By Jayadevan P K, Evangelist at Freshworks for Startups
If you’re anywhere close to the world of enterprise software, you can’t have missed the buzzword: product-led growth. The idea is that you build products that sell themselves. This means you bake features and communication into the product so you can grow your revenues and customers.
Let’s take an example. Say you have podcast editing software. You could offer the base version of the software for free to get more people to use your product. But then you could have pro features like transcription and overdub for paid subscribers. Every time the user imports an audio file into your editor, you have the opportunity to sell a pro license at a small fee.
This wasn’t the case earlier. Back in the day of big old clunky software, you had to run expensive advertisements and hire salespeople to go knock on doors to sell enterprise software. And then you needed consultants and specialists to implement the product for the enterprise. Back in the day, enterprise software was bought by the executives in the c-suite. The chief sales officer bought sales software. The chief marketing officer bought marketing software for the whole company and so on. The software is then used by their respective teams. But now, the users and teams themselves are capable of making purchase decisions.
These days, however, you don’t have to do that. The cost of software has come down. Individuals and small teams can make a purchase decision in just a few minutes after seeing your product online or trying it out for free. For instance, a small team of designers can use their credit card online and buy a design tool that makes their life easy. Once a team buys it, other teams notice it and buy it too. Before you know it, you have several teams in the enterprise using the same product.
Eventually, you can sell an enterprise license to the enterprise with a few additional features such as reporting, security, enhanced support, and dashboards. Another example of product-led growth is that of Freshworks, the customer engagement and employee engagement company with over 250,000 customers globally. We started as a helpdesk company but now offer several products with a unified data platform as its backbone.
As we expanded into more products, say our CRM offering that helps sales and marketing teams, we embraced product-led growth as a strategy (If you are a startup looking to attract and retain customers for life, give the Freshworks suite a go. We’re offering $10,000 in free credits to startups through the Freshworks for Startup program). An example of a product led growth feature that we built into our products is the product switcher. The idea is to let users toggle a switch within their profile page to see all of our other products. This means every month, thousands of users discover our products without us having to knock on their doors or show them advertisements.
So to answer the original question: when do you pick product-led growth as your growth strategy? If you have built and priced a product that teams or end users can buy on their own, product-led growth is most likely the right strategy for you to pick.
Bio: Jayadevan PK is an evangelist at Freshworks for Startups and the host of The Orbit Shift Podcast. He is also the author of a business biography: Xiaomi: How a Startup Disrupted the Market and Created a Cult Following.