What is product-led growth?
...and why will it shape the future of e-commerce and retail?
Product Led Growth is a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself.
In layman's term, you grow through products-first. Marketing and customer service comes in later.
Working backwards from the customers, great customer service and personalized marketing is now table stakes.
"Don't find customers for your products, find products for your customers" - Seth Godin
Why care about product-led growth?
1. The Job of a Retailer
Although the "form-factor" of retail has changed quite a bit since the advent of the internet, the meta-job of a retailer hasn't.
The word "retail" comes from an Anglo-Norman French word meaning ‘a piece cut off’ or ‘to cut’.
The job of a retailer is not marketing, but rather, product curation.
On this level, retail hasn't changed that much.
Shoppers since depend on retailers and brands to curate, design, source, and/or manufacture the best set of products for them.
So product-led growth isn't a "new" concept, but rather, the OG* of growth strategies.
*Note: Slang for old-school
2. Cost of Marketing Channels
Ask any marketer what has changed over the last 5 years and they would point to the rising cost of advertising channels.
This isn't because they are bad at their job but rather a systematic side effect of how the internet has developed.
With fixed channels, increasing number of bidders and an acquisition power law, solely depending on advertising as a growth channel is increasingly becoming less attractive.
3. Lowest Hanging Fruit
Ironically, if you are retailers and brands that have built up quite an audience through marketing, you've done quite well up to this point.
You should have a sizable audience on social media and quite a large mailing list by this point.
Rather than increasing the frequency of social media post, why not invest some efforts and budget into shortening product innovation cycles.
New products mean new opportunities to up-sell, cross-sell, re-market and re-engage the audience that you've already built up over time.
From the financial perspective, you should see movement across three metrics
- Average Order Value
- Frequency of Returning Purchase
- Lifetime Value of Customers
How does one get started?
Without diving too deep into details; segment your data, identify trends, speak to users, launch, observe and repeat.
We tend to think that there are only one or two variables will sway our shoppers decisions (e.g. price and delivery time).
The truth is, every product has dozens, maybe hundreds of relevant "features".
Try this exercise.
Try to make your product appear in the top 50 boxes in Google image search without typing in your store name.
The keywords that you used are some examples of what your shoppers were thinking through when your product appeared in front of them.
Segment your products based on those dozens of attributes and analyze the sales based on that.
PS: If you need more help, subscribe to the newsletter and submit questions. I'd love to hear what you guys think and I'm always looking for new questions to focus on!