Question: What do successful, multi-million dollar SaaS companies like Dropbox, Ahrefs, and Slack all have in common? The answer: They all take a product-led approach to marketing.
Consumers these days are tired of traditional approaches to marketing. It’s no longer enough to pump out self-promotional marketing and sales materials like case studies and white papers.
Customers don’t want to be told what your product can do for them — they want to find out for themselves by experiencing the value of your product first-hand. And that’s where product-led marketing comes in.
In this post, we’re going to be explaining more about what product-led marketing is and why you might want to use it. Then, we’re going to show you how to create a product that sells itself.
What is product-led marketing?
In a nutshell, product-led marketing is using your product as the main vehicle to drive customer acquisition, retain more customers and ultimately, improve profitability.
It’s an approach to marketing and sales commonly used in the SaaS sector, which focuses on showing, rather than telling.
Usually, product-led marketing involves offering a freemium or free trial of your product to potential customers. The idea is that this allows users to self-serve and onboard themselves, without having to speak to a salesperson. They get to try before they buy and experience the value of your product first-hand, rather than just reading about it.
Once they’ve seen what your product can do, they may go onto recommend it to their friends or colleagues. In doing so, your customers become your sales and marketing team. They promote your product for you, thus reducing your acquisition costs.
However, product-led marketing doesn’t mean neglecting your sales and marketing efforts completely. It just means aligning them with your product.
For example, instead of writing promotional blog posts and webinar content, you might want to write resource-style guides and tutorials on how to use your products or create mini product demos.
Example of product-led marketing
Dropbox offers a great example of a product-led marketing strategy. If you didn’t already know, Dropbox is a file hosting service provider that allows users to save their files online and sync them to their devices.
By leveraging the power of product-led marketing, Dropbox was able to grow to over $1billion in sales in less than a decade. Here’s how they did it.
First, they offered a freemium pricing model. Users can sign up for 2GB of storage for free, which makes it easy for Dropbox to acquire tons of new sales leads who may later upgrade to a paid plan when they need more storage.
Secondly, they built a referral program into the product to help enhance its virality. Users can receive extra storage by referring Dropbox to their friends, which incentivizes them to share Dropbox with others and act as brand ambassadors.
Benefits of product-led marketing
Here are just a handful of the many benefits of product-led marketing
- Reduced costs. As Instagram founder Kevin Systrom wisely said, “Great products sell themselves”. With product-led marketing, software companies can dramatically reduce the costs of their marketing and sales activities by allowing users to onboard themselves and minimizing required human assistance.
- Greater trust. According to a recent TrustRadius report, consumers ranked marketing and sales materials like whitepapers and blog posts as the least trustworthy, and their own prior experience with the product as the most trustworthy.
- Greater customer retention. One of the biggest challenges facing SaaS companies is reducing customer churn. Unlike a traditional marketing or sales-led approach, product-led marketing isn’t just about acquisition, it’s about acquisition, activation, and retention. As such, it can dramatically reduce churn.
How to create a product that sells itself (4 tips)
Now we know what product-led marketing is, let’s talk about how to put it into practice. Here are four tips on how to create a product that sells itself.
1. Understand the value of your product
Customers don’t buy products, they buy solutions to their problems.
Therefore, creating a product that sells itself requires you to have a deep understanding of exactly what your customer’s pain points are and how your product can help them.
Start by identifying who your target customers are and what their desired outcomes are.
For example, let’s say you’re offering a keyword research tool. Your target customers may be marketers who want to be able to easily find keywords with high search volumes and low competition.
Once you know what the value of your product is, you can make that the centerpiece of your messaging.
2. Offer a free trial or freemium acquisition model
Offering a free trial or a free basic version of your product allows your product to become your acquisition engine. It can open up the top of your funnel and substantially reduce your acquisition costs.
Whether a free trial or freemium model is best for you will depend on your industry, target market, and product positioning.
3. Deliver on your promises
The key idea of product-led marketing is to align your marketing and sales efforts with the real, experienced value of your product.
If you’re promising things that your product doesn’t deliver on, customers are going to leak out of your funnel.
Don’t make the mistake of overselling your product. Tell your customers what your product can do, and let them experience the value of it for themselves.
4. Reduce the time-to-value
Time-to-value refers to how long it takes customers that try out your product for the first time to experience its value for themselves. The faster your customers can experience your product value, the greater your conversions will be.
To reduce time-to-value, you’ll need to carefully consider your onboarding flow and the way customers go through your product experience.
Are there any unnecessary steps in the process and distractions (i.e. required email activation, mandatory product tutorials, etc.) that delay the time it takes for users to get to where they want to go?
Try to eliminate all friction and create a straight-line path to value for your users.
As you can see, product-led marketing can be an incredibly effective strategy for SaaS companies. However, for it to work, you’ve got to make the user experience a top priority and focus on delivering real value to your customers.