Why flipping the traditional customer acquisition funnel on its head is helping businesses get more customers, and faster

The value of try-before-you-buy has been proven for years now. You’ve done it when you try on an outfit, take a free sample or test drive a car. In today’s day and age of digital experiences and products, consumers are still responding strongly to this offer. So much so that we are seeing this evolve into an entire business model focused on customer experience and value. Product-led is a growth strategy (PLG) that focuses on creating a product so good that it sells itself. This ensures the try-before-you-buy offer is worth everyone’s time and opens up a whole new world of customer acquisition opportunities while making your business more efficient.

We’ve seen some of the world’s most successful businesses lean into this approach. They flip the traditional sales-led model on its head by letting customers experience for themselves their product value rather than telling them. PLG companies build their success by creating products that are easy to use, offer clear value, and encourage users to adopt and share them. If you’re new to this strategy, we get into the key characteristics and practices of a product-led business in this previous article.

Why product-led is taking the business world by storm

Product-led businesses often have a larger amount of top of funnel leads, shorter sales cycles, lower customer acquisition costs and higher revenue per employee. When you open your product up with a low barrier to entry you’re going to see more people engage than if they need to sign up for a demo or give their time and effort another way. You’re often capturing them early in their buying journey. This means your product is already top of mind when they are ready to buy, and your sales team isn’t wasting time and resources until then. This is one way leading with your product also helps qualify customers.

A key aspect of a PLG is making sure your product is easy to use and the value is clear. Ideally this is something the whole team is thinking about from day 1. Our clients have found investing in user experience and usability can decrease product dev cycles by 30 to 50 percent.

This strategy has served some of the most successful businesses you know. Slack went from zero to a $4 billion valuation in three years. Calendly now boasts over 10 million monthly users around the world. The number of PLG companies filing for IPOs every year also continues to grow, as you can see in this great illustration below from Wes Bush, Founder of ProductLed and bestselling author of Product-Led Growth.

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Flipping the funnel

Despite the proven benefits many organizations have a hard time shifting into PLG mode. It can be scary to move away from monetizing before you engage. It may feel like you’re giving away a lot. However if you think about the customer journey, would these initial users even be on your radar if not presented with the opportunity to engage with your product in a low-stakes way? PLG allows the customer to understand the value of your product on their own time, rather than within a 30-minute sales meeting window.

Another key difference between PLG and traditional marketing and sales-led approaches is how you think about value metrics. This may mean shifting from tracking number of sales calls to number of users. PLG organizations drive customers out of that top of funnel to first time to use faster.

Another important metric is time to value. PLG often results in delivering value in 2-4 days versus an average of 45-60 days in a traditional model. This also applies to existing customers. By constantly keeping product in the forefront, your customers are going to be experiencing value when it comes time to renew.

In a traditional model it may take your customer months or even years to understand your product versus minutes in a PLG model. Sometimes traditional models persist when a product is more complicated, or a market is entirely new. This is a case where it may make sense to have your team more involved early on to explain and educate your customers. Still, the results of product-led strategy quickly speak for themselves and strategic business leaders are now asking "when" not "if" they'll make the shift.

The overall challenge of PLG is that you need total business alignment. That means every single team, sales, marketing, finance, customer service is thinking about how to make your product and customer experience better. In a product-led organization all teams have OKRs that move the needle towards improving the digital customer experience.

If you're interested in driving PLG in your organization reach out to the Aero team today to start a discussion about how we can be a resource for your next product development project.

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