Fostering SaaS Adoption through the Synergy of Product-Led Growth Strategies and AI
By Sumedha Nagpal
Product-Led Growth (PLG) is a growth motion where the product itself acquires users, engages, and activates them by showing unique value proposition, retains and monetizes the user base driving substantial value to the customer. In the B2B world, most often than not, utility takes precedence over user experience and path to value. This has largely been due to the purchase decision makers and the core users being different. B2B products are expected to solve problems and fill gaps within companies so that the purchase decision maker is able to justify the cost of the purchase. Due to these complex customer journeys, product experience takes a back seat leading to patchy user experiences, difficult to use products and lack of focus on usability of B2B products due to a heavy human touch.
But what changed? There are massive trends in the industry were talking to sales teams is no longer considered cool. Practitioners want to be confident they will be able to drive value before they go to the C-suite to authorize the purchases. Users become captivated advocates, their high retention fueling the need of purchase justifying to costs and showing value to the budget owners. The world is more digital than ever leading to more and more users expecting a smoother digital experience. This is exactly what the product-led growth motion is. It’s all about creating an outstanding product experience that convinces the users of its value.
PLG can be a game-changer or a missed opportunity, demanding a profound understanding of the product, its purpose, target market, and Go-To-Market strategy. This growth motion comes with its own set of benefits.
- Growing user base at scale: A core Product led acquisition strategy is to offer a freemium plan or a free trial. It provides users with the opportunity to test the product before committing to a purchase. Slack underlines this case. Having a low barrier to entry and a free trial period which is flexible, gives the users an opportunity to trial the product and upgrade to a paid account with much less friction.
- Impeccable product experience and quality: It is on the product to bear the brunt of sales in a PLG first strategy so the focus on product experience is primary. AI is the key enabling factor to heighten the product experience and quality in the context of the PLG strategy. By use of AI in this way, companies could personalize the user experiences on a very large scale, anticipate user behavior, provide automated customer support, constantly enhance their products, and improve accessibility at the same time. Such AI-powered solutions not only generate user delight and audience engagement but also play a role in helping the product to grow organically.
However, embracing Product-Led Growth (PLG) isn’t a mere flip of a switch; there are some considerations that businesses must be aware of. A successful Product led based Go-to-market motion comes with high upfront costs.
- Costs of supporting a freemium/free trial experience: Offering a free version of a product requires front loading costs. A free trial/freemium plan allows users to try a full breadth experience which comes with infrastructure costs and no guarantees of conversion. If a company strives for fast financial wins but simultaneously thinks about using the PLG (Product-Led Growth) model, especially with freemium, it might not succeed. PLG sets the goal of sustainable growth by creating a strong and loyal customer base, while gradually converting them into paying customers.
- Cost of standing up intelligent onboarding experiences: For end-to-end product-led growth to happen, the product must be designed for self-service use since there won’t be people guiding users through any flaws in the technology. Achieving this requires significant resources and alignment across the organization. If companies can overcome the initial investment, a product-led approach can greatly increase value with minimal cost per new customer.
The Product-Led Growth (PLG) paradigm is not just limited to the tactics of viral acquisition loops and low cognitive load, self-serve checkouts. It is a holistic strategy that is centered around the use of the product itself to acquire, activate, engage, monetize, and retain users as well as their extension through collaboration functions. AI could be instrumental in improving PLG activities across the board such as personalized user experiences to predictive solutions like recommending next-best actions which promote engagement and long-term usage.
For example, enterprises like Slack, Sigma and Miro successfully adopted a PLG approach putting product-qualified leads (PQLs) at the forefront of revenue and expansion efforts.
The implementation of PLG motion in the first place may be costly but usually, the long-term benefits are usually worth the initial cost. This strategy is very effective and profitable, which means that most of the companies resort to it. Nevertheless, it should be considered that PLG may not be effective for any sort of product or market. As we navigate the landscape of Product-Led Growth, one thing remains clear: the journey of success is a team sport, thus building a cohesive and united multifunctional team is a steppingstone toward creating, shifting, and enhancing tech items that not only bring new customers, but also retain the old ones, forcing constant growth.
(The author is Sumedha Nagpal, Product Growth Lead, Databricks, Inc., and the views expressed in this article are her own)
