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What is product led growth?

Updated: Nov 3, 2023

Product-led growth has increasingly become a buzzword. So what is product-led growth?


Let's break this down into two components: Growth + Product. (click on the link to see the previous article on "What is a product?")


Traditional marketing and sales are responsible for three stages of the sales funnel:

  1. Awareness ( making your business and your value known by a wider audience)

  2. Acquisition ( getting you to become interested and considering buying the product)

  3. Activation ( convincing you to make the first purchase )

From there on, their job is done. The rest are left with the customer service department. Which is commonly known as the after-sales care.


The growth model looks at this a few steps further, as it recognised the value of customer retention, repeat purchase, and referral. ( see diagram below )





Therefore, product-led growth is where we have in-build product features to facilitate the achievement of the goals during each stage of the funnel, instead of heavily relying on humans to perform the tasks. This is why product-led growth is hyper-efficient.


Let's go back to the example of Uber again. You will most likely come to know about Uber through word of mouth. No advertising, no sales pitch, maybe one of your friends referred the app to you. You used it, liked it then bang, you become their repeat customer. Why?

The user experience on the app is sleek, the pricing of the ride is competitive, and the in-app experience no one else is able to match. So you continued using it. Then they offered you the incentive of a voucher if you shared it with your friend. You gladly shared. This is what is commonly known as the built-in viral loop. All of a sudden you become Uber's advocate (Uber paid a little bit of promotional fee, equivalent to the value of the voucher. which is likely to be only £5 pounds.)


In this example, we learned that :

  1. Providing a great user experience from the get-go will help you gain repeat purchases and retention.

  2. Great customer experience also leads to referrals (cheap advertising).

Once you get these two elements right, you are kicking off the growth engine. And the effect will be compounding as time goes on.


The questions we can ask for our businesses now are:

  1. How can we provide my new or existing customers with a great customer experience?

  2. How can we provide incentives for my existing customers to refer new clients?

  3. What digital features can we build to achieve the goal of points 1 and 2?

At Tango Studio we aim to break down Silicon Valley startup jargon into everyday common language, so more businesses can thrive. If you have any more questions, feel free to comment below or connect with me on Linkedin for a chat. You can also book an appointment via the button below.


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