Product-led growth (PLG) is about letting your product do the talking—you advance your business by delivering such a great user experience that customers naturally adopt and refer others.
In this article, you will learn how product-led growth techniques can help you improve customer retention and unlock new revenue opportunities. Plus, we provide a practical framework to guide you through implementing these strategies.
Product-Led Growth: Definition
Product-led growth is a user acquisition strategy that relies on the product itself, rather than sales and marketing teams, to attract prospects and convert them into clients. PLG is also often referred to as a self-service model because customers can serve your product to themselves without any assistance.
To understand how it works, let’s imagine you're running a SaaS project management tool. You've acquired thousands of users, but many are churning because they struggle to integrate your product with their existing services, such as Slack, Google Drive, or Notion.
Your team may spend months building custom integrations for each request, but progress is slow. Users get frustrated and switch to competitors with better automation possibilities.
PLG starts with the product and product distribution. You need to focus on your user and customer and remove all the friction they could face in their journey to be purely product-led. For us, this means customers can sign up for free and buy the product by themselves on the website. They can have an unlimited number of users and share boards with external collaborators.
— Andrey Khusid, CEO of Miro
However, this scenario will be different if you have a clear PLG strategy. For example, instead of relying solely on in-house development, you can look for an iPaaS to help you implement native connectors without code. Then, users won’t need your team to tackle their requests—they can just link their favorite tools faster.
Traditional models vs. product-led growth: What's the difference?
In the traditional approach to product growth, companies rely on sales and marketing teams to drive profit. They use outbound sales efforts, paid advertising, and content to generate interest and move prospects through a structured sales funnel.
For example, if a user has filled out a registration form to try your product, their contact info is passed on to a sales manager. They contact the potential customer to invite them on a call or flood their email with promotional information.
This classical approach to acquiring, converting, and retaining customers isn’t bad, mainly when discussing B2B sales or any other niche with a long sales cycle.
However, if you have an intuitive product with a faster sales cycle, it may be more efficient to make it the primary driver of your sales. Some examples are collaboration and automation tools, SaaS platforms, developer software, productivity apps, and more.
In the table below, we’ve gathered the key differences between PLG and traditional growth models.
In PLG (Product-Led Growth), users sign up and start using the product independently, for example, through freemium models or free trials. McKinsey suggests that companies employing this business strategy, on average, fare better than those that use a traditional approach.
Slack was one of the first examples of PLG in action. Users could sign up for free to experience the platform first-hand. They invited their colleagues, increasing adoption. As usage grew within organizations, companies eventually upgraded to paid plans. Today, 77% of Fortune 100 companies are paying for it.
This approach helped Slack grow to over 12 million daily active users before its $27.7 billion acquisition by Salesforce in 2021.
However, recent research also shows that it’s important to implement a product growth approach well.
The product-led high-performing subset spends ten percentage points more in marketing and sales and R&D expenses combined than high-performing, sales-led companies do. They also generate ten percentage points more in annual recurring revenue growth and are able to achieve valuation ratios that are 50 percent higher. Moreover, our research found that average-performing, product-led businesses spend significantly more on operating expenses than their average-performing, sales-led peers, yet fare only marginally better on key performance metrics…
— From product-led growth to product-led sales: Beyond the PLG hype
McKinsey suggests that companies that consistently outperform their competitors apply a PLS, or product-led sales strategy.
This approach combines the benefits of both classical and product-oriented methods. The sales team focuses on converting high-intent users who have already engaged with the product rather than chasing cold leads.
To facilitate this process, businesses that adopt PLS apply:
- A data-oriented approach. Companies analyze user behavior on their platform, such as purchase history and browsing behavior.
- Scoring. Each lead is qualified and prioritized with the help of software tools and advanced AI algorithms.
- In-product onboarding. Services may include different types of content, such as articles and how-to guides, and encourage users to explore premium plans.
In this article, we’re covering the PLG strategy, but many of the practices we describe can also be used to build product-led sales in your company.
Key characteristics of product-led companies
If you’re considering the transition to PLG, here are the core characteristics of a successful product-led company:
User experience comes first
PLG companies prioritize a frictionless and delightful user experience from the start. If users struggle to navigate the product or don’t see its value quickly, they’ll leave. The best PLG businesses invest heavily in:
- Intuitive UI/UX. Better design means there’s no need for extensive user onboarding.
- Personalization. Tailored experiences based on user behavior make the product stick and drive customer loyalty.
- Continuous improvement. Product development doesn’t stop—companies leverage data-driven optimizations to enhance usability.
For example, Figma is a browser-based design tool that became a market leader because it eliminated the need for clunky software installations. End-users enjoy it for free, and teams pay for the ability to collaborate and store more projects.
The tool has a market share of more than 30% and has hit a $10 billion valuation in less than 5 years.
First try, then buy
Product-led companies let users experience value before asking them to pay. This reduces friction in the buying process and builds trust. The most effective PLG businesses leverage:
- Freemium models. Users can access essential features for free but pay for more advanced capabilities.
- Generous free trials. Gives customers enough time to get hooked.
- Paywalls at the right moment. Locks premium features when users see clear value.
For example, Zoom allows free 40-minute meetings for all users. Once they reach the time limit, the app encourages them to upgrade.
The PLG approach helped Zoom to gain a market share of 66% in the meeting market. Its current capitalization is more than $26 billion.
Self-service orientation
PLG companies empower users to onboard, learn, and upgrade independently, reducing reliance on sales teams. That means:
- No sales calls. Users can sign up and get the product instantly.
- Automated onboarding. Interactive tutorials and tooltips guide users.
- Seamless upgrades. If users want to access premium, they just need to pay a subscription fee in a few clicks.
For example, when Notion first appeared in 2013, it quickly became viral. This workspace tool provided many templates for different use cases: knowledge bases, roadmaps, brand kits, shopping lists, resumes, etc. It also included guidelines for users on how to create their workflows. Many people started using Notion and creating their own templates, building a community around the platform.
Today, the tool has become one of the go-to workspaces for end users and companies alike, with a market share of 83%. Individual users can still access it for free, while companies pay a fee for collaborative features.
Benefits of being product-led
OpenView’s 2022 Product Benchmark report shows that PLG companies are twice as likely to achieve over 100% year-over-year revenue growth as their sales-led counterparts. The trend is expected to remain in 2025 due to this model's benefits.
1. Faster growth, fewer resources
Unlike traditional sales-led businesses that rely on expensive outbound efforts, product-led companies acquire users through self-service experiences. This means that lead generation, sales, and customer success don’t require massive teams, allowing companies to scale faster without a proportional increase in headcount.
2. More efficient cost structure
Not only do PLG companies grow faster, but they grow more profitably:
- Lower customer acquisition costs (CAC). With fewer outbound sales efforts and a product-driven conversion funnel, PLG companies spend less per new customer.
- Higher revenue per employee (RPE) Since fewer sales and support reps are needed, PLG businesses generate more revenue with leaner teams.
- Better customer retention. A frictionless self-serve experience means customers adopt the product organically, leading to higher retention and expansion revenue.
3. Better user experience = higher conversions
PLG shifts the focus from selling features to delivering seamless user experiences. When customers see the value with their own eyes, conversion rates increase, sales cycles shrink, and time-to-value improves.
Strategies for product-led growth
Depending on your niche and stage of business development, here are a few plans of action you can try.
Market penetration
If your company has achieved a strong product-market fit—consistent user growth, high retention rates, and positive feedback—you should maximize reach within your current market.
You can increase your market share by targeting adjacent user segments or acquiring more users with a similar profile. Strategies like special discounts or exclusive offers can attract this audience. For example, limited-time discounts during peak shopping seasons or exclusive membership perks, such as early access to new features, can create urgency and appeal.
Example: Albato iPaaS is a no-code PLG integration platform that connects hundreds of apps into automated workflows. From the start, the focus was on users in a local market who wanted to optimize their operations, save time, and boost productivity. However, with time, we expanded the service's geography and now offer it worldwide.
Market expansion
Once market penetration within your core segment is tackled, expanding your market share might be the next step. This requires thorough research to identify scenarios with high potential for product adoption.
A valuable starting point is to localize your product to meet the specific needs of different regions. For example, you could translate the product to the local language, adapt the user interface to local preferences, or make cultural adjustments.
Example: Over time, Albato expanded its operations to America and Europe, integrating local apps and ensuring compliance with regulations like GDPR and SOC2. Localized website versions in English, Portuguese, and Spanish were also created. The platform also supports the Turkish and French languages.
Product development and innovation
Improving the product is essential if you want your customers to use it more frequently. Always listen to user feedback and gather insights using tools like surveys, feedback forms, or analytics platforms.
You can also create a public roadmap to facilitate this interaction and increase engagement. This tool will help you perform updates that solve customer problems and keep the product relevant.
Following this, you can adjust pricing or package features and upsell opportunities with existing accounts. A McKinsey study reveals that 80% of value creation for top-performing growth companies stems from unlocking new revenues from existing customers.
Example: Based on user feedback—via support chat, communities, and roadmap—Albato constantly implements new apps and features. A big game changer was theApp Integrator, which allows users to add custom connectors to the platform via API or Webhook. We will also launch a drag-and-drop builder and team functionality soon.
Diversification
To drive revenue and protect your business against market downturns, you can develop new products or implement new features that solve new problems and complement your existing offerings. This is especially important when the global market is experiencing a slowdown.
McKinsey's study also states that by focusing on successful experience-led growth strategies, businesses can increase cross-sell rates by 15 to 25%, boost customer wallet share by 5 to 10%, and improve customer satisfaction and engagement by 20 to 30%.
To develop a solution that attracts different customer segments, it is essential to conduct product analysis, user interviews, and market research. You can combine these methods and prioritize activities based on your goals to maximize efficiency. For instance, start using analytics data to guide the focus of user interviews, understand pain points, and validate insights with market research.
Example: Seeing a market gap, Albato began its diversification strategy by offering a complementary solution: the B2B Embedded module. This tool allows SaaS companies to implement white-label connectors directly within their interface, expanding their connectivity and possible use.
How to implement product-led growth step-by-step
This is what we recommend if you want to adopt a PLG approach.
1. Deliver real value immediately
If your product requires 100 steps, passport registration, and a call with a representative, PLG won’t work.
For example, in Zoom, you log in, create a meeting in one click, and invite people. Simple.
In Albato, you only need to sign up with Google or Facebook and select a trigger and an action to set up an automation.
Your product should provide value right away. If it’s an analytics service, show a demo report. If it’s SaaS, offer a trial version without unnecessary hurdles.
2. Minimize friction
Any friction kills PLG. The easier it is to start using your product, the more likely users will stick around. Here is what you can do:
- Remove unnecessary registration forms.
- Automate onboarding (built-in hints, guided tours, interactive walkthroughs).
- Make the interface intuitive.
For example:
3. Implement built-in virality
PLG products should spread on their own. How? Through recommendations and collaborative effects.
- Slack – You can’t use it alone; you invite the whole team.
- Dropbox – "Invite a friend and get extra cloud storage."
- Calendly – Users share scheduling links, and everyone who books a meeting gets introduced to the product.
Tip: Ask yourself, “How can my product motivate users to invite others?”
4. Provide freemium or trial access
PLG is impossible without free access. Let users try out key features without payment.
But here’s the trick: the free version should be useful enough for users to get hooked, but not so much that they never feel the need to pay.
For example, Spotify allows free music streaming but with ads. Ads might make the experience annoying for real music lovers.
5. Aim at continuous optimization and improvement
PLG isn’t magic—it’s data-driven work. It’s crucial to understand:
- Where do users drop off?
- Which features provide real value?
- Why do users upgrade (or not upgrade) to paid plans?
Use user behavior analytics (e.g., Amplitude, Mixpanel, Hotjar) and constantly improve the product. Some growth metrics to keep track of are:
- Customer Acquisition Cost (CAC). It measures how much your business spends to acquire a new user.
- Monthly Recurring Revenue (MRR). Reflects predictable income from subscriptions.
- Average Order Value (AOV). Indicates the typical spending per transaction.
- Lifetime Value (LTV). Assesses the revenue a customer generates over their engagement with the product.
- Churn rates. Helps identify retention challenges at different stages of the funnel.
- Net Promoter Score (NPS). Reveals user satisfaction and likelihood to recommend the product.
Common challenges and how to overcome them
Problem 1: High competition. Many products compete for the same user base, making it difficult to stand out.
Solution: A competitive analysis can help to identify gaps in the market. You can differentiate by offering unique features or superior user experiences and tailor your marketing strategies to highlight what sets your product apart.
Problem 2: Low adoption. You get registrations, but new customers don’t consistently use your product.
Solution: Users might not understand how to use the product, or it doesn’t align with their current processes. Work to create a seamless and intuitive onboarding experience for new users. Also, you may want to look for ways to minimize friction points and quickly guide users to key value propositions. Consider offering step-by-step tutorials, personalized onboarding, and clear in-app guidance.
Problem 3: User churn. Customers end relationships with you. You always need to attract a new audience.
Solution: To combat churn, analyze customer behavior to identify why they leave and use this data to improve the product experience. Proactively addressing customer feedback and providing timely support can also improve retention.
Problem 4: Small upgrade rate. The number of users that buy subscriptions is too small.
Solution: When the average order value decreases, finding ways to encourage upgrades is essential. You can start by clearly communicating the benefits of upgrading to entice users to explore higher tiers. You can also offer premium features and plans that provide significant value to users.
Case studies for a product-led approach
Leveraging the right tools is crucial to scaling a successful product-led growth strategy.
Tools like UserGuiding, which enhances onboarding and overall user experiences, and Intercom, known for improving customer communication, are excellent examples of how technology can support your product-led growth.
Albato Embedded is also a standout solution. With just a few clicks, end users can activate ready-to-use scenarios without switching between tools to set up automation. This provides them with a native experience and makes the configuration process smoother.
Also, while end users can monitor the automation log, number of transactions, and volume of data transferred over different periods, SaaS companies have access to an Admin Panel to manage the usage of active integrations by all of their clients from one place.
This fast and scalable model significantly enhances the product's value with minimal effort from the internal team. By increasing product connectivity and boosting customer satisfaction, Albato helps businesses reduce churn and increase monthly recurring revenue.
Here are two real-world success stories of companies with Albato Embedded:
- RD Station: Enhanced product value for over 1,000 customers through sticky integrations while saving 70% on development costs.
- Climbo: Increased freemium-to-paid conversions by 30% and boosted revenue by 70% with white-label embedded integrations.
Summing up
Achieving sustainable product-led growth requires a strategic approach that combines innovation, user focus, and adaptability. Remember, growth is not just about user acquisition—it’s about delivering continuous value, fostering loyalty, and scaling efficiently.
If you want tailored insights on how Albato can help drive your SaaS product growth, visit our Embedded page or contact our integration experts to schedule a demo session.
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