This article is written together with Wes Bush, founder and CEO of ProductLed and one of the world’s leading experts on PLG. He is the bestselling author of Product-Led Growth: How to Build a Product That Sells Itself and the upcoming Product-Led: The Modern Way to Build a SaaS Business, coming up in 2024.
In this article, Wes and Stefan, Cello’s Co-Founder & CEO, discuss:
- The challenges of standing up and scaling growth loops in PLG SaaS
- The role of incentives in accelerating cycle time for PLG growth loops
- Real case study applications from the likes of Moss, X, Superhuman, and TL;DV
💡 The below is just a summary of the key facts, the original article can be read on productled.com.
In the current economic climate, achieving growth without drastically augmenting customer acquisition costs has become increasingly difficult. Growth loops, compounding systems that reinvest outputs for further input, are thus crucial in achieving sustainable and scalable growth. The piece categorises incentives into extrinsic, intrinsic, and social, delving into real-life case studies to illustrate their impact on PLG growth loops.
| Growth Loop Element | Description | Example & Strategies for Acceleration |
|---|---|---|
| Understanding Incentives | Incentives are rewards offered for a specific action, crucial for enhancing growth loops. | Types: Extrinsic, Intrinsic, Social. Implement relevant incentives to motivate desired actions. |
| Viral Loop Example: Moss | A referral program where both referrer and referee benefit, enhancing user sharing. | Two-sided incentives and pre-written email templates for effortless sharing. |
| UGC Loop Example: X.com | Content generation by users, incentivized to share for rewards. | Sharing ad revenue with content creators to motivate content generation and distribution. |
| Casual Contact Viral Loops: Superhuman & tl;dv | Incentivizing users to maintain brand presence in their output, attracting new users. | Rewards for keeping branding, automating referrals in communications for easier sharing and sign-ups. |
Incentives in Growth Loops
- Incentives promise future rewards for specific actions.
- There are three types of incentives.
- Extrinsic = tangible rewards, both outside and inside the product experience.
- Intrinsic = rewards driven by inner motivations.
- Social = rewards stemming from social interaction, such as recognition.
Incentivised Viral Loops
- These normally entail two-sided incentives, extrinsically rewarding both referrer and referee.
- An example of this is Moss, which creates viral loops with pre-written templates, an effortless sharing experience, and attractive financial rewards.
User-Generated Content (UGC) Loops
- UGC loops consist of growth created through product usage and content creation by users.
- X, for instance, incentivises UGC loops by sharing ad revenue with creators, leading to more content being published.
Casual Contact Viral Loops
- Casual Contact loops occur when users indirectly attract new ones through product usage, including through "Powered By" labels.
- Companies such as tl;dv and Superhuman place such labels in strategic locations, and reward customers for keeping these even after upgrading to premium plans. This increases casual touchpoints, leading to viral loops.
Check out the entire article using the following link!
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