Blake Bartlett of OpenView Partners invented the term "product-led growth." It refers to the idea that the product is the most important factor in client acquisition, retention, and growth.

This method has recently been used by a slew of software companies to achieve outsized growth while preserving capital efficiency. Companies like Atlassian, Slack, Zoom, Smartsheet, Datadog, MongoDB, and others have prioritised data and analytics over sales and marketing to produce intuitive, highly viral products that are readily adopted by end-users. The benefits of being product-led are obvious: it's a low-cost strategy for businesses to swiftly build big user communities, maximise product adoption, and develop organically inside and across organisations. A comparison of publicly traded product-led and non-product-led software companies is provided below for your convenience. As you can see, “PLG” companies have higher net dollar retention, sales efficiency, and CAC ratios than other companies.

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Source: Information from a Public Company

Product-led businesses are benefiting from a number of changes in the enterprise buying process, including increased trust in employees to choose their preferred solutions, rising consumer-like expectations of knowledge workers, lower barriers to entry, and lower customer willingness to pay, among others. While there are a variety of reasons for this approach's popularity, one thing is certain: PLG is here to stay. If you don't believe me, take a look at the most recent Enterprise Tech 30, a ranking of the top companies with the most potential to change the enterprise landscape. 24 (or 80%) of the 30 organisations mentioned have adopted the product-led growth paradigm.

Enterprise Technology 30 (source)

The benefit of using a PLG strategy may appear obvious: develop quicker while spending less. What, though, enables these businesses to create strong product-led growth engines?

That leads me to a critical component of the PLG value chain: startups that enable product-led growth.

The goal of a successful product-led strategy is to provide as much value to customers as possible in the shortest amount of time. Unlike classic GTM, which starts with a product that solves a real pain point and then builds a product around it, PLG starts with a product that answers a real pain point in such a way that consumers feel compelled to “sell it” to colleagues, friends, and even the internet. However, this does not happen overnight – there are four key steps to developing a PLG engine, which I've outlined below.

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Commit to being a product-driven company.

Recognize and comprehend the customer

Independent adoption should be maximised.

Develop and monetize your business.

To do so successfully, you'll need time and discipline. Fortunately, SaaS solutions designed to enable teams and organisations aiming to develop an effective product-led momentum have recently emerged. I've highlighted some of the businesses that excite me the most, as well as how they help firms become more product-driven.

PLG Market Map Enablers

Make a commitment to PLG.

To be product-led, a business must have buy-in from all key functions, including sales, marketing, product, customer success, and engineering.

Teams may swiftly gather input, iterate, and deliver feature upgrades that best address the target user's pain point by disseminating essential customer and product information. Delivering meaningful and quick benefit is a huge differentiator in increasing adoption in a time when switching costs between software options are so minimal. To be successful, teams must establish guardrails that allow them to clearly grasp their goals and deadlines, prioritise and implement product improvements, and communicate effectively with all key stakeholders.

There are a variety of tools available today that can help with these tasks, including defining and measuring OKRs (Workboard), managing engineering and product teams (Jellyfish), and sparking open communication and cooperation across departments (Miro). While these solutions are important in any successful organisation, they are especially important in PLG companies because responsibilities and information flow across departments overlap and rely on one another more regularly and naturally. Product-driven companies develop quickly, addressing user demands while collecting and utilising contextual input. This necessitates coordination and collaboration, resulting in better-informed and coordinated decision-making across departments.

Recognize the user

As previously stated, the ability to give immediate value to users is critical to a successful product-led strategy. To accomplish so, you must first understand the user and their problem, as well as how the solution solves it. PLG firms, unlike typical enterprise companies, must sit at the intersection of real-time customer and product data to holistically comprehend the value the product drives for the user – creating PQLs rather than MQLs