How to Create a Product-Led Growth Strategy?

Userpilot Team
10 min readJun 17, 2024

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Learning how to create a product-led growth strategy can transform your business.

But where can you get started to start driving growth and success?

Let’s explore what a product-led growth strategy and its benefits are, and look at different strategies any SaaS can create and implement.

TL;DR

  • A product-led growth strategy is an approach where the product itself drives user acquisition, expansion, and retention.
  • Product-led growth strategy delivers value through the product, leading to increased satisfaction, retention, lower acquisition costs, and faster scaling.
  • While product-led growth focuses on delivering a great product experience. Marketing-led growth focuses on expanding brand awareness and generating leads through content and ads. Meanwhile, a sales-led strategy is all about nurturing prospects, scaling the sales team, reaching out, and closing deals as a means of growth.
  • There are three pillars for building an effective product-led growth strategy:
  1. Customer Acquisition: Attract users through the product’s intrinsic value and features.
  2. Customer Retention: Keep users engaged with continuous product value.
  3. Expansion: Drive growth through satisfied users advocating for the product.
  • Let’s go over the steps to build a product-led strategy:
  1. Define your ideal user: Conduct market research and create user personas to design an effective product-led strategy.
  2. Build a user-centric product: Design a seamless onboarding process and personalize the user journey to elevate the product experience.
  3. Optimize for customer acquisition: Implement free trials and growth loops to attract users continuously.
  4. Drive customer retention: Provide continuous value and engage users regularly to retain users.
  5. Measure success and improve: Track key product metrics and use data analytics to make informed decisions.
  6. Create company-wide alignment: Involve stakeholders and encourage cross-functional collaboration to aim all the team’s efforts into achieving growth-related goals.
  • Here are some examples of product-led strategies from other SaaS companies:
  1. Slack’s freemium model lowers the barrier to entry, driving user base growth.
  2. Dropbox’s referral program leverages word-of-mouth to expand its user base.
  3. Zoom’s viral growth loop organic growth through user invitations.
  4. Canva’s user-generated content enhances engagement and attracts new users.
  • Book a Userpilot demo to see how you can implement an effective product-led growth strategy without relying on the dev team!

What is a product-led growth strategy?

A product-led growth strategy is an approach in which the product itself drives user acquisition, expansion, and retention. It means that the company’s products are designed so users can easily discover its core features without needing assistance from sales or customer success teams.

A product-led mindset operates under the premise that if the product is good at satisfying the market’s needs, users will convert into paying customers when given the chance to experience the value of the product for free.

What are the benefits of a product-led growth strategy?

Product-led growth focuses on delivering value through the product, leading to sustainable growth. It improves the product to meet user needs, fostering loyalty and driving organic growth through word-of-mouth and user advocacy.

As long as you follow the right product-led growth strategy, it will offer several benefits, including:

  • Increased satisfaction and loyalty. Focusing on the product and its value leads to a better experience for users, which can result in increased customer satisfaction and brand loyalty.
  • Higher retention rates. Product-led companies tend to have better retention rates because they focus on creating a product that customers love and want to continue using.
  • Lower customer acquisition cost. Since the majority of customer growth comes from word-of-mouth and referrals, attracting new customers is cheap.
  • The potential to scale faster with fewer resources. When focusing on creating a great product that customers love, companies can grow faster and more efficiently by lowering entry barriers and giving users free access to the product.

Marketing-led growth strategy vs. product-led growth strategy vs. sales-led growth strategy

Although SaaS businesses can adopt multiple growth strategies, some growth models are more fitting for different purposes and business models.

On a sales-led model, growth depends on big sales teams that can bring SQLs (sales-qualified leads), nurture them, and close as many contracts as possible. This model is mostly for enterprise-level products, where the person responsible for the purchase decision is different from the person using the product (i.e., the user).

When it comes to a marketing-led strategy, there’s an emphasis on attracting and converting a high volume of potential customers through the marketing funnel (i.e., getting as many eyeballs on your product as possible). This can involve creating content, investing in paid ads, and boosting brand awareness.

With a product-led approach, though, users don’t need to reach out to a sales rep to book a demo. Instead, they’re free to explore the product and let it do the sale. And if the product is so good that users can’t help but recommend it, it will expand the customer base through word-of-mouth.

Marketing-led growth strategy vs. product-led growth strategy vs. sales-led growth strategy
Marketing-led growth strategy vs. product-led growth strategy vs. sales-led growth strategy.

What are the 3 pillars of the product-led growth strategy?

A product-led growth strategy is built on three fundamental pillars: customer acquisition, customer retention, and expansion.

These pillars ensure that the product itself drives growth by attracting new users, keeping them engaged, and encouraging them to expand their use of the product.

That said, let’s go over them:

Product as the main source of customer acquisition

A good product attracts users through its intrinsic value and features. By offering a compelling user experience that encourages trial and adoption, the product naturally brings in new customers without relying heavily on traditional marketing tactics.

Some tactics for this include:

Product as the primary source of customer retention

Continuous value delivered by a great product experience keeps users engaged and loyal. For example, regular updates, solving user problems, and maintaining high usability ensure that customers find lasting value in the product, which promotes long-term retention.

The tactics you can follow for this involve:

  • Regularly releasing new features and improvements.
  • Providing in-app support and resources.
  • Fostering a community around the product.

Product as the primary driver of expansion

Satisfied users upgrade and advocate for the product, driving revenue growth. By encouraging upgrades and word-of-mouth, the product not only generates more revenue but also expands its reach and impact.

This is what you can do to incentivize product expansion:

  • Offer tiered pricing and premium features.
  • Implement upsell and cross-sell strategies.
  • Encourage user-generated content and referrals.

How to create an effective product-led growth strategy?

Creating an effective product-led growth strategy involves several key steps that ensure your product is at the center of your growth efforts.

Now, let’s look at a step-by-step process to implement a successful product-led growth strategy:

1. Define your ideal user

Defining your ideal user will guide the development and product marketing efforts toward those who will benefit most from your product.

For this, start by conducting thorough market research to understand the demographics, behaviors, and needs of your target audience. Then, create detailed user personas that represent different segments of your potential user base.

As a result, you can prioritize features that solve their problems and create marketing campaigns that resonate with them — leading to improved user acquisition, satisfaction, and retention.

how to create a product led growth strategy user persona
Example of a detailed user persona.

2. Build a user-centric product

A user-centric product prioritizes the user experience, meets customer needs, and aligns with the market’s demands.

To build a user-centric SaaS product, there are a bunch of best practices, including:

  • Designing a seamless onboarding process that helps users quickly understand and derive value from your product.
  • Personalizing the user journey by leveraging data to provide relevant content and features.
  • Develop functionalities that address the pain points and requirements of your users, ensuring that your product remains indispensable to them.
  • Continuously iterating based on user feedback and behavior analytics.
  • Engaging with your users regularly to gather insights and make improvements that keep your product aligned with their evolving needs.

This way, you can build a product that not only attracts new users but also retains and delights them over the long term.

3. Optimize your product for customer acquisition

Product-led customer acquisition requires you to demonstrate your value proposition early in the user journey.

To do this, you need to make it easy for new users to experience the core benefits of your product without friction. Which can involve:

  • Implementing free trials and freemium models to lower the barrier to entry.
  • Design a growth loop where users are incentivized to invite others.
  • Using analytics to track onboarding success and identify areas where users might drop off. And then refine the process to improve conversion rates.

When providing a compelling initial experience, you increase the likelihood of users converting to paying customers — driving more acquisition in the process.

4. Drive customer retention

Product-led businesses increase customer retention by delivering continuous value and ensuring users are consistently engaged.

To do this, it’s necessary to focus on making your product an integral part of your users’ workflow or daily routine.

  • Hosting webinars, offering educational content, and maintaining active communication channels can help in keeping users informed and satisfied.
  • Regularly update your product to include new features and improvements based on user feedback.
  • Provide exceptional customer support and proactive communication to address any issues before they lead to churn.
  • Engage users with regular updates and new features that add value, ensuring they have a reason to stay and continue using your product.

When focusing on user needs and continuously enhancing the product, you can maintain high levels of customer retention.

how to create a product led growth strategy  webinars
Userpilot webinars.

5. Measure the success of your product-led strategy and improve

In a product-led strategy, it’s essential to measure your success and find opportunities for improvement.

To do this, start by using a comprehensive analytics dashboard to track key product metrics. These can include:

With the right KPIs, you can A/B test different in-app experiences to determine what drives better results. As a result, you’ll be able to identify which features are most popular or which user segments are most valuable.

how to create a product led growth strategy analytics
Going through a product dashboard with Userpilot.

6. Create company-wide alignment

Creating company-wide alignment ensures that all departments are working towards common goals, enhancing the effectiveness of your product-led strategy.

To achieve this alignment:

  • Involve all key stakeholders in the strategy development process and communicate the vision and goals.
  • Incentivize open communication, set shared objectives, and encourage collaboration between teams.
  • Book regular cross-functional meetings to keep everyone on the same page and focused on the product’s success.

As a result, every team’s efforts will contribute to the overarching business strategy.

Examples of product-led growth strategies

Now, let’s go over some product-led strategies from other SaaS companies:

Slack’s freemium model

Slack’s freemium model allows users to experience the core functionality of the platform at no cost.

This approach significantly lowers the barrier to entry (resulting in a larger user base). And as teams grow and require more advanced features, they are likely to upgrade to paid plans, driving revenue growth.

Plus, Slack’s intuitive interface and seamless communication features make it easy for users to see its value quickly — which further enhances user acquisition and retention.

how to create a product led growth strategy slack example
Slack’s freemium plan.

Dropbox’s referral program

Dropbox’s referral program incentivizes existing users to refer new users by offering additional storage space as a reward.

This strategy leverages word-of-mouth and user networks, leading to exponential growth and a broader user base without significant marketing expenditure.

As a result, the simplicity and effectiveness of the referral program make it easy for users to participate and share — contributing to Dropbox’s rapid expansion and increased user engagement.

dropbox referral
Dropbox’s referral program.

Zoom’s viral growth loop

Zoom’s viral growth loop capitalizes on the collaborative nature of its product.

Since users are needed to invite others to meetings, they inherently spread the product to new potential users — resulting in organic growth and widespread adoption.

That said, Zoom’s high-quality video conferencing and ease of use make it a popular choice, and the need for participants to join meetings ensures that new users are continuously introduced to the product.

Zoom meetings
Zoom’s meeting schedule.

Canva’s user-generated content

Canva’s user-generated content repository showcases how other users make use of the platform — providing inspiration and proof of value to potential users.

This strategy not only enhances user engagement but also acts as a powerful marketing tool, efficiently demonstrating the product’s core value proposition.

As a result, Canva can build a community around its product, encourage more users to share their work, and attract new users through authentic UGC.

canva ugc
A creator profile in Canva full of UGC.

Conclusion

As we explored, adopting a product-led growth strategy can significantly enhance user acquisition, retention, and expansion for your SaaS business.

By focusing on delivering exceptional product experiences, you can drive sustainable growth and long-term success.

But what if you don’t have the time and skills to implement product strategies? Then book a Userpilot demo to see how you can implement an effective product-led growth strategy without relying on the dev team!

Product-led growth strategy FAQs

Let’s address some common questions about how to create a product-led growth strategy.

What is a product-led growth model?

A product-led growth model uses the product itself as the main driver for acquiring, retaining, and expanding the customer base.

What is a product-led growth example?

An example of product-led growth is Slack’s freemium model, which allows users to experience the product before committing to a paid plan.

How many companies use product-led growth?

According to ProductLed’s SaaS growth benchmark, as many as 58% of B2B SaaS companies have adopted a product-led growth strategy.

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Userpilot Team

Userpilot is a Product Growth Platform designed to help product teams improve product metrics through in-app experiences without code. Check out userpilot.com