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Product-led growth

What is product-led growth?

Product-led growth describes a business strategy that places a company’s software at the center of the buying journey—and often at the center of the broader customer experience. A product-led growth strategy counts on the product itself—its features, performance, and virality—to do much of the “selling.”

What makes product-led growth unique?

The main differentiator of product-led growth is that it puts the product front and center of all go-to-market efforts. In product-led organizations, sales and marketing teams reorient to let the product (and the positive social proof it generates) take the lead.

For example, for companies that have a freemium product, the product itself becomes a sales and marketing tool as it attracts new users without spending money on ad campaigns or additional sales hires. Similarly, product-led growth strategies often allow users to experience a product for free, with the intention of showing enough value to encourage them to upgrade to the paid version.

How do self-service trials or freemium drive product-led growth?

Often central to a product-led growth strategy is a self-service trial or freemium option that allows a prospective customer to evaluate the product independently and without charge, bounded by time and/or functionality, and often without engaging a salesperson. This self-service approach aligns to shifting changes in buyer preferences, particularly in the research and evaluation phases of the buying journey. Many buyers want to try before they buy, relying less on a salesperson’s assistance than on their own first-hand experience with the product, in conjunction with customer and social proof that they discover via review sites and social networks.

Many companies use these trial and freemium experiences to measure product usage and engagement, scoring leads and timing and targeting conversion offers and sales outreach accordingly. Citrix, for example, used product analytics to identify a certain trial usage pattern that converted to paying customers at a higher rate than others. The team then created an onboarding flow that steered trial users toward those particular features, and was able to increase their trial conversion rate by 28 percent.

How does product-led growth reduce customer acquisition costs?

A product-led growth strategy can have a positive impact on customer acquisition cost (CAC) by reducing the burden on sales teams. Sales and marketing expenses contribute to customer acquisition costs, thus the more downward pressure a company can place on these expenses, the better their efficiency metrics, such as CAC, will appear.

How do I tie product-led growth into my company’s product-led strategy?

Product-led growth is a subset of a broader product-led strategy, which expands beyond the try/buy phase of a self-service buying journey to include other touchpoints, pre- and post sales, where the product takes center stage. For example, a product-led strategy may also mean bringing aspects of sales, marketing, service, support, and education inside the product for convenience, reduced friction, and greater contextual relevance to end users. Here, business functions and customer interactions that were previously executed through other channels converge inside the product, all toward the goal of making the product more useful, more engaging and, ultimately, more valuable for customers and end users.

How can I learn more about product-led growth?

Pendo published a comprehensive e-book on how to create a product-led organization, which is available for download here. ProductCraft, OpenView Partners, and Product-Led Institute have also published great content on the topic.

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