How To Know If Product-Led Growth is Viable for your B2B Company

The idea of product-led growth is an appealing one to many company leaders. But is it really viable for your product?

Elena Verna, an expert on product-led growth shared some great insights into this question in this episode of Lenny Rachitsky’s podcast.

Here’s a quick run-down of some of the main ideas.

Product can contribute to growth via a number of levers:

1. Acquisition
2. Retention
3. Monetisation

Retention

To be successful, every company needs their product to be contributing to retention.

Retention breaks down into:

1. activation (getting people to start using your product) and
2. engagement (getting people to use your product habitually).

Unless you’ve cracked these two and people are using your product regularly, you won’t have enough opportunities to encourage them to buy or upgrade the product (monetisation), refer the product to others (acquisition) or create content that attracts other users (acquisition).

Acquisition

Product-led acquisition can be great if you can get it to work as it can be extremely cost-effective at scale. But for many B2B businesses it’s not a good fit.

If your product has a one-to-many relationship between its users, i.e. if it has collaboration at its core (e.g. Slack or Miro), then product-led acquisition can be a good model.

If your product doesn’t have this sort of one-to-many relationship (and most B2B products don’t), then getting product-led acquisition to work is going to be very hard. Instead, you’ll probably want to look at marketing-led or sales-led growth models.

Monetisation

Your product can assist with monetisation in a couple of main ways:

1. Self-serve: allowing users to purchase the product themselves (e.g. through a company credit card.)
2. Product-led sales: using a sales team to sell to companies already using your product.

Whether a self-serve model can work for you will depend on your target market or sector. But even if your target market generally isn’t ready for this model today, you may find it becomes more receptive to it over the coming years.