Companies are valued based on metrics. Those with better metrics are valued higher, and those with worse metrics are valued lower.
None of this is controversial, but it’s also not helpful for getting started – metrics alone don’t help you build a business. They can help you set goals, but they don’t do much to help you achieve those goals.
What if startups reverse-engineered and started thinking about what successful companies do to ensure their success. If startups start by focusing on the tactics successful companies use, can they tie them to the metrics they help elevate? And if manufacturers follow enough of these tactics and improve enough of these metrics, then can they achieve the ratings of the leaders they want to emulate?
If you want to be a product that constantly attracts new logos, you have to be visible.
Since the term “product-led growth” (PLG) was first coined in 2016, the startup community has been focused on answering these questions. PLG is defined as a growth model where product use drives customer acquisition, retention and expansion, and it has always been focused on developing for the end user. But as end users have seen their lives and the way they work change over the past three years, the tactics companies employ to enable PLG are changing.
Here are 11 principles that can guide readers to success, even in volatile markets:
Those at the forefront, “PLG leaders,” are those that use more than nine of these product-focused principles, and those that follow very few (or none) are labeled “traditional SaaS.”
Overall, the variance of the measures is striking. PLG leaders achieved 95% higher revenue scale while continuing to grow 141% faster than their peers, retaining 11% more of their revenue, and remaining more than twice as efficient with rule of 40.
Not surprisingly, all of this leads to 82% higher multiples, but what exactly are they doing?
Building to discover
Today’s products are not launched, they are discovered. They don’t walk into a business from the briefcase of a sales rep to an executive screaming for adoption in an all-in-one training session. They’re found by everyday people looking to solve everyday problems through Google, communities or friends – that’s where the new user journey begins.