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The differences (and similarities) between product growth and product-led growth

Product growth vs. product-led growth. Only a word separates the terms—surely they’re interchangeable? Actually, not quite. You may hear the words thrown around in similar product management spaces, but the goals and tactics of these two ideas are different in practice.

Last updated

24 Aug 2022

This chapter of our growth product management guide simplifies the differences between product growth and product-led growth so you can stay close to users and create a product that delights and converts. By the end, you’ll understand the differences between the terms, and how to use each approach to learn about users and improve your product through your daily tasks.

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Product growth vs. product-led growth: what’s the difference?

Let’s get the theory sorted right away: how are product growth and product-led growth different?

Product growth is the act of increasing product usage and revenue. When you focus on product growth, you improve your product or positioning to get more people using (and buying) more of your product. For example, you could watch session recordings to finally figure out what element of your signup flow is causing page drop-offs, or redesign a page to boost engagement after heatmaps reveal that users are missing critical product information.

Product-led growth (PLG) is a go-to-market business strategy that focuses on the product as the primary way to attract, convert, and retain users. While your product is a core component of a product-led growth strategy, it’s only one piece of a broader, cross-organization movement. Product teams still play a role in improving the product to support PLG, but there’s also a focus on creating a product that grows the user base.

Product-led growth is about how to structure a company and strategy (putting the product first, like in many SaaS companies), whereas product growth is more about growing a product (acquiring users and customers, revenue growth, etc.).

Laura Wong
Growth Product Manager at Hotjar

Product-led growth and product growth in action

Now it's time to put the methods into practice—so how do you use product growth and product-led growth to make user-centric product decisions that delight customers?

Let's look at how the phases of growth product management and product-led growth align—and how each approach enables teams to build better products:

The 3 phases of growth product management

'Product growth' by itself is a goal, so you may see the term ‘growth product management’ used to represent the work you do towards the objective to grow. 

Let’s dig into the basics:

1. Build your growth product management team

So you want to grow your product? Time to call in the growth team. Your product growth stakeholders can include:

  • Growth product managers

  • Product marketers

  • Engineers

  • Lifecycle marketers

  • Designers

  • User researchers

Growth teams utilize a diverse set of skills because both your product and audience play a role in growth. Having a cross-functional team also gives you more touchpoints to learn about your users and influence the company’s product roadmap.

💡 Pro tip: set up your growth team to match company goals

Growth teams are inherently cross-functional, but there are different ways to organize them. For example, you could have separate growth teams focusing on particular phases of the funnel, or have teams own entire funnels for each customer segment.

The way you structure your team and goals should align with company initiatives and priorities, so you can:

  1. Get buy-in: articulating how your work supports company-wide goals gets leaders on board

  2. Go with the flow of the company: when everyone consistently works in the same direction, you gain momentum together

2. Track metrics that indicate expansion

The main goals of product growth are to increase your product's usage and grow your customer base. To achieve this, you’ll track metrics like:

  • User acquisition: targeting new audiences or boosting exposure in your target market leads to more people using your product

  • Customer growth: once people use your product, your goal shifts to increasing engagement and upsells

  • Revenue growth: any combination of product growth strategies can lead to more revenue 

  • Net Promoter Score® (NPS): delighted customers that refer you to friends or colleagues expand your reach, and can help you identify new jobs-to-be-done (JTBD) to boost product engagement and increase promoter scores

3. Learn about users to make informed updates 

Growing your product is a big job, but user data makes it much more manageable. User insights at every point of the customer journey help you understand where your product is now, and where it needs to be to delight more customers. 

Here are some examples of product growth tasks that will help you learn more about your users' needs:

📖 Storytime: how using a growth product management approach nearly tripled conversions

Once upon a time, NerdCow, a premium web design agency, set out to help a stock image site increase its conversions. The Transport Library had over 140,000 rail and bus images for sale, but no idea how to grow their product. They needed the skilled help of a growth product management team.

So, NerdCow galloped in with their faithful sidekick, Hotjar, to assess their client's website. With Hotjar’s help, NerdCow found three solutions to defeat the issues holding The Transport Library’s conversion rates back:

  1. A simplified search bar so the site’s non-technical users could find what they were looking for

  2. On-page graphics like badges, so users could swiftly spot which products were new and which ones they’d already viewed

  3. Abandoned cart emails and site notifications to nudge users towards converting

NerdCow set out on their Conversions Quest and completed the updates in two weeks. Then, like (data-informed) magic 🪄, The Transport Library’s conversion rates nearly tripled. 

NerdCow used tried-and-true growth product management methods—like user experience research and experimentation—to save the day.

The end! Or the beginning? You can read more of NerdCow’s story here.

The 3 phases of product-led growth

While product growth has a cross-functional team, its focus is fairly narrow: increase reach and adoption. Product-led growth, on the other hand, goes beyond the product to involve the entire company and its structure. 

1. Get the entire organization on board with product-led growth

While you can’t have PLG without the ‘P’, it’s a company-wide strategy, which means everyone is involved.

When everyone works in the same direction to implement product-led growth for SaaS, you can build momentum toward the common goal of making the product the primary driver of user acquisition, retention, and expansion. 

Your PLG stakeholders include company leadership, product managers and teams, sales, marketing, support, engineering, and design.

💡 Pro tip: implementing product-led growth takes thoughtful planning, but there are two frameworks that help you transform your organization: 

  1. A product-led growth funnel is a strategy to move potential users through various touchpoints toward a sale. It’s similar to a traditional sales funnel, but a PLG funnel uses the product experience as a stopping point in the journey. Funnels are a familiar concept for new product-led teams, but they don’t necessarily mirror how people behave. 

  2. A product-led growth flywheel is a method to utilize user engagement to grow your customer base. The flywheel doesn’t have a clear beginning and end like a funnel, because the goal is that the product experience and customer base lead to more sales. PLG flywheels shift attention to how people interact with and grow within the product.

Not sure which is best for you? Read our guide to choosing between funnels and flywheels.

2. Choose efficiency-focused product-led growth metrics

Product-led growth aims to develop a self-growing company. Some key objectives of PLG, which will indicate your progress towards building a company that grows itself, are:  

  • Lower cost of acquisition (CAC): a self-service buying model and low-cost and scalable PLG marketing channels—like content and referrals—are core components of product-led growth, and can reduce your CAC  

  • Quick time-to-value: the faster new users experience your product's value, the shorter the buying cycle, and the greater the customer satisfaction and delight 

  • Expansion MRR: ideally, the product experience and supporting materials—like in-app guides and targeted engagement emails—lead to customer upgrades or additional purchases

  • Churn rate: understanding how to minimize churn is a must for teams who want to create a product that delights customers and drives consistent engagement 

 3. Create a cohesive end-to-end product experience

Product-led growth has four company-wide pillars: market, model, channel, and product. Since the scope of PLG goes beyond the product, your work does, too. 

Some of the methods you can use to drive product-led growth include:

📖 Storytime: how one company shares user insights across every department

The more the merrier! At least, that’s how Marlin, a digital signage company, approaches user insights collaboration. 

Initially, Marlin’s product team used Hotjar to spot and fix bugs to improve the product experience. But why stop there, when the entire organization can lead with user empathy? Here’s how Marlin ensures everyone has access to user insights, and involves the whole company in product-led growth:

  • Developers gain empathy and pride in their work when they watch recordings of real users using a product they built

  • The sales team has quantitative data about how fast users complete workflows, which they can use as a product differentiator in competitive situations

  • The entire company sees how users interact with the product since the Marlin team displays recordings on internal displays

The Marlin office’s internal displays show a constant stream of Hotjar recordings

Everyone in an organization plays an important role in product-led growth, and user experience insights inform decisions. With a little creativity and empathy, everyone can use tools like recordings, surveys, heatmaps, and user feedback widgets to delight customers and drive growth. 

Learn more about how Marlin makes the most of Hotjar here.

How to use growth product management and product-led growth together

Product growth and product-led growth are separate ideas, but companies can use them in tandem; it may even help to think of growth product management as one piece of the product-led growth puzzle. The tasks and methods for each vary, but two guiding principles help you accomplish both: 

Approach your work with a user-centric mindset

Your users are the reason for your product, and the force behind product-led growth—you need to approach everything with their best interests in mind. 

Every time a user interacts with your website or product, they create valuable user experience insights. But without the right tools, you’ll never know where people feel delighted, confused, or downright frustrated. 

Product experience insights keep you close to users so you can create a product that's easy for them to try, learn, and share. 

For example, designer Charli Marie knew that removing friction in the buying process could improve conversion rates and create a better customer experience, so she used Hotjar Heatmaps and Recordings to investigate her website users' behavior on a sales page with a 1% conversion rate. One insight she uncovered was that people navigated away from the sales page to her ‘about’ page. This led Charli to include a bio on the sales page, since people seemed curious about the designer behind the product.

As a result of the sales page design changes, Charli said, “It's only been 2 weeks and we need more data to be sure about any changes, but so far the conversion rate is up to 2.9%! Definitely a significant improvement!”

💡 Pro tip: organize your efforts with design thinking to stay on track

There will always be an opportunity or issue to explore and improve—and that’s on top of your already-full backlog. Design thinking is an iterative process to solve problems by putting users front and center. Basically, if you want to be user-centric, design thinking is the blueprint

The five stages of the design thinking process are:

  1. Empathize with your users by learning about them and their goals

  2. Define problems based on the most common issues

  3. Ideate solutions without judgment or prioritization

  4. Prototype the solution with a minimally viable product (MVP)

  5. Test your prototype with real users to gather insight and measure the impact

Learn more about the design thinking process here.

Advocate for product growth and product-led growth

You can approach product growth with empathy all day long, but you have to break out of your silo to impact company-wide change. 

Every department and role constantly makes decisions that impact product-led growth and product growth, so everyone needs to work with the same information. Imagine how differently a family would pack for vacation if they'd all looked at weather forecasts for different destinations. Sharing user experience insights sets everyone in the same direction, so you can work and improve as a cohesive unit. 

Here are two ways to start sharing what you learn with your company:

  1. Host Hotjar watch parties. Since seeing is believing, host Hotjar watch parties to give people across the organization the opportunity to watch real users interact with your product or website. You can curate recordings that are relevant to different teams, or ask people in different roles what they’d like to understand about users. 

  2. Share new information in Slack. Hotjar’s integration with Slack makes it easy to keep your team updated with new user feedback, and to tag folks in updates that relate to a particular pain point, use case, user segment, or goal they care about. If your company already uses Slack, this is an easy way to involve everyonein the development process. 

#Hotjar's integration with Slack
Hotjar's integration with Slack

Product growth happens one step at a time

The prospect of being an agent for change for your users and organization is exciting, but keep in mind that product growth takes time

Stay empathetic and curious, and let your users be your guide. The more you learn about them—and the more insights you can share with your team—the more user-centric your product decisions will be, and you'll be well on your way to impactful and substantial product growth.

Plan your next steps toward growth

Hotjar helps you prioritize initiatives and uncover product growth ideas you’d never considered before with Heatmaps, Recordings, Surveys, and Feedback.

FAQs about product growth and product-led growth