Customer-Led Growth

What is Customer-Led Growth?

Customer-led growth (CLG) is a business methodology where customer insights are the driving force behind business growth initiatives. This approach puts the customer at the center of all business decisions, from product development to marketing strategies.

The B2B sector, particularly software sales, has increasingly adopted CLG. It focuses on understanding and meeting the preferences of modern buyers, who value quick results and independence in decision-making and often complete over half of the decision-making process before contacting a supplier.

In practice, a CLG approach in SaaS involves:

• Mapping the entire customer journey
• Collecting insights through welcome flows and micro surveys
• Tracking feature engagement
• Closing the customer feedback loop by acting on the feedback they receive
• Using the Voice Of The Customer in your sales and marketing processes

The customer-led approach ensures business decisions are not based on assumptions but on real customer data. This creates a more user-centered approach across the organization. And it drives a deeper understanding of customers and their needs.

Synonym

• CLG

What it Means to Be Customer-Led

Being “customer-led” means adopting a business strategy and operational approach that places the customer at the center of all decisions.

It involves several key aspects:

• Deep understanding of customers’ needs, preferences, behaviors, and motivations
• A continuous flow of product use data through clickstream and surveys
• Tailored products, services, and experiences that precisely meet customer expectations
• An organizational culture that prioritizes customer needs
• Robust customer marketing and advocacy programs
• Responsiveness to customer feedback during product development
• Decision-making based on customer data, rather than assumptions or historical precedents
• Sales, marketing, product, and customer success team alignment
• Continuous learning and iteration

CLG strategies integrate customer feedback at every stage, from initial development to post-launch improvements, ensuring that the products and services offered are closely aligned with customer needs. Over time, alignment with their customer base is how companies achieve product-market fit and develop long-term customer relationships.

Customer-Led Growth vs. Product-Led Growth in B2B

Customer-led growth (CLG) and product-led growth (PLG) are two distinct strategies that companies use to drive business growth. Both have their unique features and can be effective in different scenarios.

Customer-Led Growth (CLG)

CLG centers around understanding and responding to customer needs, preferences, and feedback. It involves customizing the sales process and product offerings based on what is learned from customer interactions.

In CLG, the customer journey is mapped out in detail, with attention to customer decision points and preferences. The sales and marketing efforts are tailored to these insights. That’s what makes it particularly effective in markets where customer needs are diverse or rapidly evolving.

Product-Led Growth (PLG)

PLG puts the product at the center of the growth strategy. The product itself is designed to attract, engage, and retain customers. This approach relies on the product’s features, usability, and inherent value to drive customer acquisition and expansion.

The product is often self-service or has viral elements that encourage user adoption (for example, a referral program). In PLG, the product is normally the first point of contact with potential customers. A free trial or freemium model is commonly used to attract users.

PLG can be highly scalable, as it leverages the product to drive growth. This potentially reduces the need for large sales and marketing teams. It’s effective in situations where the product can speak for itself through its functionality and user experience. SaaS companies often use it when their products have a quick time-to-value.

What’s the Difference?

There are three main differences between CLG and PLG:

• CLG is more adaptable to markets with diverse customer needs that require a personalized approach. PLG works well in markets where the product can meet the needs of many with little customization.
• CLG often involves a more traditional, relationship-driven sales process, while PLG relies on the product to drive the sales process.
• In CLG, customer interaction is crucial throughout the sales and product lifecycle, whereas with PLG, the product often facilitates the majority of the customer interaction.

Most B2B companies find it beneficial to integrate CLG and PLG approaches. For instance, using a product-led approach for a go-to-market strategy, then using customer-led processes for personalized expansion and retention.

How Customer-Led Growth Addresses Changing Buying Behavior

To understand the current state of B2B buying behavior, let’s look at a few stats:

• More than 45% of B2B buyers are between 25 and 34 years old, making the younger generation of business professionals the largest and most influential, proportionally.
• The average buyer is as much as 70% of the way through the purchase journey by the time they talk to sales.
• 72% of buyers say they want an entirely rep-free buying experience.
• 80% of B2B buyers agree they want the same level of personalization as their B2C counterparts.
• Four out of every five business buyers expect “real-time” interaction with businesses.

The message is clear: today’s B2B customers want personalization, speed, and self-service. They want companies to give them the resources and tools to find information, conduct research, and make informed decisions. When they’re ready, you have to be there waiting.

CLG addresses these fundamental shifts head-on by:

• Adapting to buyer independence by providing resources and tools that empower buyers to explore products and services at their own pace, offering support and information in a non-intrusive manner.
• Meeting buyers where they are. Whether a prospect prefers a traditional sales interaction or a self-directed model, CLG strategies are flexible enough to accommodate different buyer preferences at different stages of the funnel.
• Integrating customer insights into product development and sales strategies, leading to better alignment with customer expectations and increased loyalty.
• Leveraging data and analytics — customer interactions, preferences, and feedback — to improve user experiences.
• Building long-term relationships through continuous customer engagement.
• Cross-functional collaboration between sales, marketing, and product departments, which have to be aligned to execute the overall CLG strategy.

It all comes down to customer obsession. If you’re not constantly thinking about your customers, you won’t be able to successfully implement CLG. It’s about understanding their needs, preferences, and behaviors and using that insight to drive growth at every stage of the customer lifecycle.

Benefits of a Customer-Led Growth Marketing Strategy

CLG aims to bridge the gap created by these changing buyer demands by providing a more tailored and responsive buying experience.

The benefits of this strategy include the following:

Higher Customer Retention

CLG focuses on creating long-term relationships. Since it’s about understanding customers and their needs, this strategy leads to increased retention rates because you’re continually working to improve customer satisfaction.

Increased Customer Engagement

Customers won’t just stay longer, they’ll do more with your brand. When you focus your content, product, and sales process on them, you create an environment that encourages engagement.

Over time, continually engaging your content means they’ll get more value from your product. And they’ll implement it into their business workflows more effectively. For your brand, this solidifies their “active customer” status and improves their chances of turning into advocates.

Increased Customer Lifetime Value (CLV)

Retention in and of itself improves customer lifetime value. But higher engagement with your product and marketing means your customers will advocate for your brand and expand their product usage long-term.

So, they’re not just bringing in the same revenue every month. As they grow their own businesses, most of them will create sources of expansion revenue — additional users/seats, subscription upgrades, and complementary products that improve their workflows.

Engaged customers are also the ones who are willing to share their success with others. They’re the referrals, case study candidates, and reviewers who generate new leads for your business. With CLG, these customers become more like your partners.

Lower Customer Acquisition Costs

Retaining and expanding your current accounts is roughly 5x more profitable than acquiring new ones.

Why?

• Sales infrastructure is expensive. Hiring, training, and equipping reps, creating content, and designing sales processes — these all require extensive time and money.
• Buyers don’t trust salespeople. 92% of customers trust referrals over your business’s sales and marketing materials.
• Everyone wants to see ROI. Over three-quarters of today’s buyers look at 3+ forms of advocacy before they make a purchase decision.

By providing the best possible experience, keeping an open line of communication, and turning your customers’ feedback into your best marketing asset (three fundamental principles of CLG), you’re creating an army of brand advocates who will bring in new business for years. And, since they also validate your product, you’re making it easier for your sales team to close deals with new prospects.

Improved Brand Reputation

Social proof validates your position as a high-quality vendor. By prioritizing the product features and marketing collateral your customers are asking for, you’re doing two things:

1. Maximizing the amount of new social prof you create
2. Continuously reinforcing why you deserve it in the first place

When you retain customers long-term by offering a great product, your sales team will have to start fewer conversations by answering, “Who are you guys?”

Better Product Development

The idea that product innovation happens by chance is purely a myth. Customers are the best source of insights into what your product should do. Every successful company builds its product around customer needs and pain points — not the other way around.

CLG emphasizes developing your product roadmap based on what customers want. Once you go to market with new features, continuous data and feedback collection will help you refine that feature set.

Reduced Marketing Costs

With customer-led growth, customers amplify your marketing communications. All the customer-generated content you get from reviews, case studies, testimonials, referrals, and social media is free marketing. Their audience sees it, and you can repurpose it for yours.

Adaptability to Market Changes

CLG is focused on understanding and responding to customer needs. This means that as the market changes, so does your approach. You’re not beholden to one particular marketing or sales channel, but rather able to pivot quickly based on what your customers are responding to.

Data-Driven Decision Making

When you always have a pulse on what customers are thinking and doing, you can make high-level decisions backed by data. You’re not making assumptions or guesses about what your customers want and need, but rather listening to their feedback and taking action based on that information.

How to Implement a Customer-Led Growth Strategy

Here’s a step-by-step guide on how to implement a customer-led growth strategy:

1. Implement the right technology.

Before you can even think about leveraging your customers for data, feedback, and advocacy, you need to implement the right software.

Briefly, this includes:

• A customer relationship management (CRM) system
• A customer data platform (CDP)
• Web analytics software (GA4, heatmapping tools)
• Product analytics tools (e.g., Userpilot, Mixpanel)
• A customer marketing and advocacy platform
• Marketing automation software

Your CDP is the most important of these tools for CLG. It provides you with a single source of truth about each customer, integrating data from all sources and giving you the insights needed to create targeted, personalized experiences for customers. It also helps you create automations that personalize their web-based and in-app experiences.

2. Understand your customers.

If you’ve developed and/or launched a product, you’ve already started doing this. Now it’s time to take it a step further. Use your CDP and CRM to analyze all your data, segment customers, and understand their behaviors, preferences, and needs.

3. Gather customer feedback.

Gathering feedback means talking to three types of customers: new, high-value, and churned customers.

• New customers are your best source of info about the onboarding and implementation processes. Since you recently closed them successfully, they’re also a valuable source of insight into your sales and marketing techniques.
• High-value customers (or “evangelists,” “power users,” or whatever you want to call them) are your ideal customers. You need to learn what differentiates people in these groups from your everyday customers.
• Churned customers are a learning lesson. Why did they leave? Was there something you could have done to prevent it?

A solid Voice Of The Customer (VoC) program will collect quantitative insight through in-app surveys and feedback forms. It will also gather qualitative data from usage patterns, help desk conversations, and support emails (in other words, the stuff your CDP and product analytics tools collect).

4. Build a customer-centric culture.

It all starts from within. Even with an integrated tech stack and continuous data flow, the only way to be truly customer-led is to have a culture that puts customers first. Here are some key steps you can take:

• Train and enable your support, sales, and marketing teams to communicate better with customers
• Encourage cross-functional collaboration through interdepartmental meetings and discussions
• Create a system for employees to provide feedback on customer needs

Create Slack channels to share insights and hold meetings where everyone can convey what they’re hearing and discussing with customers. And publicly celebrate successes like customer wins and positive feedback.

5. Personalize customer experiences.

Personalization can happen in a lot of different ways (and it has to) if you want to create a truly customer-led growth strategy.

• Personalize website and app experiences. This is the obvious one. You know what each customer does and wants; therefore, use this information to tailor their web-based and in-app experiences. Where you can, create automations (e.g., guided product tours based on previous usage).
• Personalize marketing messages. By integrating your CDP with other tools like marketing automation software, you can personalize messages to customers based on their behavior and data.
• Use your CDP to create targeted upsells. By analyzing customer data, you can see what types of users are most likely to buy which products or features.

6. Continuously improve.

Once you have everything running, you’ll need to keep track of performance and activity. This includes both macro-level data (e.g., conversion rates, retention) and micro-level data (in-product clicks, engagement levels).

7. Implement customer success and advocacy programs.

Once you have all sorts of feedback, the real benefit of customer-led growth presents itself: while the customer benefits from a better product, you can use their positive feedback and advocacy to drive more leads and sales.

• Create a customer success program that’s focused on making sure customers achieve their goals with your product.
• Implement an advocacy program that encourages referrals, reviews, testimonials, and case studies.
• Turn customer feedback into marketing collateral. User-generated content can reinforce your marketing messages. Knowledge of customer pain points can help you write better copy.

8. Reward customer loyalty.

99% of the time, a customer advocacy program doesn’t work, it’s because the experience wasn’t rewarding enough. If you want your customers to help you, you have to make it worth their while (it takes too much time and effort otherwise).

Rewards could be in the form of…

• Gamification, like points, badges, and discounts
• Early access to new features or beta versions of you product
• Discounts on future purchases or renewals
• Exclusive access to events, webinar, or content
• Gift cards to preferred vendors or popular stores

You should also close customer feedback loops. When someone gives you specific feedback about a product or feature (and you implement something they suggest), it’s easy to send an automated in-app message like:

“You asked, and we listened! Based on your feedback, we’ve implemented {Feature X}, {Feature Y}, and {Feature Z}. Thanks for helping us improve out product.

Show me how it works.”

This is an easy way to personalize and engage your customers while reminding them you’re listening to them specifically.

9. Monitor key performance indicators (KPIs).

As far as customer success is concerned, there are two main KPIs you want to look at:

• Monitor key Customer Satisfaction (CSAT) — What percentage of customers are happy with your product?
• Net Promoter Score (NPS) — How many of your customers would recommend your product to a friend or colleague?

These two KPIs can help you gauge the success of you customer-led growth strategy and identify areas for improvement.

10. Iterate and scale your program.

With technology and streamlined internal processes, you’re ready to scale your program and keep iterating as you grow. This is where your data comes into play. Use it to identify patterns and trends, make informed decisions, and continuously improve your customer-led growth strategy.

People Also Ask