For a surprising number of companies, the pandemic turned out to be an economic boon. Our behavior shifted radically over the last few years, and companies like Zoom, Slack, Shopify, Netflix and Square were all there—perfectly positioned for those changes. Many experienced hypergrowth as a result.
Who doesn’t want that? These services were well-positioned to take advantage of the shift to remote work and online activities. None of these companies were guaranteed to succeed. What makes these companies stand out?
In short, Zoom, Slack, Netflix and the like all share a common focus on product-led growth, often referred to as PLG for short.
These companies were able to experience hypergrowth during the pandemic by delivering an exceptional product experience that meets customers’ needs in a rapidly changing environment. By focusing on product-led growth, these companies were able to weather the challenges and emerge as leaders in their respective industries.
It’s also a focus I’ve put into practice as the Chief Growth Officer of Tynker, an edtech coding platform for kids and teens. This strategy provides a path to sustained revenue growth by delivering an exceptional product experience that drives customer acquisition, engagement and revenue.
As a result of this approach, we’ve been able to get much more out of our organic traffic and paid efforts. It requires work, of course—but the results have been eye-opening in short order.
In this article, I want to share three crucial points you should consider when drafting your successful PLG strategy.
1. Ask the right questions to evaluate PLG’s success.
Here are some key questions that can help assess the success of a product-led growth strategy and where to focus when implementing one.
How well is our product meeting customer needs and solving their problems?
2. What is our customer acquisition cost, and how is it trending over time?
3. What percentage of our growth comes from product-led channels like word-of-mouth and organic search?
4. How effectively are we using data and analytics to drive product decisions and inform the go-to-market strategy?
5. What is our net promoter score, and how has it been trending over time?
6. How well are we retaining and growing our existing customer base?
7. What is the feedback from our customers on product features, and how can we improve?
8. How well do we integrate product, marketing and sales efforts to drive growth?
9. How do we build cross-functional solid alignment across the organization to execute PLG strategy?
10. What are the metrics to measure success and set the right expectations with key stakeholders?
Answering these questions can provide insights into the effectiveness of a product-led growth strategy. Consider how your company performs along these lines. Identify one or two minor tweaks to the product experience that might lead to improved KPIs. Even starting small is better than not starting PLG at all!
2. Embrace innovation as a critical component of PLG.
Innovation is a critical component of PLG. A product-led growth strategy requires continually delivering new and improved experiences to customers. Tweaking, testing and measuring parts of the user experience helps us keep our users more engaged and drive growth, even as we enter a period of increasing consumer thriftiness. This requires a culture of innovation where new ideas are encouraged and rapidly tested—and failures are seen as opportunities to learn and improve.
And while Tynker has constantly innovated regarding the education experience, it’s clear now that focusing some of our innovation efforts on the user experience, onboarding and so on can deliver significant dividends on the revenue front, enabling continued growth amid economic growth uncertainty.
Product-led growth and innovation are essential components of a successful growth strategy, regardless of external economic conditions. By putting the customer at the center of the growth strategy and continually delivering new and improved experiences through innovation, companies can attract and retain customers, drive customer engagement and achieve sustainable revenue growth. By focusing on PLG, companies can also reduce their dependence on increasingly costly customer acquisition efforts like paid media and minimize the impact of economic downturns on their growth.
3. Build a community that adds value to your customers.
While having an enthusiastic customer base is excellent, if you can turn that user base into a community capable of supporting one another and sharing knowledge, you have the potential for a home run. “Traditionally,” as Andrew Chen writes, “the playbook for building network effects has been the following: Get users onboard, connect them, and have them create content and conversations.” Following this playbook can help you amplify your product among organic users.
With relatively little effort from your company, a community can add exponential value to your users. These days, establishing a community may be as simple as setting up a Facebook group for verified users to talk with each other, monitoring that and engaging where appropriate. Tracking the amount of user-generated content and the number of members provides a window into your community’s health.
At Tynker, we’ve focused on building a community around the 60 million kids who use our platform to learn how to code. Our platform allows kids in the Tynker community to publish and rate each other’s creations in a kid-safe way, inspiring kids to create more coding projects. Invariably, this leads to discoverability through better SEO with user-generated content, which brings in more kids, which means more kids discover coding, further driving subscription growth.
Follow the data—this will help identify the features that are your selling points.
This can show you where to focus your R&D for future iterations. And with a PLG strategy, reinvestment in your product is the key to everything.
As businesses look for more cost-effective ways to grow, a product’s value proposition that delivers a great customer experience becomes increasingly compelling—and customers are less likely to “churn.” This creates new opportunities for companies that have embraced PLG and innovation to differentiate themselves from their competition and achieve sustained growth through whatever economic waters happen to be flowing through the moment.
This article first appeared on Forbes
