Kinfolk features articles from individuals across the globe whose perspectives we consider significant. Our aim is to make the process of establishing enduring technology businesses more accessible for African founders and leaders.
This blog post by Janelle Teng and Ethan Kurzweil discusses product-led growth principles adopted by successful companies.
If we were to trace the origins of the product-led growth (PLG) business model, we’d start our tour in Sydney, Australia. Many consider Atlassian, founded in 2002, to be the first cloud company to pioneer a PLG business model. Its founders believed that a friction-free, product-led distribution process was the way to accelerate the adoption of new technology, especially among developers. So steadfast was their resolve to make the PLG approach work that Atlassian famously employed no salespeople for the first decade of existence. When a central Wall Street bank threatened to take their business elsewhere without an enterprise sales discount, the company famously told them they’d be welcome to return anytime.
While PLG has proven particularly effective in the developer economy, this strategy has gained momentum in many other categories, including collaboration tools and customer engagement software. PLG has become even more popular in recent years thanks to tailwinds like the rise of remote workforces and infrastructure advances that allow democratization that benefits individual agents.
TEN PRODUCT-LED GROWTH PRINCIPLES
1. Build the product as its self-serve distribution vehicle
Successful PLG companies understand that the best outcome is set up to sell itself without additional intervention. These companies primarily build their product as their own stand-alone distribution vehicle that can drive customer adoption, retention, and expansion without human touch. The magic happens inside the product itself!
2. Deliver a eureka moment instantaneously
Leading PLG companies know it’s essential to delight the user as soon as possible. The best products can deliver an epiphany about the value of the product without unnecessary friction. There is no need for lengthy onboarding processes involving complex sign-up forms or demos with promises. Instead, PLG companies allow users to try out the product right away to experience its benefits directly so that time-to-value is near immediate.
3. Focus on creating value instead of extracting value
The best PLG companies have unwavering confidence in the value of their product. This enables them to democratize access by giving the product free before getting paid. The “try it before you buy it” method is undeniably alluring for customers; they experience the value firsthand without risk and eventually become engaged, loyal users.
4. Center the product universe on the end user
Successful PLG requires a relentless focus on the end-user experience since these individuals are the “top of the funnel.” These users will eventually act as front-line champions because their authentic evangelism drives further adoption and sales within and outside their organizations. The most effective PLG companies honour “user-centricity” by building communities centred on end-users and prioritizing their experience in product development.
5. Establish a clear initial entry wedge
Since PLG involves limited to no sales rep intervention to sell a product’s value proposition, companies need to ensure that their initial targeted use case and solution narrative is simple and precise, enabling end users to quickly grasp what problem the product solves. To achieve a product market, users need to be able to adopt a solution with minimal education, dialogue, or support.
6. Generate virality through network effects
Without elaborate marketing campaigns or large sales teams, PLG businesses rely on user evangelism to drive awareness and adoption. However, the best PLG companies recognize that end-user advocacy does not simply mean relying on word-of-mouth or referrals. Instead, these businesses build their product purposefully to harness network effects stemming from their initial champion’s adoption.
7. Employ a transparent pricing model
PLG companies strive to deliver solutions without human intervention, and pricing is no exception. Pricing models should be clear and straightforward to reduce friction during the purchasing process. End users should be able to understand and predict their total spending against the budget without needing to conduct additional research or discuss it with a sales representative.
8. Design straightforward packaging based on intuitive gates
Mirroring Principle 7 on pricing, successful PLG companies ensure that packaging is well-structured so it is crystal clear what users receive in each plan. Users can then decide on their own to pick the best bundle for their needs.
9. Embed customer success levers
A self-serve ethos is crucial to all aspects of a strong PLG business—from product features to pricing and packaging to customer success, which is no exception. Before building out large customer success teams, savvy PLG leaders look first to embed self-serve customer success levers in the product and user journey so that users have the right tools and feel empowered to help themselves when troubleshooting is required.
10. Infuse a product-led philosophy throughout the organization
Ultimately, a high-performing PLG motion revolves around the product but requires coherence across all facets of the business. Everyone in an organization—including sales and marketing, design, finance, customer support, development, and engineering—should be “bought-in” philosophically and work cross-functionally to build programs that deepen product usage and engagement over time.
Just as the cloud business model revolutionized the software industry more than two decades ago, we believe the PLG approach is a powerful accelerant that will help startups gain more traction faster than ever before. As the cloud economy expands in terms of vertical, segment, and geography, we’re confident the PLG approach will drive new levels of product innovation and commercial success much faster throughout a founder’s building journey.