer feedback software showing product-led growth over time

Amazon’s Kindle wasn’t the first electronic library system available, but it was the first one to offer publishers a guaranteed profit because it didn’t allow for borrowing, purchasing, or downloading books from anywhere but Amazon. According to Marcos Aguiar, this allowed publishers a guaranteed ROI, which led to the trust of the larger corporations, and Kindle’s success. 

Illustration showing how product feedback can help achieve product-led growth

If you want to know how we built a product feedback software that served not only our needs, but product managers along the way, take a gander at the link above^. And if you just need some general information on product feedback in web-based situations, we also have your back chief!

Three Pillars Of Product-Led Growth

Numerous SaaS and software companies are using product-led growth strategies to develop their customer base. If you’ve worked remotely during the past year, you may have used Slack, which is a communication software. Slack promotes PLG by encouraging users to add people from their contacts to the Slack network, potentially getting six new users for the price of one! 

If you’ve heard about self-service research, you know that customer feedback is vital to any successful growth model. Product-led growth is no different; it puts customer satisfaction at the forefront of business development. If you keep the three pillars of product-led growth in mind, your relevant business metrics will shoot up, and you’ll be ready to welcome new customers with open arms.

The three pillars of product-led growth are: 

  1. Designing your product for the end-user. Having a product that solves the needs of your consumers means staying committed to efficiently improving your product. You should know how your product benefits users’ lives and how it can continue to do so long term.
  2. Delivering value before capturing value. Your consumer has to see the value in your product before they are willing to put money into it. Make sure that users can navigate the product on their own and quickly solve their problems with ease. 
  3. Investing in the product from the very beginning. While you may be investing a lot up front, the return on that investment can be much higher. Having a go-to-market strategy will help you keep track of product-led growth metrics, and give you a better understanding of how to continue on this path of growth. 

Let’s look at each of these pillars and discuss how they can help you and your business.

Design for the end user, and gauge with retention and churn in mind

End-users are the driving force behind product-led growth businesses. Unlike large corporations who care about ROI, end-users are individuals who care if your product helps solve their problems. Customer-led growth involves heavily relying on customer feedback to create better user experiences. If you want to know about stress-free website feedback, that’s an interesting resource to consider as well.

For your business to grow, you have to have good customer retention and low customer churn. It’s a clear indicator of value for your customer base. Tailoring your product experience to your end-user will increase the value of your product. If customers are satisfied with your solutions, they’ll keep using them and tell their friends. Creating an end-user-focused product makes everyone happier!

Eric Yuan, the founder of Zoom, took his own frustrations with a lack of high-quality video calling into consideration when coming up with the platform. As he said in 2018, “Someday if I can have a smart device and with just one click I can talk with you, can see you—that [is] my daydream.” By thinking about what everyday users were lacking, Yuan developed one of the most famous video conferencing companies, which thrives because of its end-users.  

SaaS churn going down as part of product-led-growth

When it comes to understanding your end users at the retention stage of the funnel, we’ve written a nice blog on SaaS churn, with the Usersnap approach and metrics to back it!

Deliver value before capturing value

Implementing product-led growth means delivering value to your users before gaining any for yourself. A user will look for the value in your product before they put in any money for the service. All healthy relationships involve give-and-take, so putting out a product that focuses on customer needs will allow you to retain your user base for years to come. 

This also puts the customer first in your business, which any potential consumer will appreciate. TikTok’s business model allows users to use their product for free but has in-app purchases. By delivering results to the users first, the app has gathered millions of users who are willing to spend a little to enhance their experience and allows TikTok to grow financially.

Another example: at Usersnap, we deliver value before capturing it by offering a free, 15-day trial to start off any user. This has undoubtedly led to many folks using our product for 15 days for minor projects, which to us is totally fine. Why? Because when that same user needs another tool like ours in the future, they’ve probably already had a great experience with us (based on our CSAT, NPS, G2 reviews, etc.), and will have us in their mind first and foremost.

Invest in the product with go-to-market (GTM) intent

The upfront costs of creating software are typically more expensive than delivering the product to users, so you’ll need to hit the ground running with your marketing strategy to get your product out to as many users as possible and begin making profits. Because your product becomes the channel to attract, retain and grow customers. If you invest in your product, customers will take notice, and they’ll want to begin investing themselves. 

In a product-led go-to-market (GTM) strategy*, the product becomes a crucial and irreplaceable part of every step of how your company reaches and engages prospective customers. You need to make sure that the product sells itself. 

The cherry on top: how prospective customers and product leads interact with your product early in the buying process helps your company make better decisions about what features to build next. You could even adjust marketing messages based on in-product behavior to highlight values and features that correlate with a higher probability of a prospect becoming a customer. 

*GTM strategy is an action plan that describes repeatable and scalable processes for how a company acquires, retains, and grows customers, driven by in-product customer behavior, feedback, product usage, and analytics. 

How To Measure Product-Led Growth 

Product-led growth gives you a variety of ways to measure your growth as a company besides the straight-shot from awareness to revenue. Even if you don’t see a lot of revenue coming during the first period of your product’s implementation, you will be seeing more customer acquisition and promotion of your product, which delivers it to more users. 

One way companies measure this is with product-led growth flywheels. This framework generates higher user satisfaction and advocacy. If users are satisfied with your product, they will advocate for it, which will grow your customer base without spending extra money on marketing—and once that’s done, putting a little extra into your advertising will help even more!

Byproduct of good experiences: product-led growth and customer advocates

Some key ways to measure your business’s growth are: 

  • How long does it take the user to get value from your product? 
  • How many product-qualified leads are you getting? Product-qualified leads are users who have found the purpose of your product and decided they can’t live without it. 
  • How quickly are new features being added to your product as users demand? 
  • With your product-led Saas growth, how much revenue are you generating? 
  • How much revenue is the average user generating for your business? 
  • What is the average customer journey to your product (how long does it take)? 
  • How much revenue churn are you generating when cycling through customers?
  • How much revenue is being retained from users each day? 
  • Are your users satisfied with your product? To what extent?
  • Is your product being promoted by current users to their network of people? 

Dave McClure, the mind behind 500 startups, advocates for using actionable metrics rather than vanity metrics. Instead of focusing on an image of success, companies should focus on how satisfied customers are with their products, and measure their success that way. 

Natural growth rate of benchmarks

If you aren’t sure what product-led growth should look like, many companies have had success with this tactic, like Zoom, Slack, and Expensify. These companies showcase what a high growth rate can look like in a business. If you take a look at their data analysis, you’ll see a commonality between each of these companies: they all started with optimization of their self-service factors. 

This, combined with good sales and marketing tactics, has led to company growth over time. Using a product-led growth strategy plan, these software companies have given their customers value early on, leading to a high customer retention rate and successful business. By optimizing their user experience, they were able to put the majority of marketing and product use towards the user, allowing the company itself to focus on developing its product as needed. 

8 Traits of Effective, PLG-Minded SaaS Product Managers

SaaS product managers who want to double down on PLG in their organization should always keep a few things in mind. These traits can be developed with an acute awareness of them, and a keen desire to improve on them as well. Finally, SaaS product management also requires many of these traits generally, with or without a PLG lens.

1. Detailed Understanding of Products

A SaaS product manager who can easily identify any product’s purpose, USP, and target persona is immediately in better shape to apply PLG principles within a team and organization. This intelligent identification of a product’s characteristics is equally applicable and more important to the SaaS product manager’s own product. By doing so, a PM can also identify the same product characteristics of competitors, distinguish how the competition fails to meet customer needs, and double down on the USPs of the PM’s actual product. 

2. Knowledge of Customer Needs

Generally, SaaS product management strategy requires understanding customer needs. On top of this, in order to start applying PLG ideas, approaches and frameworks within your team and organization, you’ll need to identify your customer’s needs. A good way to do that is to talk with them, ask them questions, solicit feedback, and take it seriously! 

Example customer survey question from a Chief Product Officer

Also, in SaaS product management, it is always important to take learnings from previous experiences (sometimes in other organizations) and apply them to your current organization. An example of this would be a process that you know works (or doesn’t work) based on past experience, and to integrate those learnings into your current context. By doing so, you’ll share your wisdom as a good SaaS product manager.

3. A Detailed Understanding of Responsibilities

A SaaS product manager must be able to read between the lines of the job offer and description. Certainly, the responsibilities will reference some of the core tenants of SaaS product management (as we described above). Past that, however, there are process-related responsibilities that a SaaS product manager should address after assessing the current operational landscape. 

For example, if the product team is not doing foundational research on problem spaces before going into product development, but you believe this is core to SaaS product management, something has to be done. In practice, this means a SaaS product manager might take the lead on building in a research process, to eventually hand it off when time and resources are available to do so. In short: if there are clear gaps in the product development process, SaaS PMs serve the team and themselves best by identifying bottlenecks and relieving them with team-based solutions.

4. Anticipating Problems and Challenges

So the feature is built, and we pop the champagne? Well, not quite yet. A SaaS product manager should anticipate problems and challenges before they arrive in their inbox.

Usersnap Inbox - split view and reply to customers in SaaS product management

Even if checkers is fun, SaaS product managers need to be playing chess. After the next release, what contingencies can you imagine playing out because of the release? Additionally, what plans can you start to enact immediately once a hypothesized challenge lands on your to-do list? 

Lastly, what methods of tracking your success or progress did you set up from the start of the project? Without these measurements already in place, it can get quite messy when it comes to identifying actual issues, bottlenecks, and problems that impact a customer’s ability to get a job done. 

When it comes to anticipating problems and challenges, having a clear action plan before the project starts, as well as clear KPIs to know when there is a problem, is crucial.

5. Excellent Decision-Making Ability

SaaS product management and PMs require strong abilities to make the right decisions. It can be really hard to adjust to all the inputs coming in at once, much less filter oneself from self-inflicting cognitive biases. How can you as a SaaS product manager consistently get good inputs, and always know you’re going in the right direction? Achieving this is difficult, and takes time and experience to recognize.

Once a project is complete, SaaS PMs should do a retrospective to match the eventual success (or failure) of the project with the process that took place that led to the result. With that information, a SaaS PM can get great insights into the decision-making process and how to build one that works time after time.

6. Dynamic Leadership Qualities

SaaS product management which can integrate the PLG approach necessitates product leadership. Product leaders, by nature or by nurture, start acting more and more like the CEO of their product. They not only develop some of the traits mentioned here and after, but they take responsibility for the team’s growth on these traits and skills as well. Product leadership means not just fishing for a friend, but teaching a friend to fish so they can do it for themselves. 

In short: Dynamic product leadership = taking responsibility for the growth of the product and those who work on it.   

7. Stakeholder Management

SaaS product management means getting stakeholders on board. This means providing the best evidence possible for why one decision should be made versus another. 

Statistics dashboard for a Chief Product Officer collecting customer feedback

Once you’ve got the business and customer facts on your side, and your stakeholders are on-board, then what? From there, it is about consistent communication with them. They probably don’t want to know everything about the status of a project or its granular KPIs that made it successful or not. However, they do want to know what is going on at the meta-level, what it means for them and their activities, and what is up on the horizon. 

For example, if the marketing team doesn’t know enough about the newest feature that is being released, how can they promote it effectively? In some cases, stakeholder management means clear documentation, blocking time for internal Q&As, and making yourself available to discuss with stakeholders when their questions or concerns would come up.

8. Combining Hard and Soft Skills to Deliver Successful Iterations

Then after all of this, SaaS PMs need to be fact-based, but do it in a way that allows for human emotion. Without human emotion, either coming from the PM, members in the product team, or with other stakeholders, there’s no sense of connection or teamwork. 

SaaS product management is tricky business at times, because of this consistent process of zooming out and zooming in, looking at facts that are qualitative as well as quantitative, and keeping everyone who works on the project satisfied in the process and outcome. Thus, taking all of these traits and blending them into personal interactions and processes is a key trait for a SaaS product manager.

Final Thoughts on Product-Led Growth 

Whether you are a new company trying to start using product-led growth, or an older company trying to make a switch, anyone can benefit from this business model. If your product is self-servicing, you can switch to product-led growth and enhance your overall business without doing much internal work. After all, it is our opinion that it is part of the future of product leadership.

User feedback is your best friend when it comes to successfully implementing product-led growth strategies. If you continually ask your customers what your product could be doing better for them, you’ll learn exactly what people want, and what they aren’t being given elsewhere. If you pay attention to your users, you’ll see growth in your company in no time.