As we usher in the end user era, adopting a product-led growth model is how businesses can thrive, and not just survive, in it.
By the end of this year, over half (53.9%) of Southeast Asia’s (SEA) population will have a smartphone in hand. Led by Indonesia and Vietnam, the number of smartphone users in SEA will reach 326.3 million in 2022, which also accounts for 88% of all internet users in the region.
Undoubtedly, this presents a huge opportunity for companies with digital products. But while companies aspire to be the next Grab or Gojek, that sort of radical growth and eminence doesn’t happen overnight. There is no panacea that will create loyal customers and cement a brand’s importance in the eyes of increasingly demanding consumers.
But there is good news in the form of an almost-foolproof blueprint to long-term, sustainable business growth: product-led growth.
Similar to “growth hacking” a decade ago, product-led growth is a popular but frequently misunderstood concept. Adopting a product-led growth model requires a deep understanding of the approach – one shared across the entire company and not just within select teams like product or sales. With the right strategies in place, product-led growth can spur an unparalleled business transformation that turns the traditional growth model on its head.
Letting your product speak for itself
Product-led growth focuses on the product itself as the key revenue driver, and reduces reliance on marketing and sales teams to drive revenue. In the past, a customer might be entirely educated about a product through marketing materials or sales pitches. The internet has changed this, allowing people to research options, read reviews, make use of free trials, and decide for themselves if a product is worth the spend. More recently, we’ve entered the “freemium” era, where customers can use products at no cost but with limited functionality.
Of course, the prerequisite to implementing a product-led growth strategy is an obvious one – you need to have a good product. In this era of short attention spans and countless choices, your product should be easy to navigate and should meet customers’ needs from the get-go. If they decide to delete your app, chances are they might never download it again.
What makes a product “good”?
So how do you know if your product is “good”? The answer lies within the data. Oftentimes, you’ll see companies getting hyper-fixated on vanity metrics like page views and click-through rates, but many companies neglect — or don’t have access to — the metrics that provide deeper insight into customer behaviour. While marketing and sales are still essential for growth, even the best campaigns cannot make up for an inadequate product that is riddled with pain points.
Companies need to dig deep into product metrics which can reveal what users love, what needs work, and where they are getting stuck. Here’s what companies should look for:
- User activation. A good product should be easy to use, even for the most non-technical of customers. There shouldn’t be complicated processes or interfaces. Your customers should be able to use your product seamlessly and see its impact almost immediately.
- Product stickiness and user retention. Your product should be an essential part of your users’ daily habits. Whether a new customer downloads your product to buy stocks or to order their Friday night dinner, you want your product to solve their initial need so well that they keep coming back. For example, someone may first download a food delivery app when they’re too busy to cook dinner. But if they have a good first experience, they’ll come back to you the next time they want a fuss-free way to fill their stomach, until eventually you are their default option for food. But the journey doesn’t — and shouldn’t — stop there; product-led organisations constantly ask how their product can produce more value and remain something that people can’t live without.
- Monetization.While activation, stickiness, and retention are all imperative, a good product also needs to be monetized easily. This could be through having users make initial or repeat purchases, offering upgrades to a paid or higher-tier subscription, or with in-product advertising.
Cross-team alignment is crucial — and starts from the top
To truly enable product-led growth, companies must implement an organisation-wide product-led model. This requires a major culture shift, starting with the C-suite.
Product success must no longer be measured by output but instead by outcomes. Being output-oriented typically translates into a sometimes fruitless cycle of building new product features, without understanding the impact or value these features have for customers. Orienting on outcomes means focusing instead on specific metrics that help drive retention and business growth. For example, a grocery delivery company can focus on delivery speed as a metric for success.
Leaders need to create a top-down culture where the entire organisation is focused on outcomes. Everyone, not just the product team, must adopt a product-led approach. For example, chief product officers must get buy-in from their peers, not just those in marketing and sales, but the CEO and other company leaders, to successfully move a company from being marketing-led to being product-led. You need to have both top-down and cross-functional alignment for an outcome-oriented product-led growth strategy to work.
Courting freemium users to become paid subscribers
Convincing users to spring for the paid version of your product is tough, but it is critical for growth. Companies traditionally focus on growing from a small handful of users to monetizing their product and then scaling their customer base. Instead, they should focus on moving customers up the ladder of engagement. This means getting customers to take advantage of more features, ultimately moving from the freemium model to becoming paying customers, and eventually, brand ambassadors. This starts with piquing users’ curiosity about what else could be offered to them, and how else they could have a better user experience.
Some companies offer additional features and enhance the product experience for paying customers. For example, digital media companies might offer exclusive content for paid users that aren’t available to freemium users, while delivery businesses often offer faster delivery times or lower service fees for paying subscribers.
While adding value is a common approach to moving customers up the ladder, a different, frequently overlooked strategy is to remove pain points. Often, removing tension points that exist in the freemium model can be an even more compelling way to convince your customers that it’s worth paying for the product.
Making everyone accountable for product-led growth
Continual product improvement is essential for a sustainable product-led growth strategy, and meeting product-centric success metrics requires constant innovation and iteration to determine which features best meet the needs of the product’s target user base.
In a world that sees thousands of new digital products every week, understanding your product’s strengths and weaknesses and what your customers are able to achieve by using your product is critical. Business evolution is unavoidable. However, a product-first strategy is a timeless staple that can seamlessly take your organisation from one era to the next by continually refining a strong product so that it remains indispensable for users. To win in the digital-first era, organisations need to adopt — and hold themselves accountable to — a product-led mindset.
