5 Things IT Needs to Know About Product-Led Growth Strategies

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Product-led growth is taking Silicon Valley by storm with companies crediting their recent IPO success, and chances are, you know what product-led growth is without knowing the term ‘product-led growth’ (PLG). A PLG strategy is one that mindfully relies on the product as the primary driver of customer acquisition and retention. Companies like Slack and Zoom became household names during the pandemic using PLG strategies. Want to collaborate? I’ll Slack you. Or, I’ll send you a Zoom invite. To have that conversation with your boss or join the virtual happy hour with your friends, you (very seamlessly) became a user, too. To take advantage of premium services, you became a paying customer.

While any number of industries can employ basic PLG strategies, it’s become very popular with SaaS companies. As your users continue to download more and more software agents to get their jobs done and then invite others to open their files with Dropbox for example, you can begin to see why PLG is hot right now, and how a literal SaaS explosion is forecast to continue.

While your marketing team may be well-versed in PLG, why should IT care about this trendy growth strategy? Here are 5 key things to know.

1. What is PLG?

PLG strategies can be both a stressor and an opportunity for IT. Free trials and freemium software (often-used tactics included within the larger PLG go-to-market strategy) can be the stuff IT nightmares are made of and, while the security and compliance risk they pose is real, it doesn’t have to all be doom and gloom. The discovery that another software option delivers faster, more efficient task completion can be an important productivity saver (not to mention employee morale booster) and the fact that it can be easily shared with another team member is also a plus.

2. PLG strategies are here to stay

Long gone are the days where IT is first and foremost a technology gatekeeper. Today’s savvy IT teams are embracing distributed software buying models and, while some of your procurement processes may still lag behind this shift, business unit led software purchases are more the norm. More and more, the shift is evolving even further into individual-led purchases. Users are leading the charge and signaling what they need to succeed in their jobs and bring value to their team, and their organization.

SaaS vendors with PLG strategies further this evolution with high-quality software products and exceptional customer experiences that are seamless to launch. A few clicks, maybe a credit card, and your user is off to the races, making referrals to their team members along the way. Conversely, users have this expectation today. They want to do their own research (A.K.A. ask a friend), try before they buy, and instantly download. PLG, when done well, delivers on each of these customer preferences.

3. To embrace PLG, you need visibility

In a recent study by Snow Software, most organizations report running 100 to 1000 SaaS applications across their network and 73 percent of IT leaders indicated their SaaS spend had increased over last year. How can IT navigate today’s PLG-fueled SaaS landscape while still contributing to the security and growth of the organization? It starts with comprehensive visibility into software, its usage, and consumption. PLG strategies deliver the very aspects that often make SaaS so appealing – easy to procure and deploy. But they also can lead to decentralized, unmanaged SaaS usage, wasted spend, and increased security risk. Visibility of all SaaS applications, including hybrid applications like Microsoft 365 as well as the popular free and freemium applications, gives you the ability to manage and optimize SaaS applications before they get out of control.

4. Data analytics need to be a priority

Visibility arms you with the data needed for strategic, safe software usage across the organization. Data-driven insights can lead to application rationalization, or a look at what should be kept, replaced, retired, or consolidated. In addition to saving money, this work also enhances productivity – so employees don’t have so many software options to choose from that they waste time becoming a jack of all trades but master of none. Data also allows you to shore up security and compliance risks and hold definitive, more effective software vendor negotiations come audit or renewal time.

Data is also the fuel you need to deliver concrete guidance back to the business unit. It’s the foundation IT stands on for serving as a trusted advisor to the rest of the organization. Take year over year usage growth for example. If ‘X’ is what this year looks like, we will identify any unused accounts, duplicate users, and unnecessary premium subscriptions as well as account for headcount growth, and budget for that amount +2 percent to mindfully land on ‘Y’ for next year’s budget. Data can also be the proof you need to say, this software works well for us therefore a change is unwarranted.

5. Governance doesn’t have to be a bad word

Analyzing the data gives you the power of perspective over your SaaS environment. It allows you to find and address waste and directs you to valuable optimization steps. It will lead you to processes that help keep spend under control and risk minimized, including such things as software requests and approval, account provisioning, and managing end user devices. These processes – or governance – often get met with user frustration and they are considered little more than a necessary evil. But they are actually much more. They serve as the backbone for how IT contributes to the security and growth of an organization. They are also how IT navigates the here-to-stay trend of product-led growth.

SaaS companies are experiencing huge growth and don’t show any sign of slowing down. To ensure your company is reaping the benefits of your SaaS investments and minimizing the risks involved, now is the time to understand how PLG strategies are impacting your IT environment.

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