Over the last few years, companies have changed how they use and purchase technology. Instead of relying solely on big-scale software to automate or digitally transform operations, organizations are shifting gears to focus solely on end-users. These end-users include the newest generation of consumers entering the market — a savvy generation comfortable with technology and whose digital expectations and requirements differ from previous age groups.
For enterprises to stay competitive, they must adopt strategies that meet consumers’ changing needs. Companies prioritizing sales-led strategies will fall behind. Scaling a SaaS business requires a product-led growth (PLG) approach.
Businesses must align flexibility and autonomy in the sales process as Gen Z’s consumer influence increases. Over 60% of today’s customers prefer using digital self-serve channels. This younger generation wants the ability to test-drive technology at their own pace to determine how the tools fit into their workflow and operations before committing to a purchase.
To meet the demands of digital natives, SaaS companies should develop an autonomous buying strategy for their products — allowing customers to explore the sales process independently. A PLG model considers how buyers want to receive information and enables companies to align products and information with their customers’ preferences.
Companies should consider these three crucial components when implementing a PLG strategy.
PLG Revitalizes the Sales Cycle
First, organizations must define, understand and embrace their overall business goal. A PLG strategy provides the foundation by first gaining clarity about end-user challenges and then offering customers a solution to their pain points.
A SaaS company’s average sales cycle takes approximately 84 days — teams spend nearly a quarter working to obtain one new customer. A PLG strategy revitalizes and shortens the sales cycle by empowering teams to produce attention-grabbing content that invites customers to explore new products.
When they implement a PLG strategy in their sales processes, companies optimize their sales teams’ time, enabling them to spend time completing more high-value, hands-on tasks and realizing exponential growth.
Companies inviting consumers to test tools and technology through initiatives like free trials empower users to explore services for the “right fit.” Consumers can evaluate whether a product or service addresses their requirements without committing significant financial resources. In fact, free trials convert to paid customers approximately 25% of the time. SaaS companies like Slack and Dropbox have successfully leveraged PLG strategies to acquire more customers and achieve higher adoption, satisfaction and conversion rates than the competition.
PLG Increases Consumer Trust
Only 3% of buyers trust sales representatives, but 92% trust referrals from people they know. Many consumers reach out to their personal or professional networks for insight when researching an important (and expensive) purchase. PLG strategies empower organizations to build the brand awareness and credibility consumers expect through current customers who evangelize the brand to potential customers.
While consumers often find technology solutions via word of mouth, the product must convince them to become customers. In a PLG model, the bulk of customer pipeline growth comes from organizations providing potential customers the opportunity to try products or services. This strategy builds potential consumers’ trust in the technology by allowing users first to use the product, then make a purchase that fits their needs.
Additionally, a PLG model provides greater access to feedback from current and potential consumers. Brands can leverage user data and feedback to better their product. The data could include information on what aspects of the product consumers use the most or what features consumers struggle to use. Companies can then act on this information and enhance their product to serve their consumers’ pain points better.
PLG Ensures Product Quality
Product forms the foundation of every SaaS company, and when the software it provides falls short, the business struggles. When a company’s products fail to meet current and potential customers’ expectations — or don’t offer the flexibility to adapt as businesses scale — prospects move on.
With a product-led approach comes the opportunity for businesses to offer new or revamp existing solutions to address individual needs and expectations more effectively. A PLG strategy provides opportunities for organizations to gather feedback from end-users continuously. Consumer insights empower companies to deliver a higher-quality, better-fit solution.
Consumer feedback is crucial in all stages of a product’s life cycle to ensure quality. Through product development, companies can use customer feedback to build a solution that solves consumers’ challenges. Post-trial of the product development, feedback helps brands focus on what needs improvement. And finally, post-purchase, customer insights help organizations continually fine-tune their offerings to ensure it remains relevant.
While SaaS companies may take various approaches to increase their growth, a PLG strategy checks the boxes by focusing first on the end user, listening to their feedback and using those insights to create and provide the most effective solution. Inviting tech consumers to contribute actionable insights and feedback gives companies a greater understanding of users’ pain points to inform product changes that positively impact user experience.