- Cost-Effective User Acquisition
Product-led growth (PLG) offers solutions that de-emphasize relatively costlier strategies such as the employment of extensive sales teams or expensive marketing campaigns. Instead, PLG encourages businesses to focus more on the product itself to acquire customers. Research from Totango reveals that, on average, companies spend $395 for customer acquisition. PLG has the potential to drastically cut down these costs and efficiently increase profitability.
Company: Slack
Tactic: Freemium model, enabling free use of the cambodia businesses directory platform with additional paying options.
Result: Millions of self-acquired users, cutting CPA significantly, thus saving substantial expenses.
A real-life manifestation of this practice can be seen in the business approach adopted by Slack. This platform used a ‘freemium’ approach, allowing teams to use the application free of charge with an option to upgrade depending on their requirements. Thanks to the freemium model, Slack enjoys growth as the product itself draws in millions of users, drastically reducing their cost per acquisition (CPA).
- Lower Churn Rates
Churn rates — the ratio of customers who discontinuate their subscription within a defined period can be daunting for businesses. These attrition rates can prove to be costly in the context of profitability and sustainability. According to data from ProfitWell, a 1% difference in churn can lead to a 12% difference in company valuation over five years.
An exemplary display of managing churn rates can be seen from Slack again.
To elucidate further:
Success Story: Slack
Key Focus: Building a product that users love and need.
Result: Exceptionally controlled churn rates.
Slack cultivated an environment that allowed customers to communicate easily — they built a product that consumers genuinely loved using. As a result, Slack experiences incredibly low churn rates, making it an exemplary figure in the SaaS world.