The Trap of Product-Led Growth

Marketing School - Digital Marketing and Online Marketing Tips

Eric Siu and Neil Patel

Business, Marketing, Careers

4.6 • 1.4K Ratings

🗓️ 18 October 2023

⏱️ 6 minutes

🔗️ Recording | iTunes | RSS

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Summary

In episode #2584, we take an in-depth look at product-led growth (PLG), a popular business strategy that relies on using your product as the primary vehicle to generate more growth, traffic, and users. But wait! There’s a catch. While this approach yields rapid initial adoption and growth, companies that follow the PLG playbook risk getting stuck in what is known as the PLG trap and may have difficulty scaling in the long run. Tune in as we share examples of companies that have used PLG to their advantage and others where it has led to their downfall, plus we highlight the importance of planning ahead, share our advice for evolving from a PLG-only to a PLG enterprise company, and more! TIME-STAMPED SHOW NOTES: (00:00) Today’s topic: The Trap of Product-Led Growth. (00:04) What product-led growth is and what are some successful examples of it? (01:45) How to avoid what the Harvard Business Review calls the “trap of PLG.” (02:41) Examples of declining year-over-year revenue growth as a result of the PLG trap. (04:45) A case study of a company that successfully avoided the PLG trap. (05:08) Remember: the marketing tactics are highly variable! (05:37) That’s it for today! Don’t forget to rate, review, and subscribe! Go to https://www.marketingschool.io to learn more! Links Mentioned in Today’s Episode: ‘How Software Companies Can Avoid the Trap of Product-Led Growth’ MongoDB Don’t forget to help us grow by subscribing and liking on YouTube! Leave Some Feedback: What should we talk about next? Please let us know in the comments below Did you enjoy this episode? If so, please leave a short review. Connect with Us: Single Grain << Eric’s ad agency NP Digital << Neil’s ad agency X @neilpatel X @ericosiu Learn more about your ad choices. Visit megaphone.fm/adchoices See omnystudio.com/listener for privacy information.

Transcript

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0:00.0	All right, so we are going to talk about the trap of product-led growth.
0:03.8	So, Neil, do you want to explain what product-led growth is?
0:06.5	Product-led growth is a way that you end up generating more growth, more traffic,
0:10.2	more users, with your product.
0:12.2	And a great example of this is
0:13.7	Slack I can give way seats for free and Slack is more useful when your team is on
0:20.7	Slack but after a certain amount of seats someone may have to upgrade to pay or
0:24.7	Microsoft Teams at the beginning they're like Microsoft Teams is 100% free.
0:28.8	Invite all the people in your organization and they can use it for free.
0:31.6	Just pay for Outlook or whatnot and you can end up
0:34.6	using as much as you want to actually think at the very beginning you didn't have to use
0:37.6	outlook it was just pretty much free but the product led to more growth
0:41.8	because instead of spending it on marketing they
0:44.3	spent it on the product by adding in more features you can get more growth or you
0:49.2	can create a viral effect so another example of product that growth is Dropbox. You want more space and storage.
0:55.2	Tweet and if you tweet it out like, hey sign up for Dropbox and people sign up, we'll give you more space.
1:01.8	And that was the way Dropbox grew. So a few years ago. So those are two good examples few years ago. I was speaking to the hubspots
1:10.0	A-Pack leader. He was basically their general manager, and we're talking about what led to
1:15.4	to HubSpot's rise.
1:16.8	And basically, when the leaders of HubSpot wanted to implement this PLG motion, so FreeM where they gave away a lot of features.
1:25.0	They basically crippled the product where you could use some of the free features but you'd have to upgrade and pay for it at a certain point, right?
1:31.0	And 99% of the company was against that, and the leaders
	...

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