Product-Led Growth: a Customer-Focused Strategy for SaaS Business Growth
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Product-led growth or PLG is a business strategy suggesting that the product itself is the main tool of user acquisition. Within the past decade, this approach has proven to be the most efficient one, especially for software companies. Dropbox, Slack, and Zoom have all chosen this strategy to reach success.
PLG is slowly forcing out sales-led and marketing-led strategies that were prevailing in the software industry just a few years ago. The recent changes of users’ needs and market caused the appearance of a new strategy with a usable intuitive product that promotes itself. Let’s look closely at the factors that facilitated this change and how PLG impacted SaaS businesses.
What is product-led growth?
With the ever-increasing number of software products, users’ requirements also changed. Something that seemed to be magical 10 years ago is now taken for granted. With so many options available, people do not want to purchase software without testing it first.
Since the beginning of the Internet era, people are constantly self-educating. Nowadays, you can find anything on the web: from cooking recipes to tutorials on how to fix your devices.
While in the past people relied on sales representatives when buying something, now, potential clients want to explore and experience the service itself to know what they will get before buying it. People don't depend on sales executives anymore. With numerous lists of helpful apps and software available on the Internet, users prefer testing the service before investing money in it.
Product-led growth allows customers to make full use of all features of the application without paying. This approach has proven to be especially effective for SaaS businesses due to their subscription model. First, you gain free access to the platform, and only after testing a product for some time, you decide if you want a paid subscription or no.
Free trial and freemium models are the two main types of free subscriptions. With the first one, you can use the service for free for some time (from 14 to 30) days. After this, you would need to pay for a subscription to continue using the software. Freemium model offers timeless access to the product but with some limitations.
For instance, Dropbox, a PLG company, has storage limitations for free accounts. Only if users make a paid account, they can store more data.
Free usage of the product becomes an essential part of the buying process with PLG. If your service satisfies customers’ requirements, paying for it is a logical next step for them.
With a “try-before-you-buy” strategy, you do not invest heavily in marketing. Indeed, SaaS companies that implement this approach rely more on the word of mouth, positive experience, and good reputation because the users who enjoy their service will definitely spread the word about it.
How to build a product for end-users
If the product itself is the key aspect of your growth strategy, it means that all the departments of the company are improving and enhancing it in close cooperation.
The next questions demonstrate how each team in the company focuses on product development:
“How can the product resolve the issues of our customers?” - customer success team
“How can the product create the demand?” - the marketing team
“How can the product boost sales?” - the sales team
“How can our product design help to resolve the problem of our users? - design team
“How do we create a product that is useful for our customers? - engineering team
Your SaaS application needs to be better at resolving users’ issues than other products available in the market. Your targeted customers can always check it by subscribing for a free trial, which comes with a product-led growth strategy.
The PLG model also shows that you respect your users and do not make them pay for something they do not need. By offering a free trial, you let your customers choose your product because it works best for them. Consequently, they do not become buyers right after registration. Indeed, the conversion from free users to paying users happens only after a positive experience with your service.
One more example of a prosperous “try-before-you-buy” business is Zoom. Only a year ago, this SaaS solution was popular mostly among people involved in the IT industry. Nowadays, this product is a must for anybody who is studying or conducting business meetings online and simply has video calls with friends now and then.
It seems that all of a sudden, everybody started talking about Zoom as a leading video-conferencing tool. However, the trick here is that with free 40-minute first video call, all the users got to know why this solution is actually great.
With a PLG strategy, where the product speaks for itself and demonstrates all the best features in action, Zoom gained worldwide recognition and popularity by the word of mouth. If you find something useful and awesome, it is quite logical to share with friends and close people.
How to make product-led growth work for you
Product-led growth seems to be a relatively easy approach, especially if your product advertises itself. However, to build a solid foundation for a freemium SaaS company, you would need the next three things:
- Understanding your value
Unfortunately, many SaaS companies fail to understand what’s special about their product for targeted customers. A core value of your product is a central part of a PLG strategy and a key to differentiating a SaaS solution in the market whether it is the lower price or one more feature that your competitors do not have.
- Communicating the value of your product clearly
Without the previous step, you will not be able to show the benefits of your product. The core value of your SaaS solution should be noticeable and stand out. In many cases, users do not understand why your application is better than the others so you need to show and explain this.
- Delivering on what you promise
Finally, providing the expected and promised services is a must for a product-led growth strategy because it relies on the performance and functionality of your application. If you do not deliver on what you promise, it may cause negative UX and, as a result, no paid subscriptions after the free trial.
Advantages of product-led growth strategy
Let’s find out why PLG strategy became so popular and effective during a short period of time. There are two main advantages of this approach:
Product-led companies can grow much faster because their users immediately start testing the product within free trials. The onboarding process is almost instant and, in most cases, does not require any assistance from customer support.
Consequently, customers get familiar with the software much quicker. They do not need to read or learn about service because they can use it straight away. The point when a user creates a paid account happens pretty soon as well, due to a free trial. In such a way, the company grows and gets new customers at a surprising speed.
Lower сustomer acquisition costs
If your customers onboard themselves, the sales cycles become significantly shorter. Moreover, you do not need large customer support, sales, or marketing teams in a PLG company. The costs of customer acquisition are pretty low because new users are joining after experiencing the value of your product, not because of expensive advertisement.
In the 21st century, freemium models of software products have modified the rules of competition and growth for many SaaS businesses. Freemium model is the business strategy that currently works for all types of SaaS applications.
With no hidden and sophisticated marketing or sales techniques, the product-led growth approach is built upon a usable and effective product that proves its advantages at each user’s click. It does not mean that this strategy is less challenging or complicated. You still need to think of advertising, but you should do it wisely.
The company’s growth strategy, along with many other factors defines the company’s development. The role of the growth product manager is also a crucial component of a success formula as this person plans and facilitates this scaling. If you are curious about the tasks, responsibilities, and impact of a growth product manager on the company’s future, check this article in our blog.
What Is UX Design, According to UX Designers
UX designers work on turning a bad user experience into a good user experience. So each UX designer should definitely know what UX design is.
Well, not quite. When we asked Eleken designers about their definitions of user experience design, we got six different answers. That’s why, we gathered all the answers in this article to help you figure out what UX design is all about. Let’s get the ball rolling.
What is UX design?
Remember the Indian story about an elephant and blind men? A group of blind men who have never come across an elephant before tried to imagine what the elephant is like by touching it. Each man felt a different part of the elephant's body so they ended up with radically different ideas about the elephant's appearance.
With UX, we have a similar situation. User experience design is a broad multi-dimensional field, and every design professional highlights a fragment of it that they believe to be the most significant.
If we take all the definitions we got from Eleken’s UI/UX specialists and put them together, we have a chance to assemble one holistic user experience design definition. And that’s what we are doing.
- UX design process aims to bring users from point A to point B
Tamara, a UI/UX designer at Eleken, believes that user experience design is called to bring users from point A, where they start their journey, to point B, where the app’s promised value is:
“UX, is about meeting a person's expectations, fulfilling their requirements. In general, to help every user reach their aim within the product without fuss or bother.”
Tamara, a UI/UX designer at Eleken
- UX meaning by Maksym - it's all about managing user's attention
There’s no direct way for a user from the app’s point A to point B. A UX designer has to build user flows as a riverbed, going around terrain features. This way, a user would raft down the river towards their destination with no effort:
“UX is about properly planning every user’s step and correctly guiding people along all these paths to make their experience effortless.”
Maksym, Design director at Eleken
- UI design offers a toolkit for managing users’ attention
The definition of UX is impossible in isolation from UI – user interface design – which serves as the second half of the “UI/UX” acronym.
The relationship between UI and UX is an evergreen debate in the design world. It has become trendy to demean user interface design because design is about “UX problem solving, not making things pretty”.
We at Eleken disagree. We do not separate visual design from UX strategy and recognize the value of UI as a tool to manage user attention:
“UI belongs to UX. Thanks to colors, sizes of objects, their location, designers can make user experience more or less obvious.”
Maksym, Head of Design at Eleken
- Product user experience is a balance between featurism and usability
As apps grow, their features tend to snowball. And it seems to be good:
- Customers come for the value that awaits them at the final destination of their user journey.
- The value is realized through the features offered by the application.
- More features = more value.
However, this is where the digital product turns into a mess, the original value gets lost and users get completely confused by the number of options:
“Piling up features can scare away clients rather than retain them. The role of UX designer is to bring balance.”
Natali, UI/UX designer at Eleken
Eleken designers often work with clients who need a user experience expert to redesign their overcomplicated apps. This was the case with the Ricochet 360 cloud phone system or Gridle client experience platform.
- UX is about impressions users get at the end of their journey
“UX means thinking about the customer’s journey over time as they interact with the product and with the company as a whole. UX is the impression a person has after spending time with us. It includes everything, from colors to copy.”
Alex, UX Lead at Eleken
What are the other UX components that make up the users’ impression?
“Impressions consist of the structure and navigation of the application, the value that the functionality brings and the user interface design.”
Vitaly, UI/UX designer at Eleken
Do you feel that? The pieces of the UX understanding start to click together. We have the final piece before the puzzle is complete, and that piece is context.
- UX in product design takes context into consideration
“UX goes beyond the screen. You have to think not only about how the user interacts with the screen. Let’s take a taxi app as an example. You have to think about how it interacts with the screen in different conditions: on the go, in a cafe, in the rain, in a crowd, in the dark. In all cases, calling a taxi should be convenient.”
Maksym, Head of Design at Eleken
As I was writing this article one sleepless night, my wireless mouse stopped showing any signs of life. Changing a battery in the dark, I twisted a mouse in my hands trying to see plus and minus signifiers until a battery slipped out and rolled under the table.
So, what does UX mean?
Sitting under the table, with one hand holding the battery and the other rubbing the bruise from where my head met the table, I thought that the battery is a good summary of what user experience is NOT:.
- It ignores the context of usage,
- That leads to an awful user impression.
- It takes function over usability (why not design a battery that would make it impossible to mix up terminals?)
- Its UI (black signifiers on black plastic) fails to manage users’ attention.
- A user takes from point A to point B not because of the design but in spite of it.
But if battery producers may not yet worry about people refusing to use their batteries (because all batteries are equally bad).
For digital software products, bad UX means a death sentence.
And there are two main reasons for that.
- Because value goes first.
Most products trigger the payment before users have a chance to experience them. A washing machine, for instance, you try only after you buy it. The same is true for a new smartphone. Even traditional on-premise software takes your money before you get a box with a product.
SaaS model swapped paywall and value around. Before users consider the possibility to pay for SaaS software, they experience it through a free trial or a freemium subscription. Needless to say, users will churn in case of an unpleasant experience.
Let’s take a look at how it works on an example presented by Olena, a UI/UX designer at Eleken agency:
“When I need to distract myself, I play solitaire. I used to have an Android phone and play a standard game on it. Then I switched to iOS and downloaded another solitaire game that looked more modern and was generally nicer than the standard one. But when I started playing, I noticed that my new game doesn’t give me enough hints or shuffle cards when I want to.”
Guess, what happened next?
“I deleted this game and downloaded the standard one I had before.“
Olena’s story raises the curtain on the mysterious relationship between UI and UX, but more on that later.
Another important point Olena’s story uncovers is the high competition and easy transferability between different SaaS apps.
- Users have no reason to stay
If you just paid $239 for a yearly Photoshop plan, you’ll probably hold off with skipping it for another graphic design app, even if Photoshop just froze at 99% when saving a file you’ve been working on for the last five hours.
The situation changes if you have a monthly Sketch subscription and suddenly feel that your experience with Sketch leaves a lot to be desired. With a monthly subscription, nothing prevents you from shifting to Figma.
If we look at the 5-year Google Trends graphs of Sketch and Figma in comparison, we’ll see how quickly an underdog can overtake an industry leader in the world of SaaS.
Google Trends graph for Sketch (black) and Figma (blue). Image credit: bootcamp.uxdesign.cc
To earn thumbs up from your users, you will have to try hard.
Or consult with professionals in UI/UX for SaaS startups – like Maksym, Olena, Natali, Alex or Vitaly. If you are ready to talk, fill in a short form. It will only take a minute.
Product Manager vs Project Manager: Main Differences in Goals, Responsibilities, and Skill Sets
Product manager vs project manager - potato potato - one may say and of course will be wrong. Project managers and product managers are vital roles in tech companies. However, if you're struggling to get the difference between product and project manager, the good news is - you're not alone.
Eleken is a design company for SaaS businesses with years of experience. And in our day-to-day work we get to cooperate closely with both product and project managers. In this article, we'll break down the main differences between product managers and project managers to help you understand which one is better for you.
Defining the role of a product manager
A product manager is a person responsible for a product and managing other teams to build, launch and maintain a successful product. A product manager is a key role in most technology companies.
Product managers need to be able to oversee the entire product life cycle, from concept to implementation. They usually need to have more diverse backgrounds and have to be very flexible and able to constantly learn new things, while interacting with different teams. Their goals are not predefined; moreover, their job is to determine goals for both themselves and the product. The result of their work is a solution that fully satisfies clients' demands and meets the company's expectations.
Product managers work closely with designers to make sure that the product’s design fits customer needs, as well as with engineers to make sure that all design features can be implemented without affecting the functionality. They also work with the marketing department to make sure that the product is effectively marketed when it is released. A product manager is also responsible for taking and analyzing input from stakeholders and users and passing it to the development team.
Now let’s look at a project manager.
Project manager definition
In a nutshell, a project manager is a person that organizes and coordinates the team to deliver a particular project on time and within budget. So, to better understand the project manager’s role, we first need to understand what the project is.
Project is usually defined as a sequence of steps or tasks that need to be completed to achieve a certain result in time and without using extra resources. Anything from designing a new application to building a house can be a project. Projects can vary by field and size, managed by one or many project managers, but the goal (and therefore the job of a project manager(s)) is pretty straightforward: to complete the project in time and without exceeding the budget. That’s why, it's safe to say that planning the timeframe, resources pool and objectives is a modern project manager’s responsibilities, while the ability to mitigate the risks is their superpower.
Product manager vs project manager: main differences
As you already noticed there are some key distinctions between the two roles that set them apart. A project manager is responsible for delivering the project without breaking the bank, while a product manager is focused on ensuring that the product developed meets customer needs.
Product management is responsible for a whole product creation, while and project management focuses on a specific stage of product development.
The key difference between product managers and project managers lies in how each role approaches the management process. Product managers focus on long-term strategy and goals, while project managers tend to focus on the project execution.
Project managers handle tasks within the scope of one project (or initiative). Product managers manage multiple initiatives across different teams to ensure alignment with business goals and objectives.
Now let’s explore the main goals, responsibilities, key performance indicators (KPIs), and skill sets of both project managers and product managers.
Responsibilities of a product manager vs a project manager
There are key distinctions in terms of responsibilities and deliverables of product manager and project manager roles that you should be aware of:
As you can see two roles have some common ground. Close cooperation with the team and lots of communication involved are typical for both positions. And no matter the role, both need to advocate for users’ needs and communicate with the team daily. Both roles also have to focus on idea implementation, need to have strong management skills, and be result-oriented.
Let's summarize: product managers are typically involved in defining products, setting direction, creating product vision and strategy of a product, choosing features, and managing roadmap prioritization. A product manager can be involved in developing products, but they usually don't actually build them.
KPIs of a project manager and product manager
Key performance indicators of the two roles we're talking about emerge from the goals of their work. A product manager's KPIs are determined by a key goal to oversee the development and growth of a product, while a project manager's responsibilities are united towards completing specific projects within defined resources. A product manager typically focuses on metrics such as customer satisfaction, increased sales, user acquisition, retention rates, and other metrics related to product performance. Project managers monitor metrics such as project budget, schedule adherence, and quality control and focus more on team performance metrics.
Project and product manager skill sets
Here we can see that product manager skills of and project manager skills are quite different.
Product managers need to have strong business skills, as they'll be dealing with the market, stakeholder’s expectations, and product’s development and performance. They also need to have a good understanding of technology so they can make decisions about what features to include in a product. They often are expected to have some basic skills in marketing, engineering, and design as well.
In contrast, project managers need to be great organizers and have strong problem-solving skills. The project manager's superpowers include managing users' expectations, dealing with ambiguity and sudden changes, budgeting, and creating timelines. Project managers are more niche-oriented and have technical knowledge in particular directions. They should be stress-resistant as troubleshooting upcoming problems is one of the project manager’s challenges. Project managers have to keep the team’s course on the defined goals, which is why this role is most appreciated for their efficient diligent approach.
Collaboration with designers: project manager vs product manager
When it comes to design, both product and project managers can be involved in managing the design team. However, the way both of them collaborate with designers is different.
Project managers define and manage the scope of tasks, organize efficient team collaboration, making sure that everyone is aware of their responsibilities and keep an eye on the team’s progress and deadlines. They help designers to estimate the timelines and set milestones for the team. With a project manager in the team, the workflow becomes more structured and often more efficient, everyone is on the same page and the project manager is the rockstar in this case.
Product managers work with designers differently, they are more like chief operating officers for the product and their job is to align everyone with product goals. Their collaboration with designers is essential for the product's success, since the design team will create the product’s look and feel. That’s why product managers share the vision and make strategic design decisions together with the designers. Product managers prioritize work for designers and help them to see the bigger picture. With the product manager in the team designers feel more motivated and have a better understanding of the products they work on.
But when it comes to the question of who is more important - product or project managers - we can't just point at one side and say "Those are not needed". From our experience, both roles are irreplaceable and Eleken designers enjoy working with both project and product managers!
I’m sure that by this point you have a solid understanding of the two roles and see that they are not the same and can't be neglected. In fact, both roles complement each other.
Project and product management together is a bit like… running a farm.
A product manager keeps in touch with the market and potential customers to understand what is in demand. Based on that decides what vegetables to plant, then ensures that farm workers know what is their end goal and everything goes according to the plan.
A project manager gets instruction from the product manager about what they want to produce for the autumn and takes care of delivering that: calculates the budget to buy seeds and pay workers, then manages workers to plant and harvest the best quality vegetables in time.
Project managers and product managers work closely with each other along with other members of their department to coordinate tasks so that all parties are working towards one goal: releasing an effective solution that matches clients' expectations.
If you are now motivated and want to learn more, we have a great article on how to become a product manager.