Your product-led growth strategy hinges on (at least) 3 factors

1. Product stage

If you haven’t yet found market fit, your goal should be to find the right problem with the right solution for a market that cares enough about that problem to want to pay for your solution. Your product driven growth strategy should be in direct service of that and only that. Trying to grow too early without any market fit will leave you an extremely leaky funnel (and a bad taste in people’s mouths…since you only have so many chances to make a good impression). We’ve seen this in the last 18 months with Clubhouse, which hit a viral peak in early 2021 and has since apparently lost 70% of its users.

If you have found market fit, your product driven growth strategy should be influenced by the other factors below.

2. Customer insights + value prop

How do people use your product? Is it a social product that grows in value as more people come onto the platform (e.g, Reddit)? Is it a transactional product that people only come to once in a while (e.g, CarMax)? Is it a subscription product with a physical delivery of goods or services (e.g, MeUndies)? You need to start with how people are using your product, where they’re spending their time, and what they’re actually doing on platform that could be exploited for growth to new users.

Let’s take each of the above examples and see how their product-driven growth strategy may differ.

• Reddit: Each time someone posts on Reddit, their posts are indexed by Google and searchable by a new user. The more users on the platform who are posting or engaging with various features, the more value each subsequent new user may get when they land on a Reddit page. Because the mechanic of the core product is all about asking-and-answering (or posting and responding), this content-driven SEO growth strategy matches the natural human behavior on the platform.
• CarMax: It’s not every day that you’re going to buy a used car. Infrequent products require very different growth strategies because it’s challenging to gain enough understanding of users if they only come to your product once or twice a decade. Vivek Kumar has written about this extensively in his ICED Theory post. He recommends growth strategies that increase the predictability of knowing the time of a transaction (e.g, when you’ll buy a car) and increasing the frequency and volume of touchpoints with the brand (e.g, content marketing that keeps the brand top-of-mind early on any infrequent-but-lengthly purchase decision).
• MeUndies: Wearing underwear may not be a niche market, but buying an underwear subscription may well be. That said, the decision to buy underwear is (usually) not a social one, nor one that requires deep decision-making investment (like buying a car or understanding taxes). But their customer — I don’t know, probably a millennial, urban socialite who cares about quality, ease, and playful self-expression — does spend time on social media and shops heavily online. Paid marketing on Instagram as a growth strategy may be high ROI because that’s where this audience already lives and is buying clothing. While paid marketing itself isn’t purely product-driven growth, getting folks to “match undies” with their partner once they’ve landed on the site certainly is.

3. Your pricing structure

When bootstrapping a product for initial market-fit, you may need to pay upfront to acquire new users. But over time, you want to be careful about how your cost structure works so that acquisition of new users doesn’t cost more than the value they bring to your platform.

Product-driven growth generally assumes a lower cost of acquisition. After all, if the product is “growing itself,” you don’t have to go out and pay for new customers through traditional channels. That said, different growth strategies have different costs. Depending on you goals, these strategies may be more or less attractive.

Let’s walk through how pricing works for the examples above.

• Reddit. Because Reddit is a user-generated content site, and drives growth primarily through SEO and virality, they primarily monetize through on-platform advertising. They more eyes on their site, the more demand they can drive from advertisers. Money from advertising can then be re-invested in other mechanisms that continue to drive growth (whether that’s advertiser tooling, improving core engagement features, or expanding to new use cases or markets).
• CarMax. CarMax also takes advantage of network effects by serving both sellers and buyers of used cars. Because CarMax is an infrequent product on high-ticket items and because they capture both supply and demand of used cars, their pricing structure is different than a regular used car dealership. They can focus on high throughput of vehicles at lower prices because the chances of selling a car on their platform is higher given their national network of local stores. Their growth strategy — to open up new dealerships to capture local supply that can then be sold anywhere across the country — is product-driven because people looking for a new car can purchase online from any CarMax and have it delivered locally.
• MeUndies. Changing customer behavior from one-time-purchase of underwear to a subscription is no easy feat, but enables MeUndies to invest in both product- and marketing-driven growth tactics because each individual customer likely has higher LTV. As each new customer comes aboard and enjoys the product, they are more likely to recommend it to people they know and increase virality, which drops the cost of new user acquisition even further.

The connection between audience, value prop, pricing structure, and product stage will help you determine which options from the menu of growth strategies to choose from.

What are different product-driven growth strategies?

Since we’re talking about product-driven growth, I’m going to ignore sales and paid marketing motions, though they may be even more powerful for you depending on your product and audience (so don’t discount them just because PLG is hot these days!).

Start by articulating what growth means to you: who you’re trying to reach and through what type of lever — acquisition or revenue?

Note that I’m assuming acquisition isn’t just about getting a new set of eyeballs to your product. Instead, it’s about getting a new user activated and on their way to retained. Acquiring new users who never activate or retain is never a good growth strategy.

• Are you trying to acquire new users in your existing niche? (e.g, find more people who are high-intent and meet your existing well-retained user profile who could be using your product)
• Are you trying to deepen the value you’re getting from existing users in your niche? (e.g, usually through increasing value prop or use cases served and then charging more)
• Are you trying to grow to new users in an adjacent segment? (e.g, find people who share the use cases you serve but may be in a different vertical)
• Are you trying to grow to capture an adjacent segment with different needs at a higher price point (e.g, going up-market from mid-market to enterprise)

Determine what quadrant you want to play in and why. Then articulate how people in that quadrant are going to find your product through the product mechanics itself. There’s really only a handful of sustainable and compounding product-driven growth loops.

• SEO: This is usually driven by content that gets in front of people early on in their journey to your product (NerdWallet does this through content marketing around managing your finances; Yelp does this through restaurant reviews). SEO works best for products that are inherently content-oriented or that can produce large catalogues and create wide surface area that can be indexed by search engines (Etsy, IKEA, etc).
• Virality (word-of-mouth): This is usually driven by your product experience just being really awesome…so much so that other people start talking about it and people join the parade. Think about why and how a user of your product would tell someone else about it, and then design around that motivation. For example, Substack newsletter subscribers often forward a newsletter to their friends because they’re motivated by sharing knowledge, seeming well-read, or being in some sort of social dialogue. Designers using Figma often share their files with Product Managers in order to enable them to collaborate. Virality works best for products that her inherent social, sharing collaboration features (e.g, Dropbox, Tiktok, Bumble)
• Network-effects: Marketplaces where supply and demand can grow each other can be particularly magical for growth. Faire is a good example of this — existing retailers bring new brands to the platform, who in turn drive demand from other retailers.

*Note that I haven’t discussed here specific activation strategies (e.g, offering freemium trial to new customers so they can try-before-they-buy). Once people arrive at your product, platform, or storefront…you still need to active them effectively.

If you’re trying to bootstrap a product that doesn’t yet have market-fit, you may off for less-sustainable strategies to see your product grow. Lenny has a great list of what he calls “Turbo boosts” in this post about kickstarting growth.

Putting it all together

• Growth is not just one thing. It’s really about the successful pairing of audience, value prop, pricing structure, and product stage. To come up with a good strategy for how to grow sustainably, you need to think of all four of those in concert together. And you need to ensure that the strategy you deploy actually activates new customers, not just brings them to the platform only to then immediately churn.
• Approach niche markets with the same principles as you would any market: focus on a clear customer problem, ensure people actually care enough about that problem that they’re willing to pay for a solution for it, and ensure that your solution actually solves that problem at the right price point.
• Sometimes it’s better to deepen your offerings within a market rather than expand to adjacent markets. Revenue growth within a segment is sometimes less expensive than expanding to multiple segments.
• If you’ve already hit product-market fit, your product-driven growth strategies will likely stem from either SEO, virality, or network effects. By focusing on the customer insights of how people actually use your product in their real lives, you can get clued into which of those strategies is likely to be highest leverage.