The 4 main principles behind product-led growth
There are some principles to consider behind product-led growth: leveraging product need, using that need to expand, and using your product to retain and acquire customers.
1. Leverage your product need
Building an original product isn’t easy, but once you’ve built something that satisfies the needs of entire markets, you know you’re on the right track. Take Dropbox for example. It developed a product people desperately needed—easy file sharing. Dropbox used the need for its software as leverage in its growth strategy. I’ll unpack Dropbox’s product-led growth success later in this post.
2. Use your product to expand
If customers love your product, upselling and cross-selling become easy. Upselling and cross-selling are the primary drivers of expansion revenue. You can upsell customers by upgrading them to a larger plan, and you can cross-sell customers additional features to augment the service they already have. You can leverage your product value to build revenue beyond the primary product.
3. Keep retention high through product satisfaction
The key to product-led growth is keeping retention as high as possible, and churn as low as possible. You do this by simplifying onboarding to ensure customer success and making your product indispensable in a customer’s daily life.
4. Acquire new customers through strong referrals
Acquiring new customers is easier when they learn about you through word of mouth. Take G Suite for example. Google doesn’t employ an “in your face” referral approach—it’s subtle. You can send anyone a Google Doc. Non-Google users don’t have to join Google to view the document, but it would make idea-sharing much easier. Consequently, obtaining it makes it and easy and logical choice. Google’s product is easy to use and share; once one person sends a link, the product spreads like fire. Today, universities, organizations, and individuals rely on G Suite products for daily tasks.