Not only has the technology and coding in the software industry been rapidly evolving, but so too has the industry itself. Everything from your strategy for breaking into the market to your product’s positioning in the marketplace has evolved. Today, the current software market is highly volatile, and marketing alone is insufficient to convince consumers to buy anything.

The archaic marketing model that enabled businesses to decide what channels to use for marketing the product at the start, what budgets to allocate for each one, and which leads to pursue worked when retailers had the most direct line of communication with their clientele. Every six months to a year, the product would be released, and by the time any customer feedback was compiled, development on the next version would have been frozen.

However, this is no longer true. Now that use statistics, continuous release cycles, and freemium services are in place, consumer feedback is continuously shaping product objectives. Startups must now cater to their customers in order to survive. To succeed, startups must adhere to the notion of product-driven growth. Modern growth experts do not believe that effective marketing alone can sell anything. Those who are current and in tune with current trends are devoting an increasing amount of work to product-led growth, which resides within the service team.

In this blog, we will look into what product-led growth is, why it’s important, its historical overview, benefits, and key metrics.

What is Product Led Growth?

Several industry experts on SaaS have made an effort to add their own definitions to the term. Here’s one from Open View Partners that states, “Product Led Growth (PLG) is a go-to-market strategy that relies on product usage as the primary driver of acquisition, conversion, and expansion.”

The Product-Led Growth Collective provides another definition that states, “Product-led growth (PLG) is a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself. It creates company-wide alignment across teams—from engineering to sales and marketing—around the product as the largest source of sustainable, scalable business growth.”

Today, product-led growth receives a great deal of attention, and for good reason. Even has its own abbreviation, “PLG.” A product-led growth strategy is one in which a firm relies primarily on the quality of its product to attract and retain customers. This strategy involves a company giving away its product for free in the hopes that users will eventually pay for it. In some cases, companies will provide fully functional items for a short period of time. In contrast, some businesses let customers use a stripped-down version of their product for free indefinitely before asking them to pay to unlock further capabilities.

In non-product-led businesses, sales may be the primary source of income generation, with sales and customer success playing a pivotal role in ensuring the retention of existing customers. While this is still vitally necessary for product-led businesses, the main difference is that the product itself generates income and keeps customers coming back for more by encouraging more in-depth interaction with the company.

Companies like Slack, Calendly, and Datadog, which have adopted a product-led growth approach, have seen rapid expansion by attracting and retaining an engaged user base that they have successfully converted into paying customers. Any organisation, including those catering to huge corporations or operating in specific niche vertical markets, can implement PLG concepts to improve user experiences and increase go-to-market efficiency. Software firms must adapt to market expectations in order to succeed in the present age of connected work, which entails creating a product for end users and then selling that product directly to those end users.

Why Is Product-Led Growth a popular Trend These Days?

Consumers today can be quite picky. They would rather try before they buy. Their ability to focus is severely lacking. They’d rather have a hands-on experience with your solution than read a whitepaper about the issue it addresses. However, there is much more to product-led growth than a “try before you buy” policy. The key is to create a remarkable offering and put resources into having the product speak for itself.

Let’s shift our focus to the B2B (business-to-business) sector. It was in the business-to-consumer sector that product-centricity (also called product-led growth) first became prevalent. Nonetheless, product led growth has recently spread to the B2B sector. Statistics show that the total addressable market for business-to-business sales is two times that of business-to-consumer sales. It used to be that only the most successful B2C organisations (Google, Facebook, Amazon, Netflix, etc.) used product-centric strategies, but now product-led businesses like Slack, Shopify, Dropbox, HubSpot, and others are challenging the B2B market with the same set of tools. Today, there are numerous large-scale instances of effective product-centric best practises being applied in a business-to-business setting.

Why is product-led growth important?

One-on-one customer service and sales are unsustainable for growing businesses because of the sheer volume of consumers and leads they must deal with. With product-led growth, critical onboarding, support, sales, and marketing processes are automated, and customers and prospects may interact with these features without ever leaving the app. This ensures that all types of users are receiving the help and information they require without having to rely on the company’s human resources, freeing them up to focus on more strategic, important work. To rephrase, product-led growth should not be seen as a replacement for the efforts and creativity of humans, but rather as an enhancement to them.

Historical Overview: Product-led growth

The term “product-led growth” was first coined by OpenView’s Blake Bartlett in 2016, however the underlying principles were not new. The increase in product-led growth can be attributed to businesses trying new approaches to expanding their customer base and increasing their bottom line (such as “freemium” product models and self-guided tours). Profitability and expansion were once seen as opposites in conventional growth models. The cost of pursuing one was the sacrifice of the other. The companies that adopted the strategies and methods that would come to be known as “product-led growth” were able to overcome this tension and achieve remarkable growth.

Concur and Salesforce were instrumental in the development of B2B software-as-a-service in its current incarnation, which we use and are familiar with. Software that was free for users to test out has a much longer history, though. In actuality, 1983 was the year that product-led growth truly began.

The free trial: AOL incorporated in 1983 and thereafter predicated its growth strategy on delivering 500–1,000 free hours of Internet access with the purchase of an ISP product.

Open source: The GNU Project was founded in 1983 to provide computer users with the ability to produce and distribute free, open source software through collaboration.

‍Since the advent of software, we have traversed three distinct periods:

On-premise or sales era: In the 1980s and 1990s, the earliest software solutions came in huge boxes and required several hours to install. The ability of salesmen to persuade CIOs, also known as purchasers, that they needed those strong boxes and required IT compatibility was essential for sales-driven expansion.

The era of marketing-led growth began in the early 2000s. Companies like Salesforce were the first to upload software to the cloud. As a result, non-technical executives started to buy. In order to test how software may assist them, they paid close attention to KPIs and ROI.

Next, we’ve entered the Product era around 2010s. Customers want everyday solutions that can grow with their needs and offer unique options for user interaction. In this context, product-led growth emerged to improve business practises and customer interactions.

Age of interconnected: With the dawn of this new era comes widespread acceptance of fully integrated workflows powered by automation to carryout work. In addition to the rise of automation, AI, and APIs, the interconnection of our tools has resulted in an additional significant development: the users of a product are increasingly other products as opposed to people. The industry’s rising stars are redefining what it means to utilise product as a growth engine and are developing their businesses with PLG concepts ingrained in their DNA.

Benefits of a Product-Led Growth Approach


Chris Strobl, CEO & Founder of Stealth Startup, says, “I think SaaS product led growth comes down to having a viral product with distribution built in. The advantage is lower CAC and that’s pretty much it.”

How to become a product-led company

Any business that makes the commitment to a product-led growth approach will find itself on an unfamiliar road. Due to differences in industry, product, resources, talent, and maturity levels, it is impossible to advocate a “one size fits all” approach. It’s important to assess whether or not a product-led growth strategy is a good fit for your business before committing to it. The risks and expenses involved with providing free product access must be evaluated by business leaders. Product-led growth focuses on the customer and the product experience. Even if they’re merely utilising the freemium edition of a product, customers want excellent customer service.

Naturally, a solid infrastructure and CRM support are essential to any support team, and they don’t come cheap. Taking a product-led growth approach could lead you astray financially. However, allowing prospective consumers to trial your product for free could be a key component of a growth strategy that could eventually compensate for these losses.

Here are some first measures to take on the road to a product-led growth approach:

Targeting a large market

Product-led brands must pursue a wide market. The typical lead generation strategies will be less effective if you are targeting a niche industry. Product-led growth casts a wide net to find leads, then sorts them based on firmographic information and how they use the product.

Identify the a problem

While product-led growth necessitates targeting a huge market, you must still identify a widespread common problem. This will assist you in creating an excellent solution that solves this problem. This common problem, like the market itself, should be extensive and widespread. You can forget about the word-of-mouth component of product-led growth if your value proposition is really specific; for example, if you’re going after B2B farm brands. Individuals operating in the B2B agriculture sector will only refer your product to other brands operating in the same sector.

Ensure alignment throughout your organization

Adopting a PLG approach necessitates internal alignment, beginning at the executive level. There can be no progress toward becoming a product-led firm if different groups work toward different objectives. The focus and energy of everyone involved must be on providing an exceptional product experience. Designing the entire client journey around a smooth experience is just as important as creating the finest product. The entire digital team, including marketing, customer success, analytics, and others, must be involved in this. The onus for growth driven by products is not exclusive to the product group.

Offer free product trials to users

Freemium business models, in which a company’s primary revenue stream comes from selling a product, are widespread among product-led businesses. You can do this in a variety of ways, including by signing up for a free trial or downloading a freemium version.

Create accessible pricing

If product-driven companies do not offer accessible pricing alternatives, they risk pricing themselves out of the market. From the outset, pricing must be transparent. Leads in conventional sales-driven models are directed to request a demo, meet with a sales representative, and negotiate a price. It’s a lengthy procedure best suited for complex, large-scale businesses with specific requirements. This procedure is too lengthy for a product-led growth strategy. The sales cycle must be brief and pricing must be accessible and straightforward. Users should be able to self-serve, insert payment details, and immediately purchase your product.

Utilize behavioural analytics to evaluate and improve

Product-led growth relies heavily on the ability to make data-driven decisions based on user behaviour. Using behavioural analytics, you can monitor all of the actions taken by your product’s customers. What your users find important and what they don’t can be gleaned from their digital actions or events, such as abandoning a cart or skipping a song.

Consequently, behavioural product analytics will reveal precisely how to enhance the user journey, personalise the product experience, and implement features that users genuinely desire. Integrations can also be used by marketing and customer success teams to send communications to certain user segments. If your organisation is serious about product-led growth, investing in an event-based analytics platform is a must.

Prioritize Usability

You should design the overall user experience of your product to be as intuitive as possible. It entails facilitating the consumer journey by providing them with tutorials for user onboarding. Continuously delivering contextual in-app messaging regarding new features, upsell suggestions, etc. Providing solutions that make their tasks quicker, simpler, and less frustrating.

Prioritizing customer experience also enables your product team to focus on product development and implement significant updates. Ultimately, the objective is to demonstrate the worth of the goods you’re attempting to sell. Once you’ve accomplished this, you’ll be able to simply get a product-qualified lead and enhance long-term customer retention.

Adopt a product-led sales approach.

One of PLG’s core principles is to let your product sell itself through self-service. Sales still have their place, despite this. In fact, using a self-service motion in conjunction with a contemporary product-led sales organisation will help you close more business without sacrificing PLG. In PLG contexts, salespeople’s duties take on a slightly different appearance. Product-led sales representatives must be strategic about which accounts they engage with and when, as well as adopt a more consultative working style with clients.

Embrace product-led marketing

In a PLG environment, your best ally is word-of-mouth marketing. Not only is it free, but it’s also incredibly effective for acquiring customers. However, this does not mean that your organization’s marketing function is abandoned; it merely changes. As a sort of PLG marketing, well-known PLG companies have turned to the creation of high-quality content such as product-related hubs, benchmark and statistics reports, and product education materials to attract new customers to their products.

What key metrics are important to product-led growth?

Product-led businesses organise their teams around the same KPIs and performance indicators in order to keep everyone on the same page. Many are commonly used standard metrics in sales and marketing-led environments. However, product-led businesses look at and use these KPIs listed below for different reasons than those models.

key metrics

The churn in revenue is the percentage of total revenue lost from current customers over a given time period. It’s the money you might lose if clients cancel or downgrade their plans.

Ohad Shperling, Founder & CEO of Personalics says, “The key to reducing churn and increasing conversion to premium with a product led growth is experimenting which onboarding route gets users faster to the aha moment when the value clicks. Then through product bumpers solving pains.”

Is a Product-led Growth strategy Right for your start-up?

Most SaaS businesses have some form of PLG strategy already in place. Companies that don’t have a PLG strategy cite issues with product complexity and a lack of product readiness as the main reasons they don’t have one yet. Choosing product-led growth should be primarily based on the consumer and their problem.

Before deciding to develop a company with a product-led growth strategy, you must address several fundamental questions such as: Can your customers experience an “aha!” moment without assistance from your solution, does your product offer a unique value proposition, can they have more than one solution for the problem you solve, Do you see dynamic small and medium-sized businesses as part of your target audience. A product-led Growth model is likely to be successful for your company if your product fits the aforementioned criteria. A company’s chances of success can be improved by putting an emphasis on providing genuine value before the paywall.


The most important thing you should know after reading this blog is that product-led growth is crucial in the modern economy. A sales-driven company may experience an increase in leads and sales at first, but without a focus on the quality of the product itself, they will have trouble keeping clients and generating additional money. This is in contrast to product-led businesses, whose marketing strategies place equal emphasis on generating new consumers and retaining the ones they already have by making their product more engaging.

The most reliable technique for rapid expansion with low client acquisition costs is the product-led growth approach. When a company’s marketing department places their product at the centre of their marketing strategy, they may more easily implement a go-to-market plan. Understanding customer behaviour and decreasing time to value to overcome churn are two of the primary focuses of a product-led organisation, both of which lead to a larger base of delighted consumers.

The benefits of adopting a product-led strategy much outweigh its expenses, and the process of developing such a strategy is a learning experience that will help businesses find various previously unconsidered solutions. Companies seeking to transition to a product-led growth model are faced with the unenviable challenge of reorienting their business infrastructure around their product. Luckily, Sparity has both the resources and experience needed to implement a PLG strategy for large corporations, small businesses, and even startups that are reinvigorating and reinvesting in their product line and brand.