Imagine this: You’re sitting in your weekly leadership meeting feeling perplexed. Despite the positive voices, you can’t help but notice the general mood is slightly on edge.
Your Chief Revenue Officer rattles off the latest lackluster revenue results. “Yikes,” is the word on most people’s minds.
New business was down for the quarter again. You catch a few contemplative looks and slow nods of acknowledgments.
Landing new clients is increasingly challenging, and the cost to acquire these coveted logos seems higher every month.
There’s got to be a better way to grow. What if instead of expensive sales blitzes to find new customers, you focused more energy on current successful customers? After digging into the data, huge opportunities become abundantly clear.
The path to sustainable growth has been right under your nose – through a strategy focused on retaining your current customers.
The key to your company’s woes lies in customer-led growth (CLG).
In this guide, we’re going to lift the lid on customer-led growth to get to the bottom of this winning strategic approach to business success.
Specifically, we’re going to hone in on:
- What customer-led growth means;
- The difference between customer-led growth, sales-led growth, and product-led growth;
- Why customer-led growth is so effective; and
- How to implement a customer-led growth mindset.
Are you ready to transform your business? Let’s go.
What is customer-led growth?
Customer-led growth (CLG) is a business strategy that prioritizes customer insights to guide growth. It focuses on expanding relationships with existing customers rather than acquiring new customers.
Customer-led growth shifts the focus from sales-led or product-led growth to customer-facing. Growth comes from better understanding and serving your current customers. Their insights uncover new opportunities to provide more value, increase engagement, and earn trust.
Research shows that CLG boosts revenue growth, customer satisfaction, and retention. It creates a growth engine fueled by loyal, happy customers. They naturally advocate for your brand and product.
CLG strategies drive growth through:
- Customer retention: Keeping more customers subscribed and on the books by understanding their needs.
- Expansion revenue: Upselling and cross-selling higher-priced or different products to current customers.
- Customer advocacy: Turning loyal customers into active promoters who refer new business.
The difference between customer-led growth, sales-led growth, and product-led growth
Sales-led growth (SLG) is your typical business strategy focused on acquiring new customers through sales and marketing channels. In a business that adopts this growth strategy, customer success tends to play second fiddle.
Driving revenue growth through sales is concerned with one thing: maximizing the number of new deals. Historically, this has worked almost without a hiccup. But the subscription model has completely flipped the lid on this traditional approach to business. In SaaS products, there’s been a shift in the power balance from the company to the customer.
Rebecca Fenlon, Head of Customer Success Management at eArcu, puts this brilliantly:
“Back in the day, when you bought software, you had a real heavy upfront investment – people, data centers, etc. When we removed that, we removed ‘customer stickiness’ because it's a hell of a lot easier for customers to move providers or buy new software. To basically change their whole approach.
“This has meant suddenly we have to work a hell of a lot harder to retain those clients. It's from that power shift that really the importance of CS comes in, and ultimately, CS can make or break your company.”
Nowadays, retention is king. And customer acquisition? Well, it’s a far more expensive endeavor.
But some champions of sales-led growth argue it is, in fact, customer-centric.
According to these advocates, direct customer interactions can provide sales teams with valuable insights into their customers’ needs and pain points. No doubt about it: this is valuable customer intel.
The white-glove approach of tailoring solutions to address specific issues is absolutely customer-centric. Customization based on feedback is key.
However, there are still differences between sales-led and customer-led growth:
- CLG sees the full customer journey, while sales-led growth revolves around transactions.
- CLG compiles insights from the entire org (support, sales, success, and product) for a 360-degree view of the customer.
- CLG incentives reward long-term value, not quick deal wins like sales-led growth.
- Sales have access to critical customer touchpoints, but CLG weaves together the mosaic of insights across the customer lifecycle.
This panoramic perspective allows companies driven by customer-led growth to serve their customers more holistically to drive growth.
Product-led growth (PLG) is a different beast entirely. PLG relies on the product itself being the primary driver of user acquisition, conversion, and expansion. When you have a wicked product to steer the ship, the rest will fall into place.
Here’s what the experts at Product-Led Alliance had to say:
“At the core of PLG is your product. It's not just a thing you're selling; it's the superstar of the show. The product must be so compelling that users can't resist exploring its features and benefits. It's like designing a product that's so irresistibly delicious that people can't stop themselves from taking another bite.”
But can product-led growth be customer-centric? Can it be more customer-centric than CLG? It’s an interesting question.
Product-led growth can certainly have customer-centric elements in some ways. According to Product-Led Alliance:
“At the heart of PLG lies a deep commitment to understanding and catering to your customers' needs. By letting your product take the lead, you're sending a strong message that you value your users' experiences. This customer-centric approach fosters trust, builds brand loyalty, and turns your users into advocates.
"When customers feel empowered and valued, they're more likely to stick around for the long haul.”
Sure, well-designed products that are easy and intuitive to use do cater to user needs and experience. This builds the trust and loyalty mentioned by Product-Led Alliance.
Onboarding and in-app messaging that clicks with how real customers actually use the product? Now that's talking their language!
When you tailor those experiences based on usage patterns, it smoothes the journey for each user. Users who adopt features faster will stick around longer.
And continuously improving based on telemetry data and user feedback? That's walking in customers' shoes. You feel their pain points with each click, tap, and support call. Then you act on what customers need – not what you assume. This level of customer focus will earn you beaucoup amounts of trust and loyalty.
So, while product-led growth puts the product, service, or app first, it can be user-centric, too. However, customer-led strategies go deeper by wrapping personalized support and success around the product experience. They complement usage data with a human touch.
However, there are many advantages of customer-led growth, specifically how it provides a holistic view of the customer.
Let’s look at the topline information. Customer-led growth:
- Incorporates insights beyond just product usage data – like customer service interactions, feedback surveys, user interviews, etc.
- Focuses on the entire customer journey, not just the product experience.
- Allows customization and human touch based on insights.
- Concentrates on growing through account expansion, cross-selling, and renewal.
Product-led growth can categorically have customer-centric elements, but customer-led growth takes a broader approach to understanding and engaging users across touchpoints throughout their lifecycle with the company.
Compared to both of these other strategic approaches, CLG puts the customer’s needs and insights first. It nurtures relationships to uncover expansion opportunities. The goal is growing through customers, not just acquiring new ones.
Why is customer-led growth so effective?
You might be wondering, if sales or product-led growth works, why rock the boat?
Here's the thing: customer-led growth moves the needle on what matters most.
For starters, it costs way less to retain and expand existing customers than to hunt new ones. We're talking five times lower on average. Boosting retention by just 5% can spike profits by roughly 25-95%.
Now, that's what we call leverage.
Tune into your customers needs
Then, there's the lifetime value multiplier. Meeting customer needs boosts satisfaction, loyalty, and lifetime value. When you take the time to truly understand your customers' problems, goals, and desires, you can tailor experiences that delight them.
This level of personalization and commitment to your customer’s success ramps up satisfaction. Happy customers who feel understood and valued are far more loyal; they tend to buy more over time and refer new business.
Happy customers become advocates
And that brings us to advocacy. Customer-led growth converts happy users into voluntary brand evangelists. These fans become beneficial referrals, profitable case studies, and brand-defining testimonials.
Let it be known that peer influence holds huge power, with word of mouth driving roughly 20-50% of purchasing decisions.
Make every interaction count
Every time your customers interact with your product, it’s a reflection of your wider business.
Every time your customers interact with you, their Customer Success Manager, they’re getting a better understanding of your company. Putting the customer at the heart of every business interaction isn’t just a “nice-to-have,” it’s essential in today’s competitive SaaS market.
As Ali Memon, Senior Customer Success Manager at Adobe, puts it:
“When it comes to a customer's experience, It's important to keep in mind that any interaction they have with you is essentially an interaction with your business. As the main point of contact, you are the face of the company and everything you do, whether it's how you deal with them, respond to their queries or how available you are to assist, reflects the values and principles of the business.”
How to implement a customer-led growth mindset
To be clear, embracing customer-led growth across your whole company isn’t something that’ll happen overnight.
Let’s just leave that as a disclaimer. If your company is particularly sales-focused and preoccupied with closing deal after deal, without much effort concerted on the customer’s own success, this will require a pretty big shift in mentality. To implement CLG, your organization needs to start thinking in a customer-centric way.
However, customer-led initiatives can be implemented on an individual level; you can be customer-led on a day-to-day basis without waiting for your entire company to catch up,
Here are six key ways to put customers first and get the wheels of the good ship CLG in motion:
Focus on customer success outcomes
In order to drive growth with customer-centricity, you’ll want to ensure your customers are satisfied with your product and are likely to keep subscribing.
You need to readjust your mindset to ask why the customer bought from you in the first place.
Shifting to a customer-centric mindset isn’t an impenetrable challenge. It’s something that can be achieved with baby steps.
According to Dutta Satadip, Chief Customer Officer at ActiveCampaign:
“Really dig into the customer's motivations, context, and definition of success. Use discovery-focused conversations to re-align your product's capabilities with their goals and path to achieving value.
“The key is reducing time to value. If the customer leaves each interaction having accomplished something useful with your product, their engagement increases over time.
“Quick value wins rebuild trust and enthusiasm. That's true whether they are new, learning or a longtime, but possibly, dissatisfied customer.”
Invest in the voice of the customer
Okay, so one vital part of CLG’s success comes down to resource allocation. From hiring the right people for the job to investing in the best technology to understand your customers, allocating resources is fundamental to improving your customers’ end-to-end experiences.
It’s time to truly walk in their shoes. Talk to them, Dig into data on their journey, and, above all, identify their pain points across the entire customer lifecycle, not just during sales calls.
Solicit and act on customer feedback
Ask for input regularly through surveys, one-to-one calls, user interviews, and reviews. But even more crucially, take action on those insights and use that crucial feedback to drive improvements that create real value for customers. Believe us, they'll reward you with loyalty.
Build customer relationships
Develop genuine trust and rapport through high-touch, human engagement. This makes customers comfortable opening up about needs, which reveals opportunities. Personalize messaging and interactions to show you get them.
Proactively monitor customer health
Dive into usage data and analytics to segment users by engagement, risk profile, and projected value. Spot issues early and reach out proactively to at-risk accounts. Save those relationships before it's too late!
Unify sales and success
Tear down silos between departments. Get sales and customer success aligned around shared renewals, upsell, and retention goals. Develop coordinated workflows on accounts to delight customers.
In case you needed a recap, customer-led growth:
- Is a business strategy that focuses on gaining insights from existing customers to guide growth opportunities rather than acquiring new customers.
- Differs from SLG, which focuses on maximizing new deals, and PLG, which relies on the product itself to drive growth.
- Provides a more holistic view of the customer journey and lifecycle. It weaves together insights across touchpoints for a 360-degree customer perspective.
- Is effective because it boosts retention, which is cheaper than acquisition. It increases customer lifetime value through better satisfaction and loyalty. Happy customers also become advocates and referrals.
- Involves prioritizing customer success metrics like renewals and satisfaction. It means investing in understanding the full customer experience to address pain points. Acting on customer feedback and building engagement and relationships are key.
The core premise is that sustainable growth comes from better serving existing customers, not just acquiring new ones. Customer-led growth turns customers into partners in growth by making their needs and insights central to business strategy.