Product-Led Growth Guide Volume 2

How to Get Started with PLG

Learn how to increase product-led acquisition, retention, and monetization with PLG tactics and metrics from over 30 industry experts.

Table of Contents

                        What Does PLG Look Like in Practice?

                        It’s one thing to talk about PLG. But what does it look like in practice? Why do some businesses succeed—and why do others fail?

                        Often it comes down to whether teams clearly understand their role and the value their product provides users. On a practical level, that means investing in the analytics and research necessary to test hypotheses about those questions. Those teams “end up having the most creative approaches to allowing their product to drive growth for their organizations,” observes former Amplitude Product Analytics Lead Storm Hurwitz.

                        He held up dbt Labs, the maker of the analytics engineering tool dbt, as an example of a business getting it right. The organization broke through by creating a product that speaks directly to its users’ top problem: making data modeling more flexible and accessible. Perhaps even more critically, Hurwitz noted, dbt labs knew prospective users “needed to experience it at volume before paying for it.” To do that, it offers a free version users can add to their stack before upgrading and phasing out their existing tool.

                        Of course, this is easier said than done; there are plenty of pitfalls when shifting from a sales-led to a product-led motion. Your monetization strategy, in particular, needs to shift as the key indicators of value shift for users. In other words, your product needs to deliver as much or more value than the customer service you currently provide. Otherwise, you might run the risk of losing users.

                        Another misstep that might sink an attempt at going product-led: continuing to build for an enterprise user base. “If you don’t have an understanding of free users, you can’t drive PLG with them,” Hurtwitz says. Former Amplitude Principal Growth Manager Andrea Wang agreed, adding that free users won’t convert to paid if there’s little difference between pricing plans or the prices don’t land well.

                        One market segment we focus on—SMB and mid-market, or companies with fewer than 1,000 employees—is price sensitive and hesitant to enter into traditional sales negotiations. They would rather go the ‘self-checkout’ route, trying Ironclad on their own and making a purchase with a credit card.

                        Nick Pavlichek, Senior Product Manager, Ironclad

                        But as with any strategy, there are limits. With PLG, businesses have to reckon with the smaller deal sizes. There's a limit, after all, to how much people will buy with a credit card, as Amplitude VP of Global Marketing Ashley Stepien put it. And that’s where volume comes in.

                        “You have to drive far more users than an enterprise company that could maybe survive on doing ten deals a year because they're seven-digit deals,” she says, “which is why it's so important to create that alignment with sales,” and encourage them to see product-led growth “as a channel and not a limitation.”

                        Stepien also cautioned that a product-led approach can change the dynamic of customer relationships, making them more transactional and less enduring. The best way to mitigate that? Stepien urges businesses to cultivate a community around their products that keeps customers returning.

                        Instead of a “one-to-one relationship between a customer success manager and a customer,” she says, it’s a “one-to-many relationship between a user and other users in the community” in the mold of Webflow or Figma.

                        And sometimes, PLG is not the answer at all. If your organization isn’t ready, putting the strategy into practice can do more harm than good. Before adopting PLG, consider the following conditions from Verna. If any apply to your organization, hold off on implementing it:

                        • Current sales and marketing-led motions aren’t predictable.
                        • Customers can’t activate the product on their own.
                        • The product value isn’t immediately apparent.
                        • Enterprise buyers have all the decision-making power.