Week 26, 2020
Product-Led Growth: Purchasing Power, Personal Needs, and Growth Models
Each week I share three ideas for how to make work better. And this week, the topic is innovation and Product-Led Growth.
Why am I writing about this? Perhaps you’ve heard of it? Product-Led Growth (PLG) is all the rage right now — at least within the tech and Product Management circles that I peruse. And the backstory is quite interesting. Here’s what you need to know:
1. Purchasing Power
The way companies buy software has changed. It used to be that executives would make the purchase decision based on carefully crafted ROI calculations. But today, end-users are in the driver’s seat. Says Dropbox in a recent S-1 filing: “As individuals increasingly choose their own tools at work, purchasing power has become more decentralized.”
2. Personal Needs
The ramifications haven’t been lost on companies like Atlassian, Slack, Zoom, or Dropbox. They’ve realized that the B2B playbook of old — with its white-papers and hour-long product demos — are out the window. The end-user era is decidedly B2C. And end-users are a lot more concerned with their personal productivity than they are about company ROI.
3. Growth Models
The end result is that the traditional funnel has been turned on its head. Atlassian et al no longer lead with sales and marketing. How could they? Their target market just went from “a few” business execs to every knowledge worker on the planet! Instead, they lead with product — enabling end-users to solve narrowly defined tasks for themselves and, later, their teams.
Does your organization use Atlassian, Slack, Zoom, or Dropbox? If so, you’ve likely seen Product-Led Growth in action. Chances are it all started with one person on a personal plan. That soon became two people. Two became four. Four became eight. And eight became… well… everyone. And somewhere along the line, someone in the organization thought that since everyone is already using [INSERT APP HERE], you might as well get a company plan.
And so you did.
And now here we are.
According to venture capital firm Openview (a venture capital firm), “PLG companies perform better than other companies, including the non-PLG SaaS companies that were built for bygone eras selling to CIOs and Execs.” This is the end-user era. And Product-Led Growth reigns supreme.
That’s all for this week.
Until next time.
/Andreas
