Product-Led Growth for CMOs, Part 2: The Practitioner Perspective

Laura Kendall

We’ve all been burned by brands whose everyday products fail to deliver on their grandiose promises. It’s why brand trust is eroding among consumers. It’s also why SaaS companies are exploring product-led growth (PLG) strategies by offering free trials or freemium offers that put the end user in the driver’s seat. Users discover the products’ benefits on their own — without the hard sell.

During MadKudu’s recent CMO Guide to PLG webinar, Wes Bush, a PLG pioneer, shared insights on how PLG’s growth is impacting practitioners. The founder and CEO of ProductLed Institute and author of Product-Led Growth: How to Build a Product That Sells Itself, Bush leads by example — he’s challenged an entire industry to find a better way to approach SaaS growth. He offered his perspective on the advantages PLG companies have in accelerating growth by showing customers the value of their products.

Why Is PLG Growing?

According to Wes, how you sell to customers is just as important as what you sell. Today’s customers don’t just want to know what your product promises. They want to interact with your product to ensure it meets their needs.

At its core, a PLG model helps companies answer this simple question: Do you want to show your users the value of your product, or do you just want to tell them about it?

PLG techniques such as free trials or freemium models allow potential customers to experience your product, learn how it will integrate into their existing product stack, and discover whether it delivers the performance they need. Wes said that PLG tactics reduce customer acquisition costs (CAC) and allow SaaS companies to capture customers earlier in their product journeys and retain them for much longer than with traditional sales models.

Why Are Organizations Moving to PLG?

Wes revealed eight main benefits to a PLG approach for companies:

1. Dominant Growth Engine

PLG creates a natural growth pattern, allowing users to interact with your product and then expand their usage over time.

2. Wider Top of Funnel

According to Wes, companies using PLG see increases in conversion of 20 - 30%. Those increases aren't the result of more website traffic. Instead, they’re achieved because people are taking the time to get to know a product with a free trial, and if it fits their needs, they’re converting.

3. Lower CAC

According to a ProfitWell study, CAC has grown by more than 50% for B2B and B2C companies over the past five years. When your customers experience your product’s value through a free trial or freemium model, you can acquire them at a reduced cost, without making heavy investments in sales teams.

4. Faster Sales Cycles

PLG eliminates several steps to the sales cycle. Leads are virtually self-qualifying because customers who like your product will become subscribers.

5. Compound vs. Linear Growth

With PLG, your customers become your advocates. If your product is solid, you won’t need to sell it for every customer you bring on board. Instead, your existing customers will recommend your product to other potential users and drive growth for you.

6. Rapid Global Scale

When customers embrace a product, companies can scale rapidly. Your products could even go viral as the next must-have productivity tool or business solution.

7. High Revenue Per Employee (RPE)

Because companies using PLG have comparatively low overhead and a higher growth potential, RPE is generally high. That allows companies to boost productivity, increase efficiency, and better motivate teams to drive innovation and potential future growth.

8. Better User Experience

Because the end user drives the PLG model, your company will spend less time and money with marketing and sales approaches that don’t resonate with your customers, and you’ll spend more time doing what you do best: creating the best possible value for users.

How do I Know if PLG Is Right for Me?

If your company has a strong product and offers great value for its customers, a PLG model may be the right approach. By leading with your product, you’ll establish meaningful connections with customers and bring them on board in an authentic, low stakes, and sustainable way.

Everything CMOs Need to Know about PLG

For more about PLG from a practitioner perspective, watch the full webinar. In addition to Wes Bush’s wisdom, you’ll get PLG insights from venture capitalist Sam Richard, Director of Growth at OpenView, and you’ll learn effective ways to use go-to-market teams in a PLG model from Francis Brero, CRO of MadKudu.

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