.png)
For years, there has been a discussion about which strategy is better for SaaS growth - Marketing-Led Growth Strategy or Product-Led Growth Strategy. While advocates like Atlassian and Hootsuite push the product-led strategy, businesses like Drift and HubSpot may argue this approach, considering they achieved great results implementing the marketing-led strategy.
But is there a way to implement parts of both strategies that work for you and get the optimal results when scaling a SaaS company?
While marketing-led growth strategies are well-suited for building brand awareness and quickly monetizing customer relationships, product-led strategies work well if your product is simple and easy to experience, the market is large, and you have the resources to provide freemium products.
Before we dive deeper into how you can combine these two strategies, let’s learn more about them individually, what their benefits are, what they offer, and in which areas they are not the best choice.
Marketing-Led Growth (MLG) Strategy
Marketing-led growth (MLG) strategies focus on driving growth for SaaS products and services without relying solely on the sales team. They use marketing efforts to create a strong brand presence, attract potential customers, and build trust with existing ones.
Going for a marketing-led growth strategy is a great way to attract potential customers and grow your business faster. By using practical marketing tools, such as engaging blog posts, interesting e-books, informative whitepapers, or eye-catching infographics, you can generate a good number of marketing-qualified leads while expanding your business.
Another great thing about MLG's strategies is they take search engine marketing (SEM) into consideration, which is one of the most cost-effective ways to increase your brand visibility. Furthermore, MLG allows you to be flexible with your marketing messaging. If the current campaign isn't delivering the desired results, you can test and pivot to a narrative that can resonate with your target market.
Related Article: Product-Led Growth vs. Marketing-Led Growth
Some of the best approaches you can take to enhance your MLG strategy are:
Developing Impressive Content Related to SaaS Pain Points
One of the key pillars of a successful MLG strategy is developing content that resonates with your target audience and addresses their pain points. Your content should showcase the features and benefits of your SaaS product and empathize with the challenges and frustrations your potential customers may be facing.
Addressing common challenges your target audience encounters in your insightful blog posts, engaging videos, or informative ebooks can help you build trust and credibility with your audience. By demonstrating a deep understanding of your customers' struggles, you position your SaaS brand as a trusted advisor, making it more likely for prospects to explore your offerings first.
But before you start working on your content:
-
Conduct thorough research to discover the pain points your target audience experiences during their SaaS journey.
-
Use customer feedback, industry trends, and data analytics to gather insights into users' specific challenges.
-
Once you have this information, add some practical guidance, tips, and strategies that directly address these pain points to your content.
Once you're ready to start creating content, use storytelling techniques to humanize the issues and solutions. Narratives that showcase real-world examples of businesses overcoming SaaS challenges create a powerful connection with their audience.
Making Use of Data-Driven Insights
When we talk about enhancing your MLG strategy, making use of data may not be the first thing that comes into your mind. But, leveraging data improves the effectiveness of your strategy by telling you what works and what doesn't. Use analytics tools to track the performance of your content across various channels, understand user behavior, and identify patterns that can shape your approach.
Analyze metrics like website traffic, conversion rates, and engagement levels to understand your audience's preferences and how they interact with your content. This information helps you refine your content strategy by focusing on channels and topics that resonate most with your target market. A/B testing is also a powerful tool for optimizing your content and delivery methods, allowing you to evolve your marketing-led growth strategy based on real-time feedback.
Another way to take advantage of your data is through personalization. Tailor your content to the user's demographics, preferences, and past interactions to ensure your messages are relevant and more likely to capture and retain your audience's attention.
Integrating data into your marketing-led growth strategy transforms your approach from theoretical to strategic. It will amplify the impact of your content and enable you to adapt to the dynamics of the SaaS market.
Measuring ROI and Tracking User Activities
An important aspect of a successful MLG strategy is the ability to measure Return on Investment (ROI) and track user activities. This won't just help you assess the effectiveness of your marketing campaigns but will also provide you with valuable insights for ongoing optimization. Consider it as a feedback loop that guides you towards strategies that resonate most with your audience.
To measure ROI, track key performance indicators (KPIs) such as customer acquisition cost, customer lifetime value, and conversion rates. This data shows the monetary success of your efforts and highlights areas for improvement. Analyzing conversion rates, for instance, shows the effectiveness of your content in driving user actions, whether it's signing up for a trial, upgrading to a premium plan, or referring others.
Finally, you have to track activities beyond the trial period if you want long-term success. Understanding which features or content segments your users like allows you to tailor future marketing efforts accordingly.
The Rise of the Product-Led Growth (PLG) Strategy
Let's talk about PLG and how it's shaping the SaaS landscape. The traditional sales funnel of attracting leads and converting them into customers is being disrupted by PLG, which puts the product at the center of the customer journey. This approach relies on providing value through the product itself rather than through external marketing efforts.
PLG is often seen as an extension of MLG, where user actions within the product are used to drive growth. This shift in focus has led to immense success for companies like Slack, Dropbox, and Zoom, all of which have experienced rapid user adoption and revenue growth through their product-led approach.
Reasons why SaaS companies choose this approach are:
-
Lower customer acquisition costs
-
Higher customer retention rates
-
Faster lead-to-customer conversion times
-
Increased product usage and engagement from users
Additionally, data shows that:
-
SaaS companies usually achieve $100m ARR within the first five years if implementing a product-led growth strategy
-
PLG market capitalization has grown from $21 billion in 2016 to $687 billion in 2020.
The PLG strategy is often introduced with a freemium or free trial offer. This approach gets rid of all the annoying stuff that customers don't like, such as long sign-up forms, demos, and hidden fees. Instead, it focuses on what customers actually enjoy - a cool and easy-to-use product that helps them be more productive.
There are several approaches you can take to level up your PLG strategy:
Optimize Your Funnel By Fixing The Leaks
As we previously mentioned, when it comes to the PLG strategy, the product is the main character in customer acquisition and retention, so you can’t afford to have a leaky funnel. You have to ensure a seamless customer journey and prevent churn caused by issues within your sales funnel.
To fix these leaks and optimize your funnel, you need to:
Identify Insufficient Customer Funds
This is a common issue, especially for credit card payments with limits. To fix this, apply innovative technology to retry payments at optimal times or offer alternative payment methods that access multiple sources of funds, such as PayPal.
Address Cross-Border Transaction Failures
Different banking standards between regions can lead to transaction failures. Consider banking locally where your customers are or use a payment provider with established local banking relationships.
Mitigate Currency Conversion Challenges
Currency conversions can trigger fraud alerts. To prevent this, sell to customers in their local currency, as it can significantly increase payment acceptance rates.
But before you can fix these leaks, you need to find them. Use user data and track their movements across your funnel in various user sessions. Understanding where you're losing leads is the first step to creating a more efficient and effective product-led growth strategy.
Build Cross-Functional Teams
To make your PLG strategy the best it can be, try building teams that have a mix of people from product development, marketing, sales, and customer success. This way, you get many different ideas and perspectives on the customer journey, which means you can use all that info to improve things at every step.
Cross-functional teams work together to determine what's good and not so good about the user experience. The marketing team can help the product team understand what customers need and expect, while the sales and customer success teams can share insights into what users are doing and what challenges they're facing when they first sign up and beyond.
If you create a culture where people work together and share information, you'll be able to easily make changes to the product and customer journey. We all know how important that is in the world of SaaS, where things change constantly, and you need to keep up with what your users are telling you.
Cross-functional teams can also make changes based on real-time data. When people talk to each other and share feedback, it's easy to make changes that work for everyone. This way, your PLG strategy will always change and adapt to your users' needs.
Invest in Usage Platform
Usage data is the foundation of all your business decisions. Use it to
figure out what features your users like the most, what pricing model works best for them, or how to improve your product roadmap.
To get this data, install accurate and auditable metering solutions that track how users are interacting with your products. This data can be used for analytics and reporting so you can figure out what's working and what's not. Additionally, you can use it to identify usage patterns and behaviors, which can help inform your product development and marketing strategies.
Investing in usage instrumentation allows you to make data-driven decisions that align with the needs and expectations of your users. By tracking user behavior, you'll have a better understanding of how they engage with your product and where there may be room for improvement.
Moreover, usage data can also help you identify potential upsell or cross-sell opportunities. By analyzing how users interact with your product, you may uncover new ways to monetize your offering or create additional value for your customers.
Integrating Product-Led Growth Strategy with Marketing-Led Growth Strategy
Now that you understand the differences between Product-Led Growth and Marketing-Led Growth, it's important to note that these strategies don't have to be mutually exclusive. In fact, the most successful SaaS companies integrate elements of both PLG and MLG in their overall growth strategy.
After all, SaaS products are complex, so there is no one-size-fits-all growth strategy. MLG may be great for building brand awareness but doesn't guarantee purchase intent or sales from prospects. On the other hand, focusing solely on PLG, there might be a risk of a gap between perceived value and the value you offer, mainly because it ignores crucial business aspects, such as branding, positioning, and customer acquisition.
To truly scale your SaaS business, you need to strike a balance between PLG and MLG. This can be achieved by leveraging the strengths of each strategy while mitigating their weaknesses.
But how do you integrate these two strategies effectively? Here are a few tips:
Use Marketing-Led Growth to drive initial awareness and interest in your product. This can include traditional marketing tactics such as content marketing, social media advertising, and influencer partnerships.
However, instead of focusing solely on lead generation and customer acquisition, use these tactics to drive demand and educate potential customers about the unique value proposition of your product and how it addresses their pain points.
Once you have generated initial interest and awareness, use Product-Led Growth strategies to convert these leads into actual paying customers. This can include offering free trials, product demos, and freemium versions of your product. By giving customers a chance to try the product before committing to purchase, you are building trust and establishing the value of your product.
Additionally, continuously collect customer feedback and use it to improve your product. This will help you retain existing customers and attract new ones through word-of-mouth marketing.
It is important to note that MLG and PLG are not one-time strategies but ongoing processes that require constant optimization and tweaking. As your SaaS business grows, you may need to adjust your strategies accordingly to keep up with changing market trends and customer demands.
Eventually, other go-to-market strategies may also come into play, such as Community-Led Growth or Partner-Led Growth. The key is to understand the unique strengths and weaknesses of each strategy and integrate them in a way that best fits your specific business goals and target market.
Conclusion
Creating a hybrid approach to popular SaaS go-to-market strategies is the best way to scale and grow your business. By leveraging the power of both Marketing-Led Growth and Product-Led Growth, you can effectively attract and retain customers while continuously improving your product to meet their needs.
To make this work, SaaS companies need to break down silos between their marketing and product teams and work together to create a seamless customer journey that combines both approaches. With the right strategy and mindset, your SaaS business can achieve sustainable growth and stand out in a competitive market. So don't be afraid to experiment and find the perfect balance between MLG and PLG for your unique product and target audience.
As always, stay open to feedback, continuously analyze data, and adapt as needed to create a balance between marketing and product development that is crucial for long-term success in the SaaS industry.
