How to Embrace Product-Led Innovation in 2024

Product-led growth (PLG) has gained significant traction in recent years for its ability to drive success across many facets of business. In a product-led model, your product itself drives customer acquisition, retention, and monetization. It focuses on creating high-quality products that offer exceptional value and user experience, leading to rapid and sustainable organic growth.

However, the true challenge of a PLG approach isn’t just in adopting new tools and technologies. Product-led innovation requires a fundamental shift in mindset.

Throughout 2023, I spoke with numerous product leaders across Australia—where I live and work—to learn about their experiences with product-led innovation. In this post, I distill my findings into five considerations relevant for business and product leaders across the globe as they go product-led in 2024.

1. Align around delivering customer value

A product-led approach isn’t something you just bolt onto your business. It starts with orienting all teams and resources around a central goal: delivering customer value.

In most cases, switching from a traditional business strategy, like a sales-led approach, requires redefining your business purpose. Doing so will give your teams a clear direction and shared goal, helping to boost morale, productivity, and efficiency. Identifying or redefining the ideal customer your new product-led approach serves is also essential. That way, you can tailor your products more precisely to meet the needs and preferences of customers.

If everyone operates from the same source of truth, they can move in the same direction. Company-wide alignment also means giving everyone access to the data they need to understand customers. A fuller understanding of customers enables teams to make decisions that maximize customer value.

Canva is a product-led graphic design platform founded in Australia that serves 170 million users worldwide. At Canva, data doesn’t just live in the hands of engineers. Teams across the organization—from growth to product to design—use Amplitude to run tests. Once different teams have tested their ideas, they all come together to determine the best way to help users complete their graphic design tasks.

2. Create sustainable growth by monetizing and building for scale

Given that your product is the primary driver for attracting and retaining customers, its ability to generate revenue (monetize) and meet increasing demand (scale) is essential for business success and growth.

Monetization involves making your product valuable and compelling enough that people are happy to pay for it at your price. The best path to monetization varies depending on the nature of your product and the market it serves.

Successful product-led organizations identify the “easiest” route to revenue, both for the organization and the customer. For your organization, that looks like identifying a revenue model that doesn’t require excessive effort or resources. For instance, with a SaaS product, a subscription model might be more straightforward and predictable than a one-time purchase or ad-based model.

On the customer side, your goal is to make the buying process as smooth and intuitive as possible. Analyze customer behavior and preferences to identify your business’s best product-led monetization strategy. Be aware of changing customer preferences and be open to adapting your monetization strategy. For example, at the start of 2024, automated workflow company Zapier expanded its lower-tier plans and switched to charging by task in response to customer feedback.

In successful product-led businesses, acquisition drives more acquisition as customers invite their friends, families, and colleagues to try your product. But if your product can’t handle a growing user base without losing quality or performance, then you have a problem. So, ensuring scalability in your business model is critical.

Kristen Mann, CPO at Prospection, an Australian health-tech analytics company, shares that transforming an organization from a service-led to a product-led strategy involves making several changes to prioritize scalability.

Before the transition, Prospection delivered much of its product value via consulting. “In many cases, customers might never actually log into the software, instead requesting insights and data from their account managers directly,” says Kristen. While the business delivered customer value, the model couldn’t scale without a significant investment in new staff.

The Prospection team knew it was essential to adjust their software so customers would feel confident using the tools themselves. The change meant deprecating some of their legacy offerings that would be too costly and difficult to maintain in the new model. They reduced the complexity of their software and rolled out a new platform built for the new international target customer they’d defined. One of Prospection’s new products won Gold and Silver in two categories at Sydney’s 2023 Better Future Design Awards.

3. Get a comprehensive understanding of your customers’ journeys

You’ve aligned your teams around delivering customer value, (re)defined your ideal customer, and you’re well positioned to monetize and scale—it’s time to focus on improving the customer journey. Centering decision-making around the user journey is a hallmark of successful product-led approaches. The ultimate goal: Create a seamless and intuitive experience that feels natural to the user.

Creating a frictionless product is vital to developing an intuitive experience. Gathering product behavioral data is a crucial step in this process. You can identify friction points in your journeys by exploring how users behave within your product.

Look for areas where users drop off or exit the product without completing a flow. Customer support queries or feedback forms can also highlight confusion or dissatisfaction. Empowered with this data, take action to simplify or improve the user experience at those points.

Let’s say data shows many users abandoning your product when they attempt to customize their dashboard. In response, you could test adding a guided tutorial that pops up when a user first visits the dashboard or simplifying the customization options.

Australian software company Atlassian uses Amplitude to test product changes. When they launched a new flow to onboard users to Jira, Amplitude enabled the team to analyze how customers responded to different parts of the flow and improve completion rates by over 75%.

4. Use data-driven insights to improve retention

Retention is a crucial indicator of how much customers value your product. Retention is especially important in a product-led approach because your product’s strength is fundamental to your business’s success. Yet high competition and growing customer expectations make retaining customers in today’s saturated digital environment challenging. On the other hand, this also presents an opportunity—you can use multiple digital touchpoints to keep customers engaged.

The most successful brands today create an engaging, customer-centric experience. Data and insights are crucial because they help organizations understand customer behavior, preferences, pain points, and what they need to do to retain users.

Take, for example, the mindfulness app Calm. Analyzing user data and behavior in Amplitude, Calm identified improvement areas and enhanced its offering. This data-driven approach enabled Calm to improve user engagement and reduce churn rates.

Data also opens the door to personalization. Grouping similar types of users into cohorts allows businesses to tailor their offerings, communication, and user experiences to align closely with varied customer needs. The better a company meets its customers’ needs, the more likely they will stay with them.

5. Craft a seamless customer experience across digital and brick-and-mortar spaces

In a business model centered around your product, providing a seamless, effortless, and lifestyle-aligned user experience is essential—regardless of where or how the product is procured or consumed. Today’s customers expect a consistent and unified brand interaction, whether online or in a physical store.

The most successful PLG approaches seamlessly integrate customer experiences across digital and physical channels and deliver consistent branding, messaging, product availability, and customer service standards across all platforms.

Support your product-led innovation with Amplitude

Adopting a product-led approach to innovation can fuel growth and dramatically transform your organization for the better. And although these observations are rooted in conversations with leading Australian companies, the recommendations are universal.

The true challenge in adopting a PLG approach is the fundamental shift in mindset required across the organization—but with these five steps and the right technology, you can easily overcome this challenge.

Experimentation and data are vital components of product-led success, and Amplitude empowers companies with the data they need to experiment and innovate. By continuously testing and analyzing customer interactions and feedback, you can create products that meet and exceed customer expectations, driving customer satisfaction and growth.