Product-Led Growth (PLG) has been hailed as a silver bullet for many B2B endeavors, and countless success stories can attest to its effectiveness.
However, blindly adopting PLG without considering a company's unique circumstances can lead to disappointment.
In this essay, I will explain the concept of PLG and discuss four situations when it may not be the recommended approach.
Through a careful examination of these scenarios, I will demonstrate that while PLG holds immense potential for B2B success, it should be executed thoughtfully and selectively.
Understanding Product-Led Growth (PLG)
Emerging as a popular business strategy in the software industry, PLG is a methodology that prioritizes creating an exceptional product experience for users while automating some marketing and sales efforts.
There is no definitive answer to who first wrote about the concept of Product-Led Growth. Some of the early contributors to the idea of Product-Led Growth include:
- Blake Bartlett, a partner at OpenView, who coined the term “product-led growth” in 2016 and wrote several blog posts and articles on the topic.
- Wes Bush, the founder of Product-Led Institute and the author of Product-Led Growth: How to Build a Product That Sells Itself, which was published in 2019.
- Jim Semick, the co-founder of ProductPlan and a former product manager at GoToMeeting, who wrote about his experience with product-led growth in 2020.
There are many others who have contributed to the field as well. Product-Led Growth is an evolving concept that is constantly being refined and improved by practitioners and experts.
By placing the product at the center of the equation, companies anticipate that their users' experience will aid the marketing and sales arms of the organization.
Ultimately, satisfaction will spread, leading to increased customer acquisition rates.
But while PLG has proven effective for many businesses, there are situations where it may not be the ideal strategy.
Case 1: Enterprise Buyers Predominately Hold Decision-Making Power
For some B2B companies with an enterprise clientele, buying decisions typically hinge on high-level decision-makers or executives rather than product-focused end-users.
In these ecosystems, PLG approaches could be insufficient in swaying key decision-makers.
Tailoring strategies to suit communication at the enterprise level and providing the necessary care to cater to complex buying cycles should be the priority instead of relying solely on PLG methods.
ERPs and LMS software could be in this category. Cybersecurity products too, though it’s more about the market they’re in. You also have Malwarebytes who successfully executed their PLG strategy.
Case 2: Product Value Requires Thorough Communication
Some products immediately exhibit their value upon first use, while others require a clearer explanation of tangible benefits.
Promoting PLG strategies can detract resources from clarifying or proving products' worth to potential customers.
Additionally, products may take a particular configuration to deliver significant gains.
In such cases, a more conventional marketing or customer success-led approach ensures promises are delivered effectively, maximizing customers' appreciation and revenue potential.
For example, cybersecurity products are so far down the value chain and the use cases are so complicated it's difficult to explain their value clearly.
Then take Loom. Their value prop is crystal clear: “Loom on. Meetings off. Record quick videos to update your team and cut down meetings.” And it is indeed that simple, not a wishful over-simplification of a complex real-life multi-step workflow.
Case 3: Impossible to Activate Products With Self-Serve
For PLG to be effective, a company's product must allow users to self-activate and onboard with minimal support.
However, not all products, particularly complex solutions, can provide a self-serve model comprehensively.
Imagine a highly specialized software that requires extensive training and customization.
If the activation and onboarding processes need significant attention and effort, a product-led approach will neither uplift customer satisfaction nor sales, making prompt customer assistance or a sales-led approach more suitable alternatives.
A classic example is Salesforce, the enterprise software that needs extensive customization to demonstrate its full capabilities.
On the other end of that spectrum, a user can start to experience 80% of Figma’s value immediately after signup.
Case 4: Unpredictable Sales and Marketing-Led Motions
Product-Led Growth works best when a company has established predictable sales and marketing-led motions.
Integrating PLG before ensuring a sound sales process may lead to difficulties in understanding true customer needs and wants.
For example, a company that rushes to implement PLG without first stabilizing its sales funnel may struggle to identify critical customer pain points.
There are startups selling to the enterprise, have a POC in the market, and don’t have a set marketing and sales operating cadence, yet they are leaning into PLG with the hopes that it would somehow get them to product/market fit faster.
Before adopting a product-led approach, it is crucial to lay a robust foundation for sales and marketing campaigns to run smoothly and predictably.
Concluding Remarks
Product-Led Growth can lower customer acquisition costs, accelerate scaling efforts, and make an organization more efficient, but only when applied in tandem with sound infrastructures in place.
A rush to implement PLG without analyzing a business' fundamentals is a gamble with uncertain payoffs.
Sustainably establishing predictable sales and marketing-led motions, ensuring customer onboarding, understanding product propositions and configurations, and catering to enterprise decision-making are preeminent foundations needed before committing to a product-centric growth strategy, if it is required at all.