Keys to Product-Led Growth for Tech Providers

Even great products may not sell themselves. Product-led growth (PLG) strategies focus on enticing users to try a product and experience its value firsthand to drive purchases. Optimizing such strategies means dedicating nontraditional marketing and sales resources to the right activities at the right time.

PLG has two essential goals:

1. Enable users within prospective accounts to see value through limited usage from a product experience of some sort.

2. Convert happy users into advocates and then into paying customers by using user and usage engagement data.

“The activities related to PLG motions differ from traditional, sales-led growth (SLG) or top-down motions," says Research VP David Yockelson. “Product marketers must drive actions that drive engagement and value for users, as well as help sellers act on the resulting advocacy and purchase intent."

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Converting accounts with engaged users into actual buyers at scale requires both new and traditional marketing and sales approaches applied at the right time. PLG strategies must first focus on ensuring that users receive value from product experiences. Factors that drive PLG success include:

• Ensuring both users and buyers receive the right experience and content

• Capturing product-originated intent signals and aggregating them with nonproduct signals to infer intent

• Helping salespeople know when to conduct the right data-driven interactions with buyers

There are three steps to take when attempting to win over and convert free users into paying customers. Product marketers, product managers, demand-generation and sales-focused staff must:

1. Understand user journeys and identify user-oriented value signals and activities

2. Determine appropriate content and experiences to drive usage through prospect nurture automation, education and guidance

3. Scale the ability of marketing and sales to convert by combining usage and buying signals

Here’s more about the strategic steps of PLG:

PLG is about detecting precise opportunity signals from users that find value from product experiences, rather than relying initially on less precise or discontinuous signals from website visits or inbound/outbound marketing and sales activities.

Successful PLG mandates an understanding of the user journey through a product that helps them accomplish tasks and processes. Together, product managers and product marketers must identify user paths to value, either through experience or experimentation. 

Product marketing and product management collaboration around user journeys is also necessary to identify marketing and sales activity metrics that denote when an individual user lead or a prospective account has experienced the “right” usage — referred to as product qualified leads or accounts (PQLs or PQAs). 

PQL signals will differ for each product category. And within a given account, certain types of users may be more likely to gain value from usage than others. Thus, in addition to better qualified leads, PLG also drives benefits for product teams that observe how users take paths through a product to accomplish their tasks and then can modify products accordingly.

Understanding the user journey is a major component of ensuring that prospects see the value of the offer. The user must see value through usage or other experiences (like interactive demos) quickly. PLG offers little to no friction for users to “mature” from initial interaction —  typically through a form filled out online — to gaining value from a product experience.

Product marketers can help create a variety of actions to drive the right user behavior. These actions can either be within the application, outside it, as part of interactive demos or within associated communities. These include:

• In-application messages

• In-application links to videos or interactive demonstrations

• Guides, hotspots or CTAs within interactive demos

• Emails suggesting usage tips or providing guidance 

Depending on actions taken, or even not taken, human outreach can help guide or potentially congratulate the user on their progress. If a user successfully navigates a product and is recognized as a PQL, they can represent a good conversion opportunity.

The primary motivator for PLG is that most buyer activities are imprecise relative to the desire to purchase.The entire progression can take over 12 months before closing a deal.

PLG offers the opportunity to convert leads based on user advocates within a particular account to paying customers more quickly. It can also potentially lower customer acquisition costs through a significant amount of user self-service.

There are several methods, technologies and products that may be used to capture, manage, analyze and operationalize insights taken from usage telemetry and other indicators of user engagement. These insights are in service of both new customer acquisition and existing customer growth. Technology providers must take advantage of both user- and buyer-related signals to convert free-offer users to paying and growing customers.

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In this hybrid model, leads or opportunities are scored and progressed based on a combination of signals related to user and buyer activity with the provider across channels. Marketing and sales — hopefully together — establish criteria to grade those signals relative to intent and ability to purchase.

The best strategy for achieving growth for B2B tech providers is a combined go-to-market strategy that incorporates a continuum of PLG principles and tactics with traditional, outcome-based or top-down sales-led approaches.

David Yockelson is a Distinguished Vice President and Gartner Fellow. Mr. Yockelson’s primary research area is on the Technology Marketing Practice team in the Technology and Service Provider Research organization. He provides research and advisory services on go-to-market strategies for technology providers and also helps organizations navigate strategic product go-to-market challenges.