The Product-Led Growth (PLG) Collective, a community that promotes products as the 'biggest lever of growth', says sales-led and marketing-led philosophies have had their time - and the future is product-led philosophy.
The two biggest success stories of the product-led SaaS philosophy in recent years include the financial services and software company, Stripe, and the cloud communications platform, Twilio (we’ll look at both in this article).
These companies are pioneers of the product-led approach through their meticulous emphasis on the customer journey and the need for quicker, simpler, customer experiences.
First, what does it mean to be product-led?
Companies that are product-led put their products at the heart of their customer strategies. A good example is Figma, which employs a product-led solution to graphic design pain points like team collaboration and file management.
There are alternatives to being product-led:
A company with a sales-led approach will adapt their sales pitches to developing unique solutions for each customer. However, many companies have shifted away from sales-led approaches to focus more on the value proposition of their products as opposed to a purely sales-based approach which can neglect the customer experience.
Companies adopting this approach perform their market research first, invent a product based on their findings, then reach out to prospective customers. A marketing-led company will be too focused on acquisitions, whereas one using the product-led approach will pay close attention to activation and retention, as well as acquisition.
How Stripe succeeded by being product-led
- They give developers the freedom to explore the product now
Stripe knows that developers want to start exploring its products right away.
They do not have time to deal with the bureaucracy of chatting with salespeople or signing a contract before they can start experimenting with the product.
So, Stripe grants customers the freedom to explore and try products before they buy.
This does two powerful things:
- It de-risks the product for the customer, and
- It shows that Stripe isn’t afraid to let customers try their platform. This builds trust.
Ease of use
In a recent blog post, James Allgrove, the former head of the US East Coast at Stripe, said the only way to convince a developer to consider your product is to make it as easy as possible for them to experience its value.
This means SaaS companies need to 'unblock any challenges' developers might face, focus on a collaborative, product-led strategy, and ensure their sales strategy is aligned with their customers' buying habits.
- Seamless checkout experience
For example, EasyParcel, which aggregates delivery services in parts of southeast Asia, chose Stripe because its payment process was integrated into its software, negating the need for secondary payment gateway redirections.
EasyParcel also benefited from Stripe's uninterrupted checkout progress, which does not involve bank selection or multiple redirects.
- Being obsessive about the customer experience
Patrick Collison, Stripe Co-Founder and CEO, said that after the lockdowns began in March 2020, businesses launched on Stripe had generated over $1 billion in aggregate revenue. In a later tweet in August 2020, he said that number will shortly pass $10 billion.
How did Stripe achieve such rapid success during the biggest global economic and health crisis for decades?
- Going above and beyond the established model
It is Stripe's unique, customer-centric approach that has enabled it to attract its biggest accounts. For example, Stripe would send welcome packages to new customers, which would be shared widely on social media, along with Stripe-banded T-shirts and stickers.
While Stripe also sought to evaluate how customers pay for products online to create a more seamless experience, it did not just stop there. The company also looked at the bigger picture, such as the experience of the customers of your customers.
- Seamless product integration
Stripe works behind the scenes, so when you pay for a service, you do not have to leave your company's website (the company selling the product you are paying for).
This is in stark contrast to PayPal, which requires you to sign in to your account or to checkout as a guest to pay for a product. This created a seamless experience for the user. No time wasted having to log in to another company. No page redirects. A simple, hassle-free buying process without any interruptions.
And how did Twilio succeed?
Launched in 2007, Twilio was used by more than 7 million developers and over 172,000 customers by 2019. The founder and CEO, Jeff Lawsons, said there is a 'Darwinian evolution' happening in which a company will win against its competition if it hires software developers, listens to its customers, and builds a better customer experience.
API (Application Programming Interface) has taken the world by storm
Traditionally regarded as a temporary solution, APIs are now an essential part of any SaaS strategy for companies that want to focus on product differentiation.
A report by IDG in 2018 found that 73% of SaaS organizations were already using one or more API applications as part of their computing infrastructure in the cloud. A follow-up report in 2020 found the figure had increased to 81%!
Digital engagement, digital agility, and a digital scale
- Twilio gives users the freedom to engage with customers through a variety of channels (voice, chat, video, etc,) with a great deal of flexibility.
- APIs also enable the company to build software quite quickly, which is important for companies that need to adapt to market changes fast.
- Twilio also offers cloud solutions, in which software is built, pushed out to the cloud, and is not dependent on capacity planning or servers. It works everywhere.
A core product that can be adapted to different organizational needs
Twilio also created developer and admin tools that helped it customize its core product so that enterprises could use it as they see fit.
Other features, such as 'advanced monitoring' to prevent security issues, and the 'Application Monitor and Request Inspector' for 'error analytics', are extremely valuable for companies that need to improve their security and compliance.
Key takeaways from this blog:
- Make sure you invest in your product design and your customer experience from the word go
- Make it as easy as possible for developers to integrate into your product
- Create a seamless experience that cuts out all those customer annoyances (or keeps them to a bare minimum, at least)
- Create thoughtful, generous welcome packages that make your customers want to talk about you to their peers (word-of-mouth marketing)