Customer vs Product Led Growth

A couple of recent posts on LinkedIn have discussed the difference between Customer Led Growth (CLG) and Product Led Growth (PLG). It is a question I have been asked many times.

My answer is simple: the two are different in scope but can and often do co-exist. There are more similarities than differences; one being both are often misunderstood.

Let’s begin with a definition of each.

My definition of CLG is “everything an organisation does to profitably win, satisfy, retain and grow its chosen customers better than the competition” (more here). CLG applies to any B2B SaaS business and embraces many different go-to-market (GTM) strategies. It embraces all customer facing activities, including product. For me, it is a cornerstone of any successful business.

According to Product Led, “PLG is a business strategy that relies on using your product as the main vehicle to acquire, activate and retain customers.” Many believe, wrongly in my view, the PLG is just a customer acquisition strategy. There is no doubt that that is where the movement grew and it still dominates both practice and debate. But as the definition suggests, it is much more. In fact, I would go further than Product Led’s definition, tweaking the definition to: “PLG is a business strategy that relies on the product to win, satisfy, retain and grow chosen customers”.

Done well therefore, the only difference between the two is the primary vehicle for delivery. This has always been my view. My book “Customer Led Growth” describes seven principles underpinning CLG. Many of them apply to PLG. Here’s how.

Principle 3: People not customers. CLG companies recognise that individuals are the real focus, not faceless companies. Communicating and delivering measurable results to key customer roles is the key to CLG. The primary distinguishing feature of PLG is then focus on the individual. The typical PLG bottom-up sales motion using freemium and free trial are focused on winning individual buyers. Some of the better PLG products use role-based paths to improve context.

Principle 4: Build a deep understanding of customers. If it is to succeed in acquisition, activation and value realisation PLG has to address the needs of users directly: there are no people to interpret and explain. This is only possible if the product is built on a deep understanding of the needs of the key customer roles the product serves. It has to be ridiculously easy to use. Any friction leads to drop out, suppressing conversion rates thereby increasing acquisition costs.

Principle 5: Success is selling. Customer led growth is based on a simple red thread running through the customer lifecycle: a focus on communicating and delivering measurable results to key customer roles. PLG is only successful when individuals recognise benefits from using the product. Jay Simon, the former president of Atlassian, a poster-child company for PLG said “Software should be bought, not sold.” People only buy if they see something in it for them. They only renew and expand their purchases if that expected benefit is realised.

Principle 6: Their choice, not yours. CLG companies take their lead from the customer. They don’t seek to impose their processes on the customer. The best, but not all, PLG companies do the same. They eschew fixed customer journeys giving customers more choice over how they work. That said, this is an area where many PLG can do more.

Principle 7: Code scales better than people. This is based on the following:

• A B2B SaaS company is a product company. It makes sense therefore to lead with product;

• Technology advances enable product-led and AI is massively enhancing capability;

• It’s what many customers want - a great self-service is the first choice for many customers;

• It makes sense financially - code scales logarithmically but people scale linearly.

The world seems to be obsessed with seeking differences over commonalities. Many discussions on LinkedIn are about the differences between this and that. PLG and CLG is just one more example. I don’t see these differences. I see two approaches that are hugely complimentary and overlapping. I am not surprised the best product-led companies are also some of the best customer-led companies. Let’s have less ‘vive la difference’ more ‘vive la similitude’!