There are all types of different approaches to drive revenue for software product development.
Many companies take a few pages out of multiple playbooks to try to find what works best for them.
It might change over the years or even months, especially with a new product or iteration- things change quickly in SaaS and even more so in a start-up setting!
So we know about product-led growth and sales-led growth.
But- there's a new player gaining some traction.
And what does this mean for the future of SaaS growth? Is it something on your horizon?
Customer-led growth (CLG) is a strategy that prioritizes the customer experience by leveraging user insights to help both the customer and the company achieve what they want from the product.
Well, that kind of sounds like what we should be doing anyways?
Well- we should all definitely be pulling some of its tactics into our motion.
But let’s think about how we got here chronologically.
The original strategy for selling software was sales led.
Revenue was driven by the sales team, and getting sales in the door was most important.
And then in the early 2010’s, product-led growth began.
Anyone could try a product, whether they were ready to invest or not. Freemium tiers became normalized.
Sales and revenue leans on an excellent user experience. The product being great comes before sales and revenue.
And the same product could serve various customers.
I know this well in my own life- when I was in college, my advertising club used Slack to communicate and plan our campaign during the pandemic.
And then I never got away from Slack 🤪 I’ve used it in each internship and then job since I’ve graduated.
And now, some companies are ready for customer-led growth.
In a CLG motion, the customer experience drives everything. It comes before the product and before sales.
The feedback loop between the team and the customer is constantly moving.
It’s making the product fit the customer, rather than trying to find a customer for the product.
It’s also constantly iterating to make the product the best it can be for the customer.
The main differentiator between product-led growth and customer-led growth is that product-led growth revolves around the product’s user experience, while customer-led growth revolves around the customer experience.
But aren’t the user and the customer the same thing?
Not exactly- your user is the person in the product every day. Your customer is the one paying for it. They can be the same, but they aren’t always.
So by shifting the focus to the customer's wants and needs, it allows the company to focus on an even more customized solution for them, while still building that great user experience seen in PLG.
Product-led demands more money for research and development of the product, while customer-led needs a larger investment in finding your target market and ideal customer profile (ICP).
And in the shifty waters of today’s market, making the product and experience its best possible is key to being truly customer-centric.
There’s no room for error with customer retention- we know that trying to fill the leaky bucket from the top, with new customers, is not a way to drive consistent and growing revenue, when you already have a problem with lost and shrinking customers.
Can customer-led growth solve some of these woes?
I think it can definitely be part of it.
By solving for your buyer's problems before the product, you can achieve a longer lifetime value.
And because the buyer's wants should ideally fit in with the product, you can still abide by some of the principles of product-led growth too.
A customer-led growth strategy can be a great fit for some SaaS companies.
Maybe you fall into that group. Or maybe you can use some of the pages from the customer-led playbook and make it work with your current strategy.
CLG can be especially great when the data a company has is being constantly collected and then used for truly valuable insights about said customers.
By using the data you already collect and combining that with the constant feedback loop seen in customer-led growth, you have two incredible tools to understand how and why your customer is interacting with your product in a certain way.
So whether you build or buy a tool to give you these insights about your customer, using customer data for understanding past experiences, as well as being predictive for the future, is key to truly being customer-led.