With the demand for software-as-a-service offerings growing at an exponential rate, SaaS companies are shifting their focus from traditional lead generation methods to product-led growth strategies. But what exactly is a product-led growth model, and how can you implement one to drive revenue growth? Many of the top growing SaaS companies are using it to make even more gains. Read on to learn more about this approach and how you can apply these five principles in your business today.
What is a Product-Led Growth Model?
A product-led growth model is a method to drive revenue growth through improving the product or service rather than through sales and marketing activities. It’s also known as a product-driven business or a product-driven growth strategy, and is often used by high growth SaaS companies.
A product-led growth model is based on the idea that the best way to grow a business is to improve the product or service that you provide. At the same time, it has to be profitable for the business, and it has to add value for the customer.
This model of growth is based on the concept that you can increase customer loyalty and sales by giving them more value and becoming an irreplaceable part of your business. You do this by investing in research and development (R&D) to create better products that solve customers’ problems.
As your customer base grows and word of mouth spreads, more people will be drawn to your products and services because they are of higher quality. This strategy is different from a product-led marketing strategy, which focuses on promoting the product to potential customers.
Benefits of Product-Led Growth Strategies
There are many reasons to choose a product-led growth strategy for business. It is largely used in companies that have a single, all-encompassing, flagship product that the entire company hinges on. However, other companies can put it to use as well. Here are a few of the reasons why you should consider switching.
The quality of your product or service is the most important asset you have as a business. When your customers are satisfied and happy, they are much less likely to churn—especially if you offer helpful support and a robust customer retention program.
Better Customer Engagement
When you involve your customers in the product development process, they are more likely to be satisfied when the product is released. This, in turn, leads to higher retention and engagement, which is critical to driving revenue growth.
Higher Organic Search Volume
When you have a product that is solving a real problem for customers, it is much more likely to be found in search engines and have a higher organic search volume. That, in turn, leads to more customers finding your business and buying from you.
Increased Focus on Creating Value For Customers
When you have a product-led growth model, you shift your focus from sales to creating as much value for your customers as possible. This shifts the conversation away from how much you can get from customers to how much you can provide for them.
More Opportunities for Referrals
When you have a product that solves a problem, it’s much easier to get customers to refer their friends and family members. You won’t have to spend time and energy convincing people to buy your product; they are likely to do it on their own.
Better Reputation in the Industry
When your product provides value to customers, it benefits both parties. Your customers get a product that solves their problems, and you receive positive feedback and reviews. A positive reputation in your industry is a long-term investment that can yield massive rewards in the future.
Steps to an Effective Product-Led Growth Strategy
Every company implements its strategy slightly differently based on its needs and resources. However, there are five general steps to building a product-led growth strategy.
Build the Best Product Possible
In order for your strategy to work, you have to have a good product. When you’re focused on building the best product possible, you’re investing in research and development to create new and improved solutions. These solutions should solve pressing problems that your customers are facing.
Gather Customer Feedback
When you’re gathering customer feedback, you want to ask open-ended questions that allow customers to expand on their thoughts and feelings. This gives you a chance to look at your product from a new perspective and see if there are any major issues that you missed.
Update Products Based on Feedback
Once you’ve gathered customer feedback, it’s important to take those comments and suggestions and apply them to your product. If customers are asking for a feature or an update, make sure to add it to the product roadmap as soon as possible.
Find Ways to Increase The Product’s Value
Look beyond customer feedback to find ways to increase value. For example, if your product is robust enough, you can offer premium features or functionality to increase its value.
Another way to increase the value of your product is through public relations (PR) and brand partnerships. If you’re launching a new product or service, partnering with another brand and offering your product or service as a value add can help you reach a new audience and drive revenue growth.
Lower the Barrier To Entry With Free Trials
Make it easier for people to try your product by offering discounts or free trials. Nothing shows that a product can actually solve a specific problem better than trying it out.
When you offer free trials, you give customers the chance to try out your product and experience the benefits for themselves. This way, they are more likely to purchase the product when their trial ends because they know exactly what they’re getting.
Take the Next Steps Toward Switching Strategies
Ultimately, a product-led growth strategy is all about investing in your product and creating solutions that solve pressing problems. It’s also important to gather customer feedback and incorporate those comments into your product development cycle to make sure you’re building what they actually need. When you shift your focus from sales and marketing to product development, you gain a whole new perspective and can see where you can make improvements and invest more time and energy. This is an important shift for SaaS companies, and it can help them grow their revenue over time.
At KitelyTech, we help companies develop their products and business strategies using digital content, SEO, and other means to gain market share. Call us at (800) 274-2908 for help with your products.