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What is Product- Led Growth in 2023? The Ultimate PLG guide for B2B Startups from a PLG Founder

Handoyo Sutanto
5 min
May 25, 2023
Handoyo Sutanto
5 min
May 25, 2023

What is Product Led Growth?

When I say “business communications,” is there a company or app you instantly think of?

Maybe Discord, Zoom, maybe even Gmail? Even though many people use these apps, one software comes to my mind without a doubt: Slack.

At Lyrid, we use this very little-known service in our backend for team communications and operations- Slack! Have you heard of it?

Obviously, Slack is one of the biggest B2B SaaS companies leading the charge for product-led growth companies everywhere. Hyper-focusing on the customer and product experience, product-led growth (PLG) refers to a business growth strategy that puts the product and the innovations around it at the front of the company’s efforts. Everything from customer acquisition and success to general expansion are driven by the product. PLG companies obsess over their customers and how satisfied they are, creating products and features that are catered towards increasing satisfaction. This growth approach results in happy customers, with stronger and more organic sales and marketing efforts as byproducts. 

As mentioned, Slack is a great example for PLG companies. Slack’s software and platform connect business teams everywhere, breaking down the barriers formed by faulty internal communications. Like many PLG companies, Slack rolls out updates based on customer feedback, hoping to resolve problems one pain point at a time. Happy customers and refined user experiences sell themselves; Slack’s product essentially markets and sells itself due to its great reputation amongst a huge (and happy) customer base! Slack’s sales team has an easier time selling premium features with Slack, and the company’s marketing teams are even able to have more fun due to a natural draw towards Slack’s services (like in their update notes).

Version updates courtesy of Slack

Benefits of Product Led Growth

Setting your product as the sail that guides your company’s ship can be intimidating, especially for first-time founders looking to create something new. While starting a PLG model is definitely not an easy feat, the benefits that PLG companies enjoy are second to none.

PLG Companies Enjoy Streamlined Customer Processes

For one, PLG companies often enjoy better, more streamlined customer processes. These processes refer to the entire customer journey; from awareness and acquisition, to retention and conversion. Features and products that are created for customers will draw prospects in and captivate them, pushing them to upgrade their services as more catered features are released. This approach towards growth also increases customer satisfaction and loyalty as time goes on, creating a better customer than what a traditional business would acquire. In addition, the product itself is more intuitive and user friendly, letting prospects get started with no hassle. Overall, the customer experience with PLG services and products is a great one.

PLG Companies Are Less Resource Intensive

Sales and marketing efforts within PLG companies are less resource intensive. A customer-catered product that’s easy to use can result in easier customer acquisition and stronger word of mouth amongst related circles, just look at ChatGPT! The buzz surrounding AI and ChatGPT helped OpenAI draw in millions of new users and customers, letting the product essentially market itself. The sales processes with PLG companies are also streamlined: customer driven products sell themselves (with some customer success team effort) just by hosting valuable features alone. With less intensive touchpoints and less resources needed to thrive, the sales and marketing efforts in PLG companies are more precise and informed, giving the customer exactly what they need without doing too much. 

PLG Companies Are More Focused on What Matters

The internal operations of PLG companies are better focused and optimized. For one, money can be better allocated towards employees and product resources in these companies, as sales and marketing requires less effort and attention to cultivate. Increased employee satisfaction and engagement is pivotal towards creating a productive company culture- the happier the team, the better aligned the efforts are. That being said, alignment within PLG companies requires no debate: the product is at the core of all of the efforts- with these efforts always being geared towards better product development. Product development is also faster!

There’s a whole word of benefits that product-led growth companies enjoy, for more information visit https://www.productled.org/foundations/10-benefits-of-product-led-growth 

The Bread and Butter of PLG Companies

Because their main business model is geared towards customers, PLG companies have a lot of flexibility when it comes to HOW they cater towards their users. Here are a couple things to know about the ways that these companies optimize their approach:

Freemium vs Free Trial

I love free trials, personally. As a user, they give me the chance to use a platform or software, commitment-free. As a business owner, they let me look into a company through their software and gain insights towards their aptitude as a potential partner. 

With a free trial, companies are able to offer users a period of unlocked access to their platform, often requiring credit card information before proceeding. Once the trial is up, access is restricted and users have to pay. These days, a free trial is as important to software companies as influencers are to clothing brands, if not more important. For many PLG companies, free trials is an important first step in customer acquisition, letting their free trial introduce and guide interested and engaged customers down their products pipeline.

The freemium model is a product-led growth model where users can sign up for the free version of a specific platform or software but also pay more for a premium, a more feature-robust option of that software. Unlike a free-trial model that restricts access after a grace period, the premium model offers a free, premium feature-stripped version of a company’s platform. At Lyrid, we offer a free trial that offers users a 1-week trial of our pro offering and then reverts users back to the free version once the week is up (click here to try it out!). What the freemium model does for software companies is provide a commitment-free option for large numbers of users to try out, with an emphasis on the word ‘try.’ If users want to progress their usage, they’ll naturally upgrade or even seek sales associates to learn more about offerings. 

The use cases of these models are very different and depend on what software/platform is offered by the company. By offering the full, unlocked capabilities of a service, the free trial model better serves in pushing customers to make quick decisions. Full feature capabilities are often powerful motivators in buying, with prospects knowing exactly what’s in store for them if they choose to purchase a service. However, this convincing period is short, as this leverage is only usable within a free-trial’s period. Customer success teams would better serve the free-trial model and be employed towards the end of trial periods.

The freemium model, on the other hand, is a hands-off approach towards customer acquisition. With one of the goals being to reduce overall customer churn, the freemium model provides a no-rush permanent free-trial, just without the same features that the free-trial model would host. Paying customers within a freemium model are second to none most of the time, too. Knowing fully what they’re in for, these paying customers are company loyalists and are happy to pay for better features. 

Whether you choose the freemium or free trial model is completely up to you, however, there are a couple of things to note about these models, however.

For one, PLG companies that offer free trials should work on building up and safeguarding their infrastructure. A powerful infrastructure that is able to handle the influx of users daily is a good representation of the quality of the company hosting it. In the case of ChatGPT, the infrastructure was able to handle traffic by making users wait while others were able to access the software, with the caveat being premium users that pay for first access.

Getting Feedback for Product

Speaking of premium users, PLG companies should be able to decide what customer feedback is worth implementing. All feedback is good, regardless of where it originated from. For many smaller companies and startups pursuing this specific PLG model, paying customers should have priority in seeing their feedback and requested features implemented. For very early PLG startups pursuing a freemium model, their top priority is to figure out how to drive revenue up without dedicated sales and marketing teams. In this case, revenue would primarily come from funding or users and partners. Because of their large impact towards the bottom line of the company, the users and partners that do pay for a premium version of your software should have their feedback implemented first. This group of paying users also represents a faction of true product users, those who are heavily invested in the growth of your product and are willing to pay for it. That’s not to say that the feedback of free users isn’t important, but at a critical stage for early startups, paying feedback might be more viable at the moment. 

It is the joint responsibility of the product teams and customer success teams to determine how to best service customers and work with their feedback. In most cases, feedback implementation in a freemium model will help push users down the company’s internal pipeline, leading free users closer to a pro user status and leading pro users to a lifetime supporter of the software.

Shortening the Time to Value Metric as a PLG Company

So you successfully convinced a user to sign up for a free trial, nice! Depending on how mature your software is, it might take a day for that user to start getting their money’s worth from it. Maybe two days, maybe a month? Now that you’ve acquired a new customer, driving down your time to value is key as a PLG company.

So what is time to value? Time to Value TTV is the amount of time it takes to start getting value when someone buys a product (in this case, software). Reducing TTV is a goal for many SaaS companies because losing a customer to a competitor is easy. Many PLG strategies revolve around improving the overall customer experience and reducing TTV. Implementing in-demand customer feedback over time is among the many ways PLG companies reduce TTV. Other methods include:

  • Employing customer success teams
  • Providing easy onboarding guides
  • Demonstrating immense value in free trials

to combat TTV within a company. For the customer success teams, it’s important to meet with customers and determine their definition of value and how best the software can help them achieve that. For many, this low-effort touch point makes all the difference in creating a positive customer experience.

What are the Top PLG Companies? Lessons to Be Learned from Them

Product-led growth companies come in many different shapes and sizes, with many of the top companies redefining their customer approaches daily. Here are just a few of the top PLG companies:

  • Slack
  • Zoom
  • OpenAI
  • Mailchimp

Though two PLG companies that might not come to mind upon first thought are Yelp and Ubereats. 

I’m sure you’ve heard of Ubereats and Yelp. Although the functions of these two companies and their platforms are drastically different, there are lessons to be learned in how they service their customers.

Why Defining the Customer Matters

In most cases, you would think that the customer is the average Joe, the person receiving the goods or services in exchange for their hard-earned money and time. In my opinion, the true customers of Ubereats and Yelp are the suppliers, the businesses that create the foundations on which these apps operate. Without businesses delivering food for Ubereats or providing a platform for feedback for Yelp, these companies would cease to exist. Diligent care for each person within this ecosystem (businesses and ‘customers’) alike leads to a happy relationship.

Product-led companies are built on the success of the customer experiences, the happier their customers are, the better these companies perform. With Ubereats, the customers receive professional photography and high-quality images of their products, delivering a better viewing experience for the business’ customers. Although more transparent, Yelp’s customers are subject to the photography of their customers, which may range from professional to amateur. Not only that but the businesses housed on Yelp are subjected to criticism, which can be good but can also shut down the business completely. Although Yelp’s approach towards service is more transparent and honest, practices like review bombing and intentionally taking terrible photos have made life for some businesses terrible.

From a customer success standpoint, Ubereats is able to flourish because its customers (the businesses and food suppliers) are happy with high image quality and friction-free food ordering. On the other hand, Yelp provides tons of friction in many of the entire transaction processes that users are expected to go through, with inaccurate reviews and photos being some of the biggest barriers.

Improving the customer success for suppliers is one of the biggest challenges for companies like Ubereats and Yelp, specifically within their competitive industry. 

Some Words for B2B Startups (and practically everyone)

For many B2B SaaS founders, pursuing product-led growth is an uphill battle. From questionable advice to difficulty driving revenue, a PLG founder's efforts are often swept under the rug by the capabilities of marketing and sales-based founders. If you’re a PLG founder (or even if you’re not), here is some advice I have from when I was founding Lyrid.

First, you should always ask yourself, “Who is my product for, and who is the most receptive to it?” And then ask your circle and network those exact same questions; you might not be asking the right people, but just keep that in mind. This will help you really distinguish your ideal customers from the crowd!

Next, and probably my most significant piece of advice, is to network! And don’t just network within your network; network outside your comfort zone. Growth is stagnant when you’re comfortable, and I found out the hard way. Networking will kickstart your company's marketing and sales efforts, advertise your product, and even rally a team of people wanting to support your journey. Building in private is overrated too, in my opinion. When you build in public, you’re able to create your brand and story in real time, let your product receive feedback as it matures, and grow enthusiasm around the company.

Lastly, if you’re worried about a particular move, just do it. People spend so much time worrying about things that the opportunity passes them by; life is too short to wait. If you do happen to fail and make a mistake, it’s a good lesson to learn upon (as cliche as it is). Lyrid was the result of MULTIPLE trials and errors. All it takes for one good opportunity to hit the ground running and never stop.

If you have any questions about being a founder or anything in general, feel free to reach out to me!

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