PRODUCT-LED GROWTH: Fueling the fastest growing software companies
About ATTACH
- Author: OpenView
WHAT IS PRODUCT-LED GROWTH?
Product-led growth (PLG) is an end user-focused growth model that relies on the product itself as the primary driver of customer acquisition, conversion, and expansion.
Product-led growth, explained
Companies with a PLG strategy—think Slack, Calendly and Dropbox it’s rightfully associated with viral, Freemium, Bottom-Up Sales distribution, product-led growth is more than a simple go-to-market formula. The center of power has shifted from the buyer to the end user.
A brief history of product-led growth ATTACH
The CIO Era: 1980s – 1990s
The Exec Era: 2000s
The End User Era: 2010s and beyond
The business benefits of PLG
The 3 pillars of product-led growth
Pillar 1: Design for the end user
Pillar 2: Deliver value before capturing value
Pillar 3: Invest in the product with go-to-market intent ATTACH
Examples of PLG companies
Datadog
Calendly
Airtable
Slack
PLG metrics
Growth Rates
CAC Payback
LTV/CAC
ogo Retention
How to measure product-led growth
The Natural Rate of Growth (NRG) succeeds where traditional SaaS metrics fall short.
The formula looks like this: Natural Rate of Growth = 100 x Annual Growth Rate x Organic Signups (%) x ARR from Products (%)
What’s great about the Natural Rate of Growth is that it:
- Provides companies with a strong indicator of future revenue.
- Can be tracked from the early days of monetization all the way through to IPO.
- Applies to all software companies, no matter where they are in PLG maturity.
- Is easily measurable without sophisticated processes or tooling.
- Can identify whether a business can drive efficient growth via the product itself.
Natural Rate of Growth benchmarks
How to become product-led
Is a PLG strategy right for your product?
In order to make the transition to a PLG strategy, at least some of these things must be true:
- The product-market conditions are right.
- Your product offers a uniquely valuable solution
- The user is able to realize significant, ongoing value quickly and easily
- Your product delivers real value before the paywall
- Your product has features and functionalities that allow it to serve as an acquisition channel for marketing, selling, and onboarding new users.
- Your marketing funnels lead to product engagement
- Your product has a built-in network effect
- Within your customers’ companies, there are product champions who drive internal adoption of your product