PLG Session#1 by Vakul Agarwal

Takeaways from the first session of TPF’s ”Product Led Growth” (PLG) cohort by Vakul Agarwal (VP Growth, Licious foods)

What is Growth? Why is it important?

Growth is crucial to the long-term survival of a business. It helps in acquiring assets, attracting new talent and funding investments. It also drives business performance and profit.

📝Revenue = Users x Wallet Share 📝

📝Wallet Share = Average Order Value x Frequency📝

~ Users can be both new and old
~ Cost metric — Cost becomes a check metric for growth. i.e. growth always comes at a cost

What is the difference between Average Order Value(AOV) and Customer Lifetime Value(CLTV)?

AOV is the average amount of money each customer spends per transaction with your store. You can calculate your average order value using this simple formula:

📝AOV = Total Revenue / No. of orders📝

CLTV tells you how much each customer is worth over the course of their entire relationship with your business. If this number is low or decreases, you’ll want to focus on customer retention

B2B — Users will be less; frequency, retention and AOV would be the major metric
B2C — User growth becomes really important

By growth, we usually mean sustainable growth and not growth at a cost where the EBITDA is very high.

EBITDA — Profit incurred by the business after paying out the expenses

What is Product-led Growth?

Important questions to ask →

1. What is the user need that the product is trying to solve?
   Identifying the problem/user need that the product is trying to solve is the most important part of ensuring growth
2. What is the overall TAM and penetration for the product?
   Calculate the TAM and penetration of the product, which can be used to calculate TAM remaining
3. Awareness of users towards the product?
   Use referrals, discounts, distribute pamphlets, in other words marketing the product
4. How to increase conversion once the user is acquired?
   Positive behaviour of shopkeeper/customer support, Ensuring availability of product assortment, providing a good customer experience
5. How to keep users engaged and increase revenue?
   Ensuring solving the use case for a long term, loyalty programs

TAM — Total Addressable Market; tells what number of users might need the product/service you are offering
Penetration — Amount of market captured

Types of Growth

1. Sales Led
2. Marketing Led
3. Product Led

eg. Unilever- Marketing led; Amazon, Blinkit, Zomato, Swiggy — Product and Marketing led; Clevertap, Microsoft — Product and Sales led; BYJU’s — Sales and Marketing led

“Never think of Growth in silos”

When is Growth achieved in a startup?

When value proposition resonates with users’ underserved needs, also called as Product-Market fit.

Good metrics to measure growth

1. Retention,
2. Organic acquisition, eg. Word of mouth,
3. Net Promoter Score

NPS: How likely is a user to recommend a friend or a family to use the product

How to start with product-led growth?

→ Understand consumer needs well
→ Map various user touchpoints in the user journey
→ How best you are solving each user interaction in the user journey, i.e. Maximize value by providing better UX

For a company into groceries, the three important levers are :

1. Savings,
2. Assortment (number of different items you can buy),
3. Convenience (Home delivery, Time/Quick delivery).

For example, DMART focuses on consumer savings and assortment;
Amazon on the other hand provides assortment and convenience, i.e. by providing options like home delivery;
startups like Zepto and Blinkit focus largely on providing convenience to the consumers by offering delivery options like 10-minute delivery.

How to adopt a Growth Mindset?

1. Promoting the culture of Experimentation
2. Embrace Failure and Feedback
   Do we have fear of failure or do we encourage failure so that we learn and do something better than that?
3. A bad decision is better than no decision

To summarize, product-led growth can be ensured and achieved by keeping the following points in focus:

1. First principle thinking
2. Knowing your consumers really well; talk to representatives, customers
3. Know your mission; have clarity on what needs/problems you are trying to solve