Product led growth is often referred to as the future of SaaS. And, with 91% of companies planning to increase their product led growth investment, it’s hard to resist trying it for yourself. Some of the largest and most successful SaaS companies, like Slack and Zoom, are showing that product led growth can be very successful. If you are wondering if product led growth is right for your company, and how to implement it, keep reading.
Well, What is Product Led Growth?
Product led growth, as opposed to sales led growth, is a business strategy that focuses on letting your product sell itself. Through various marketing efforts, like blogging, remarketing, SEO and SEM, you position yourself to showcase your product, rather than having a team of salespeople generate leads manually. This makes the sign up and trial process easy and accessible. We are seeing more and more tech companies focus on product led growth due to its affordability and longevity. But, what is the difference between product lead and sales led growth?
Product Led vs Sales Led Growth
To fully understand what product led growth is, you should also understand sales lead growth. As well as the difference between the two strategies. Sales led growth is focused much more on your sales strategy, where your sales team does manual lead generation, reaching out to prospects, and leading them down your sales funnel. While sales led growth has some advantages, like customer retention and relationship building. But, sales led growth is very expensive compared to product led.
Advantages of Product Led Growth
Now that you know the differences between product led and sales led growth, I’m sure you are wondering what the advantages of product led growth are. While there are many, these are the key advantages that are often the deciding factor for companies.
One of the main advantages of product focused growth is how affordable it is in comparison to sales led growth. As I mentioned before, sales led growth depends on salespeople. As you can imagine, paying those salaries, as well as sales tools, software, and additional costs can add up quickly. And, it’s not always feasible for small tech companies to invest in a sales team before their product is well known.
If done right, product led growth can result in faster growth than sales led. This is because you are creating awareness for your company, which means you will be more recognizable to those searching for a solution. Through social media marketing, SEM, and other marketing initiatives, your company can get in front of a lot of people, quickly. By using these marketing tactics, you will attract a lot of potential customers to your website. With a strong website and call to action, you can turn those website visitors into free trial users. Ensure you use Google remarketing tactics to continuously remind your past website visitors how your company will benefit theirs.
While sales led growth may result in a higher quality of leads, product led growth will often result in many more leads. This is because you are targeting a broader audience to fill your sales funnel. Oftentimes reaching a broad audience can help your long-term marketing strategy, because while not everyone is ready immediately, they may be ready at some point. Increasing your website traffic can be very helpful, and you can always use remarketing to target them in the future.
How to Use a Product Led Growth Model for Your Company
Now that you have an understanding of the advantages of product led growth, let’s go over how you can use it for your company. While there are many different ways that you can use this growth model, here are a few things to keep in mind. First up, understanding your sales funnel.
Understand Your Sales Funnel
In order to start your product led growth strategy, you’ll want to have a thorough understanding of your sales funnel. Your sales funnel refers to how you get your name out there, generate leds, and how you convert those leads into paying customers. It’s important to understand your sales funnel as you’ll want to know what lead generation tactics are resulting in the most conversions, and what might need some updating. If you’re not very familiar with your sales funnel, check out this article.
The second part that you need to understand is how you generate leads. Since you are not relying on a sales team, this may look different for every company. A lot of companies lean on social media marketing, both organic and paid, SEO and SEM, gated content, or even a lead generation software. Generating leads is how you fill your sales funnel, and oftentimes the more leads that you can generate, the more conversions you get.
Onboarding is Key
Since you may not have a sales team onboarding your clients, a strong onboarding sequence is key. This will ensure your new clients fully understand how to use your software, and increases the chance that they will be long-term clients. Offering a live demo, pre-recorded demo, email onboarding, as well as a resource center with commonly asked questions should all be included in your onboarding process.
Offer a Free Trial
One of the key parts of product led growth is offering some sort of free trial or freemium option. This will help your product sell itself, and give your clients the opportunity to try before they buy. You want to ensure that your prospective clients have enough time to play around with the software, so they will see the value it adds to their own company before they commit. This is also where your onboarding comes in, as it will provide the resources for your new prospective clients. When offering a free trial, you’ll want to track how many clients are not converting to paid accounts.
Know Your Competition
Whether your competitors are using sales led or product led growth, it’s important to keep tabs on what they are ip to. This will help you optimize your own marketing tactics, website experience, and social media presence. It will also help your company stay agile and competitive. We all know how hard it is to stand out from the crowd, but knowing what else is out there can help.
Metrics to Measure
Just like any other marketing or sales strategy, you’ll need to track specific metrics. These are just a few marketing metrics that your company should track in order to qualify success. While these are not all of the metrics that you should track, they are a few of the key metrics for product growth.
Churn rate, also called attrition rate, is the rate at that your clients stop doing business with you. It’s commonly shown as a percentage of your subscribers who discontinue their subscription. To properly track the churn rate, you’ll need to focus on a certain time frame. In this time frame, you’ll need to find out how many of your clients unsubscribed, and how many new clients subscribed. For example, if you had 100 clients subscribe, and 10 unsubscribe, your churn rate would be 10%. When someone unsubscribes, try to follow up with them via an email automation to see if they experienced any issues along the way that led to this decision.
Customer Lifetime Value
Customer lifetime value, or CLV, is a measure of the total income that your average customer brings in. This metric will help you understand how much you should spend to acquire them, and give you an estimate of your expected revenue. Customer lifetime value is very simple to calculate. All you need to do is multiply how much the average customer spends and multiply it by how long your average customer is with your company. So, if your customers tend to use your software for 5 years, and they spend $50 every month, your average customer lifetime value is $3,000.
Monthly Recurring Revenue
As a software as a service company, understanding your monthly recurring revenue, or MRR, is essential. This is what sustains your business, and gives you how much you can spend on marketing, sales, customer service, and even paying your employees. To calculate your MRR, simply multiply your number of monthly subscribers by the average revenue per user. For your clients who choose to pay annually, multiply your MRR by 12.
Find Out Who Is Interested In Your Product
With product led growth, you’ll often have a lot of website visitors that do not sign up for your free trial or convert another way. In fact, 98% of website visitors will leave your website without a trace. That’s where Visitor Queue comes in. Through a unique form of IP address reversal, Visitor Queue can identify the anonymous companies that visit your website. We provide a company overview, social links, industry information, and more to help you understand what each company is all about. In addition, we provide employee contact information, like phone numbers, email addresses, and LinkedIn profiles to help you reach out. Send your leads straight to your CRM software to follow up in seconds. Start your 14-day free trial of Visitor Queue today and stop losing leads.
While sales lead growth can be beneficial for some companies, product led growth is becoming more and more common for software companies. We are seeing product led growth take the industry by storm, and we are expecting it to continue to do this for years to come. Companies like Hotjar, Zapier, and more have proven that it is effective. As always, if you have any questions about Visitor Queue, do not hesitate to reach out.