Theresa Anderson, Head of Marketing at Agorapulse, has led agency and in-house corporate marketing teams for over 20 years.
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Regardless of your current marketing strategy, the idea of product-led growth (PLG) is a hot topic. Spend a few minutes on LinkedIn or attend an industry event, and the passion for PLG is palpable. That said, founders don't build their businesses around a go-to-market (GTM) strategy on hype alone. Choosing PLG requires careful evaluation of whether the strategy is right for the product, audience and market.
Over my 20-plus-year career in marketing, I have had the good fortune to work with many talented and visionary entrepreneurs. Collaborating with them to bring their business to market meant channeling their passion into a workable go-to-market strategy. Time and time again, the biggest challenge wasn't getting started, it was evolving the strategy to keep pace as circumstances, both internal and external, changed.
Every go-to-market strategy has nuances that make it the right choice when launching a business, but what about after year one? Or year five? How do you know if it is time to evolve our go-to-market strategy, more specifically, how do you know you have outgrown PLG?
PLG: The Hype And The Hope
There is no doubt that the C-suite and investors are enamored with PLG. As far as go-to-market motions go, PLG aims to solve some of the problems for buyers and businesses, especially in tech and SaaS. As a customer, PLG means the entire system is set up so I can self-educate and self-serve: I visit the website, understand the value prop and see the UX in action. No live demos, no sales calls and no complicated onboarding process.
For the company, PLG holds the potential for higher margins, lower customer acquisition costs and fewer barriers to entry, which is especially appealing for startups in bootstrapping mode. For tech-savvy CEOs, PLG means they can lean on the product to grow, which often leans into their strengths and comfort level.
Everyone loves a good tech-success story, and PLG sits at the center of some impressive growth of the last decade. For example, Figma raised $40 million in 2019 with an additional $50 million in 2020. In 2022, the company was acquired by Adobe for $20 billion.
Is PLG (Still) Right For You?
For companies engaged in PLG, the self-serve nature can easily lull leadership into a “set it and forget it” mindset. Some of the best advice I read on this topic was from the book Move by Sangram Vajre: Treat your GTM strategy (including PLG) as a product instead of a revenue play.
Frame PLG as a living, breathing entity that exists within a complex ecosystem. Any change, from within or without, has to be monitored with the same love and care you give your product.
PLG, like all go-to-market motions, needs constant monitoring and updating to operate at peak performance. That includes regularly gathering feedback from internal teams, customers and prospects. It means keeping a watchful eye on the market and your competitors. Just like with any product in development, these anecdotal insights can be the first clue that it is time to reexamine your go-to-market approach.
Big, organizational changes are another sign to watch. In the last year, did you:
• Launch more complex features?
• Target a new audience or use case?
• Update the brand, positioning and/or messaging?
• Make the decision to go up or down market?
• See competitors entering and/or leaving the market?
• Shift internal resources (add/remove staff, departments and/or tools)?
Answering yes, to any of the above, could be a sign that you need to reevaluate what you are doing.
Round out your review with data. Check your CAC, churn rates, NRR, website traffic/conversions, revenue growth and LTV. Swings in any of these areas, up or down, could be a critical part of deciding if your PLG strategy is performing at peak effectiveness.
If I could only look at one of these metrics, I would focus on churn. Customers leaving prematurely can be an early indicator that the messages at the top of the funnel are not being realized by customers after the sale is done. It would be easy to call this a marketing problem, or a sales problem, but it's not.
What makes go-to-market magic is focusing on happy customers. Happy customers stay longer, expand their accounts and, ultimately, become advocates and referral sources. This kind of long-term, repeatable growth can't happen when you're marketing to get the lead or selling to hit your number. In the end, if clients aren't seeing the return on their investment they envisioned at the top of the funnel, they will leave, and your growth will go with them.
Don't Dump PLG; Diversify
No matter what you discover during your go-to-market audit, it doesn't mean you need to chuck PLG in the bin and start over. The most successful companies in the world run on more than one GTM motion at a time. Adding a GTM motion (or two!) to reflect your current audience, product and market allows you to make the most of today's efforts while rising to the challenges tomorrow will bring.
There is no doubt that PLG deserves some of the hype surrounding it, but it is not the be-all, end-all methodology for all businesses, in all situations or for all time. It is important to constantly evaluate its effectiveness and move quickly to replace it or augment it when the time is right.
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