There has never been a better time to become product led. Particularly in today’s economic climate—rife with market instability, supply chain issues, record levels of inflation, and workforce and staffing challenges—product-led strategies are critical for helping teams of all sizes do more with less.
Our latest report, The business value of being product led, was informed by data collected from over 400 Pendo customers who are actively leveraging product-led strategies to deliver the best user experiences possible. These tactics are also allowing them to operate more efficiently and reduce costs so they can thrive in turbulent times and stay focused on releasing products that deliver value to their users.
In part one of this blog series, we examined the impact that becoming product led has on customer health. Now, let’s take a look at how product-led strategies enable efficient growth, even in the thick of the most challenging economic circumstances.
What is growth and why does it matter?
Product-led growth is a business strategy that puts the product at the center of the buying journey. It leverages the product to help generate leads, demonstrate value, and drive conversions—augmenting human-led activities with automated activities within the product itself. In the software world, growth is a key indicator of product engagement that represents the expansion of product or feature usage within a given customer account, though it could also signal an increase in a company’s customer roster or overall market share.
Particularly in large organizations, it’s common for different departments to use different measures of success when it comes to growth. For example, for product teams, growth might be surfaced as a ratio of new or recovered accounts/users to dropped accounts/users (also known as the Quick Ratio), or viewed as part of a product’s aggregate Product Engagement Score (PES). Whereas for marketing teams, product qualified leads (PQLs) might be more useful for determining the efficacy of campaigns and understanding how various in-app marketing activities influence acquisition and growth.
Having a clear understanding of the product or company’s growth trajectory and trends is extremely valuable for organizations at all stages of maturity:
- For startups, steady growth sends a strong signal of product-market fit and emerging customer interest—invaluable for securing funding, boosting investor confidence, and driving awareness.
- For enterprises, sustained growth is an important driver in a company’s efforts to enter new markets or move into new product lines. It signals resilience and stability, is an indicator of fast ROI following any mergers or acquisitions, and can even help attract top talent.
Becoming product led helps businesses stretch their budget further and grow more efficiently—without the need for additional headcount or resources.
On average, product-led companies generate 30% more highly qualified leads and see a 28% increase in total active users.
How do product-led companies drive growth?
One of the core tenets of product-led growth is enabling customers and users to experience the value of the product for themselves, fast. It also has the added benefit of reducing the level of manual effort required of traditionally hands-on, outbound roles like sales and sales engineering, thanks to scalable, 1:many tactics like self-guided product tours, free trials, and freemium plans.
By getting users into the product as quickly as possible—and limiting labor-intensive activities like 1:1 demos—buyers and users can feel the product’s value and functionality first-hand, whenever it’s most convenient. Not only is this primary experience far more effective than any sales or marketing pitch, it also helps improve trust and goodwill, eliminates friction in the sales process, and ultimately converts prospects into customers at a higher rate, thanks to the baseline product knowledge these leads acquire early on in the sales cycle.
Product analytics tools are also critical for understanding and influencing growth. Analytics allows product teams to identify their most engaged free users, so their sales teams can focus their time and resources on nurturing the highest-value opportunities. And in-app guides enable teams across the business to act on this data—allowing them to seamlessly reach this lucrative audience, while they’re fully captive and immersed in the context of the product.
Feedback is another way product-led teams drive continued growth. Soliciting feedback within the context of the product enables teams to scale their voice of the customer (VoC) efforts by augmenting human-led efforts (like focus groups or 1:1 interviews) with automated, in-app feedback collection. This continual influx of qualitative data helps product teams validate and prioritize the right initiatives, and empowers customer-facing teams to have more informed conversations—which ultimately builds buyer trust and drives organic expansion.
On average, product-led companies that leverage product-led growth strategies like these generate 30% more highly qualified leads and see an average 28% increase in total active users in their products.
Download our full business value report to see more product-led growth insights and read success stories from companies who’ve benefited from these tactics themselves.