Software as a service, more commonly known as SaaS, is a leading industry shaping the world. SaaS companies started popping up almost two decades ago after salesforce paved the way with its CRM, built from the ground up.
Compared to other types of companies, the SaaS business model is quite different as the strategies, technology, and products are all different. Besides being a different industry, SaaS is constantly evolving due to technology innovation.
In fact, what was once the norm of the SaaS industry has now become obsolete. The industry’s dynamic nature keeps companies on their toes and fosters healthy competition.
Recently, SaaS companies have started paying all their attention to Product-Led Growth (PLG) and transformed their entire model from sales-led growth. Companies like Cava, Figa, Notion, and Slack are solely PLG-based.
But how are PLG companies different from sales-led companies?
However, before jumping to the answer, one must know what PLG is.
What is PLG?
It is a unique business strategy designed to focus on the product the company is offering rather than making the growth dependent on sales. Herein, the primary objective is to improve the product’s value proposition, acquire more customers, and expand the business.
The sales-led growth model puts pressure on the sales department to close deals and convince people to buy the product. On the other hand, PLG is responsible for the product’s success in all departments across the board. When the prospects realize the product’s value, they will be more inclined to become customers.
So, how are PLG companies different from sales-led companies? Read on to know.
- Self-motivated Usage
In this model, the customers or the prospects use the product as it solves a problem for them. By using the product, they learn more about it which increases the chances of becoming a customer.
Commonly, the users educate themselves about the product and explore its various features.
So, by learning and using the product, the users can determine its value in their lives.
The organization does not have to spend money onboarding customers by following the PLG model. But, the organizations focus on making the product so convenient that users can help onboard themselves.
For instance, users can sign-up, learn and start making their designs on Canva within minutes.
Besides giving the user the satisfaction of learning about the platform on their own, the sales cycle also becomes short.
Usually, the organizations have to introduce the product and give a demonstration, but in PLG products, the prospects are already informed about the product’s features. It helps in bringing down the customer-acquisition cost.
So, the organization can make sales quicker and reduce the number of people needed in the department.
The entire PLG approach is based on users only. The product’s user experience determines the users’ satisfaction, translating to better sales. The organizations work towards building a higher perceived value of the product for sales conversions.
A PLG approach puts the reins in the hand of the consumer and pulls them towards the product by offering an unparalleled value proposition.