The way people buy and use software is constantly changing. If you’re in the B2B space – there is a new favorite term that’s doing the rounds lately – Product Led Growth (PLG). 

A few years back or even today – sales and marketing are considered the primary drivers of growth in any organization – be it B2B or B2C. 

But today – the focus is on building a software so good that it sells itself. 

So, what is Product Led Growth? 

PLG in a nutshell is a go-to-market strategy that focuses on acquiring and retaining customers using the product itself through freemium models or free trials. 

However, this is just the tip of the iceberg and there’s a lot to know when it comes to PLG and how to use it for driving business success. 

What is Product Led Growth?

Product Led Growth (PLG) is all about letting the product do the talking. 

In this approach, the product itself drives customer acquisition, expansion, and retention. Instead of relying on heavy sales pitches or marketing campaigns, PLG companies offer users a hands-on experience—like a free trial or a freemium version—so they can see the value right away. 

If the product solves their problem, they’ll stick around and often upgrade on their own.

Think of PLG like a self-serve buffet: users get to try the product before they commit. 

This makes the whole experience more natural and user-driven, putting the power in the hands of the people who will actually be using the software. 

It’s become especially popular in SaaS companies, where the focus is on delivering real value upfront and letting satisfied users help spread the word.

How The Product Led Growth Model Came To Be – History Of Selling Software

Product-Led Growth (PLG) might seem like a hot new trend, but its roots stretch back through the entire history of how software has been sold and used. 

Let’s break it down in a conversational way, so you can see how PLG came to be what it is today.

1. Old-School Software Sales: Big Companies, Big Contracts

In the early days of software (think 1970s and 80s), selling software was a lot more personal—and expensive! 

Sales teams would target big companies and try to convince the top executives to buy their software. 

This was what we call enterprise-led sales. The software was installed on company servers (on-premise), so the buying process was long, complex, and required a lot of back-and-forth with salespeople. 

The executives decided, and employees just had to use what was purchased.

2. The SaaS Revolution: The Birth of Subscription Software

Fast forward to the late 1990s, and something big happened—SaaS (Software as a Service) was born. 

No more installing software on machines; it was all delivered over the internet (the cloud!). 

Companies like Salesforce led the way. 

Instead of paying a big, upfront fee, customers paid subscriptions. But the sales teams were still very much in charge, running demos and negotiating deals. This era was all about sales-led growth (SLG)—if you wanted to grow, you needed a strong sales team.

3. Marketing Joins the Party

As competition grew, it wasn’t enough to rely on sales teams alone. 

Companies started using marketing to attract customers—through content, ads, webinars, etc. This is when marketing-led growth (MLG) became a thing, helping to drive more demand. The goal? Get as many leads as possible and hand them over to the sales team to close the deal.

4. Consumer Apps Set New Expectations: It’s Gotta Be Easy!

Then came a shift—people started using everyday apps like Facebook and Gmail, and their expectations for software changed. 

They wanted business software to be just as easy to use as the apps on their phone. 

Enter freemium models and free trials. 

Why pay for something before you know it’s useful? Tools like Dropbox and Slack offered free versions that allowed users to try out the product, get hooked, and then upgrade if they needed more features.

5. Product Led Growth (PLG): Let the Product Do the Selling

By the 2010s, this approach gave birth to Product Led Growth (PLG). Instead of relying on sales teams to explain the value of the product, the product itself does the heavy lifting. 

Think about it: users sign up, they experience the product, and if it solves their problem, they’ll stick around or even pay for it. 

No pushy salespeople needed. In PLG, the product becomes the main driver of growth, getting users hooked from day one.

Successful PLG companies like Slack, Zoom, and Notion focus on making their products so intuitive and useful that people naturally want to use more of them—and share them with colleagues. 

Users often start with a free version, love the experience, and upgrade as their needs grow. It’s a bottom-up model, where the users are in control.

The Key Difference: Who’s Driving Growth?

In traditional models, sales or marketing were at the wheel. In PLG, the product itself is in the driver’s seat. If users love it, they’ll spread the word, bring in new customers, and upgrade themselves. However, this doesn’t mean that sales and marketing has no role to play in PLG. 

Marketing is still essential for building awareness and attracting users to experience the product. 

Rather than focusing on traditional sales pitches, marketing in PLG emphasizes educating potential users about the product’s value, often through content, community engagement, and product trials. 

Sales teams, on the other hand, often focus on nurturing high-value accounts or helping users who have already seen the product’s value and are ready to upgrade or expand. In this model, sales and marketing work hand-in-hand with the product to guide users seamlessly through their journey, with the product taking center stage.

Benefits Of The Product Led Growth Model

The Product-Led Growth (PLG) model offers several key benefits for SaaS companies:

• Lower Customer Acquisition Costs: PLG leverages the product itself to attract users, reducing reliance on expensive marketing and sales efforts.
• Faster User Onboarding: A focus on user experience ensures that customers can quickly understand and start using the product, leading to higher engagement and retention.
• Scalability: As the product drives growth, it can scale more easily without needing a proportional increase in sales and marketing resources.
• Improved Customer Insights: With user interactions directly tied to product usage, companies gain valuable insights into customer behavior, preferences, and pain points, informing product improvements.
• Stronger Customer Relationships: PLG emphasizes user-centric design, fostering a sense of ownership and loyalty among customers as they experience the value of the product firsthand.
• Increased Conversion Rates: Free trials or freemium models can lead to higher conversion rates as users can test the product before committing financially.
• Continuous Feedback Loop: Ongoing user interactions provide a steady stream of feedback, enabling rapid iteration and enhancement of the product.
• Built-in Viral Growth: A great product can encourage users to share it with others, creating organic growth through word-of-mouth and network effects.

How does the PLG strategy work?

PLG companies typically offer a self-service model, which means users can sign up and start using the product on their own, without needing to go through a lengthy sales process. This makes it easier for potential customers to jump right in.

• Freemium or Free Trials: Many PLG businesses give users a taste of their product through freemium models or free trials. This allows users to explore the core features without any financial commitment, encouraging more people to give it a shot.
• User-Centric Design: A key aspect of PLG is prioritizing user experience. The product is designed to be intuitive and easy to navigate, often featuring helpful onboarding processes and in-app tutorials. This ensures that users can quickly see the value it provides.
• Data-Driven Insights: Companies gather data on how users interact with the product, which helps them understand customer behavior better. This insight is invaluable for making informed decisions about product improvements and marketing strategies.
• Viral Features: Many PLG products include features that encourage users to share the product or collaborate with others. This creates a kind of network effect, where the product spreads organically as users recommend it to friends and colleagues.
• Continuous Feedback Loop: With PLG, there’s a constant flow of feedback from users. This allows companies to make rapid updates and enhancements to the product, keeping it aligned with user needs and expectations.
• Usage-Based Expansion: PLG often involves a pricing model based on usage. As customers engage more with the product—like adding more features or users—they may end up spending more, which encourages deeper interaction.
• Cross-Selling and Upselling: Once users are hooked, companies can introduce them to advanced features or premium plans that offer even more value. This strategy helps turn satisfied customers into long-term users.
• Community and Support: Building a community around the product is another important element. Users can share tips, ask questions, and connect with each other, enhancing their overall experience and loyalty.

Product-led growth metrics and principles

When implementing a Product-Led Growth (PLG) strategy, it’s crucial to track the right metrics and adhere to core principles to ensure success. 

Here’s a breakdown of key metrics and guiding principles for PLG:

Key Metrics

• Activation Rate: This measures the percentage of users who achieve a meaningful milestone within the product, such as completing a setup process or using a key feature. A higher activation rate often correlates with better retention.
• Retention Rate: This tracks how many users continue to engage with the product over time. High retention indicates that users find ongoing value in the product.
• Churn Rate: The opposite of retention, churn rate measures the percentage of users who stop using the product. Understanding churn can help identify areas for improvement.
• Daily Active Users (DAU) / Monthly Active Users (MAU): These metrics indicate how many users are actively engaging with the product on a daily or monthly basis. Monitoring these figures helps gauge overall product health.
• Customer Acquisition Cost (CAC): This metric shows how much it costs to acquire a new customer. In a PLG model, the goal is to keep CAC low, as the product itself should drive growth.
• Customer Lifetime Value (CLTV): CLTV estimates the total revenue a customer will generate over their lifetime. A higher CLTV relative to CAC indicates a sustainable business model.
• Net Promoter Score (NPS): NPS gauges customer satisfaction and loyalty by asking users how likely they are to recommend the product to others. A high NPS often leads to organic growth through referrals.
• Expansion Revenue: This measures additional revenue generated from existing customers, whether through upsells, cross-sells, or increased usage. It highlights the effectiveness of the product in driving further sales.

These metrics will help you track the success of your business. 

How to get started with PLG?

Implementing a Product Led Growth strategy requires a shift in focus toward the product as the primary driver of growth. Here’s how to get started:

1. Design a Frictionless Onboarding Experience: Ensure that users can easily sign up and start using your product. The quicker they experience the product’s core value, the better. Provide in-app tutorials or guided tours to help them hit key milestones.
2. Offer a Freemium Model or Free Trial: Let users try your product with no initial commitment. Freemium models allow users to get hooked on essential features and naturally upgrade when they need more. A free trial gives them a full taste of the premium experience.
3. Focus on User Experience: Build your product with the end-user in mind. Prioritize ease of use, intuitive design, and solving customer pain points. A product that delights users keeps them coming back.
4. Leverage Data and Feedback: Continuously gather data on user behavior to understand which features drive value. Use this insight to iterate quickly and make product improvements that enhance the customer experience.
5. Build Viral Loops: Encourage users to share the product with their network through collaboration tools, referral incentives, or social sharing features. Organic growth is one of PLG’s biggest strengths.
6. Foster a Community: Engage users through a supportive community where they can share tips, ask questions, and advocate for the product. Strong communities build long-term loyalty and encourage more referrals.

Conclusion

Product Led Growth is transforming the way SaaS businesses grow by putting the product front and center. 

By focusing on a user-centric approach, leveraging data, and allowing the product to showcase its value, companies can drive organic growth while reducing reliance on traditional sales and marketing. 

With the right mix of a frictionless onboarding experience, data-driven insights, and continuous improvement, the product led growth model can set your business up for long-term success. Ready to put your product in the driver’s seat? Start small, iterate, and watch your SaaS business scale!