{"id":2766,"date":"2024-06-04T11:23:00","date_gmt":"2024-06-04T11:23:00","guid":{"rendered":"https:\/\/dev.matsio.com\/matsio\/saasboomi\/?p=2766"},"modified":"2024-06-05T12:25:54","modified_gmt":"2024-06-05T12:25:54","slug":"why-what-and-how-of-product-led-growth-strategy","status":"publish","type":"post","link":"https:\/\/dev.matsio.com\/matsio\/saasboomi\/saas\/growth\/why-what-and-how-of-product-led-growth-strategy\/","title":{"rendered":"The Why, What, and How of Product-Led Growth Strategy: A Cheat Sheet"},"content":{"rendered":"\n

Over the last decade, there has been a tremendous change in how people use and buy the software. Starting from the early days of Salesforce to the increasingly growing SaaS ecosystem<\/a> of 2021, customers have been demanding the consumerization of SaaS products.<\/p>\n\n\n\n

With an increase in tech-savviness among the general audience, buyers are preferring to make the purchase decisions by self-educating themselves through an app\/website rather than going through a sales cycle.<\/p>\n\n\n\n

Due to a gradual accumulation of such factors, the responsibility of igniting the growth engine in any SaaS startup<\/a> has shifted onto the shoulders of the product team. But devising and deploying a product-led strategy that\u2019s scalable across dimensions isn\u2019t a child\u2019s play.<\/p>\n\n\n\n

This squeezed-form blog post is a condensed collection of notes on the why, what, and how of Product-Led Growth strategy, reformatted concisely into bullet points and diagrams for the reader to refer back for a quick refresher on any specific section.<\/strong><\/p>\n\n\n\n

What’s inside:<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Introduction<\/strong><\/h2>\n\n\n\n

For a SaaS business, there are three tidal waves\/problems:<\/p>\n\n\n\n

    \n
  1. Over the years, as the Customer Acquisition Cost (CAC) increases, the willingness to pay decreases.<\/li>\n\n\n\n
  2. Buyers increasingly prefer to self-educate and try out the product themselves, versus going through a sales demo. (Reference<\/a>)<\/li>\n\n\n\n
  3. The product experience has become a part of the buying process.<\/li>\n<\/ol>\n\n\n\n

    GTM:<\/strong> How the company will target customers and achieve a competitive advantage. There are two major types of GTM<\/a> – Sales-Led and Product-Led.<\/p>\n\n\n\n

    1. Sales-Led GTM (SLG)\u00a0<\/strong><\/h2>\n\n\n\n

    The only way to sell is to talk to users.<\/strong> <\/strong><\/p>\n\n\n\n

    Pros of SLG:<\/strong><\/h3>\n\n\n\n

    \u2705 High Lifetime Value (LTV) <\/p>\n\n\n\n

    \u2705 Perfect for niche and small Total Addressable Market (TAM), to build relationships<\/p>\n\n\n\n

    \u2705 Perfect for a new market that needs to be educated<\/p>\n\n\n\n

    Cons of SLG:<\/strong><\/h3>\n\n\n\n

    \u274c High CAC -> pushes LTV -> increases price <\/p>\n\n\n\n

    \u274c Leaky acquisition -> Only 2% of marketing qualified leads (MQLs) <\/p>\n\n\n\n

    \u274c Organisation structure product innovation<\/p>\n\n\n\n

    \u274c In SLG your primary Annual Contract Value (ACV) customers will drive the product and company <\/p>\n\n\n\n

    \u274c In SLG, Sales marketing and success teams operate in parallel with the product team<\/p>\n\n\n\n

    In short, SLG would most likely fail in a SaaS setup, considering the above three tidal waves.<\/strong><\/p>\n\n\n\n

    2. Product-Led GTM (PLG)\u00a0<\/strong><\/h2>\n\n\n\n

    The Product team drives sales, marketing, and success.<\/strong><\/p>\n\n\n\n

    In PLG:<\/p>\n\n\n\n

    ? Marketing<\/strong>: Product is the lead magnet\u00a0<\/p>\n\n\n\n

    ? Sales<\/strong>: Product helps people understand our value\u00a0<\/p>\n\n\n\n

    ? Success<\/strong>: Product helps customers be independent\u00a0<\/p>\n\n\n\n

    ? Engineering<\/strong>: Product minimizes time to value<\/p>\n\n\n\n

    Pros of PLG:<\/strong><\/h3>\n\n\n\n
      \n
    1. Easily Scalable
      – Wider top of the funnel with freemium, etc.
      – Easy vertical and horizontal expansion, especially global
      <\/li>\n\n\n\n
    2. Low CAC
      – High time to value, fast sales
      – High RPE – Revenue per employee
      <\/li>\n\n\n\n
    3. Better UX<\/li>\n<\/ol>\n\n\n\n

      In short, PLG tackles all three SaaS tidal waves.<\/strong><\/p>\n\n\n\n

      Setting up the PLG strategy<\/strong><\/h2>\n\n\n\n

      There are three top sales strategies:<\/p>\n\n\n\n