What is Customer-Led Growth?
When you fail to understand your customers completely, you put the business at great risk.
Customers matter. No one would argue that. Right?
Isn’t that why most companies think they offer a top-notch customer experience? But when you ask customers, the picture is entirely different. According to a study, 80% of companies believe they are delivering superior customer experience, but only 8% of customers agree.
Why is there a gap in what companies think and what they practice?
For companies, customers are important, but they are not the only priority. And we understand this.
As a leader, when you make decisions, you have to think over several factors. From product excellence to operational improvement to cost-optimisation, all these factors must be in sync to achieve higher performance.
We are not saying that a business model that prioritises all these factors is wrong. However, it makes you look at your customers as mere transactions. This makes it impersonal. And that’s where the gap comes in.
Today’s consumers want more. They assume you truly understand the jobs they need to do and the result they expect from your product. Customer-led growth helps you take the required steps in this direction. It helps you build sustainable and thriving business models, irrespective of whether you are also product-led, sales-led, or engineering-led.
Customer-led Growth is a business approach that leverages deep customer insights and qualitative research to drive growth decisions and systemize / predict the production of successful products or services . The Customer-Led approach is not about chasing customers’ opinions but about delivering products that help users do the jobs they want to do and get the outcomes they expect.
When you become customer-led, you foster positive experiences – whenever, wherever, and however the customer requires it. For this, you need to have a tight grip on what a customer values. How do you achieve that? By making use of key customer insights and then implementing them into your operations.
Customer-led growth is a way of doing business that prioritises customers’ jobs and outcomes over all else. We can’t put it simpler than that.
“People don’t want a quarter-inch drill; they want a quarter-inch hole.”
– Theodore Levitt
When companies start, they break the customer journey into stages based on what they gain, i.e., business metrics. Now, when you take a customer-led approach, you break it based on what the user gains, i.e., customer success milestones. Such a strategy gives you a customer journey map, and this map becomes your foundation for all decision-making.
Essentially, a customer-led growth approach reevaluates your products and services strategies. Instead of thinking what more can you add to a product, you re-orient it to what customer jobs and outcomes it can fulfil.
All your decisions begin with: “What does it actually do for the end-user?”
The easiest way is to check if your key performance indicators (KPIs) are directly tied with your customers getting value. After that, find out if:
Let’s look at some examples to help you better understand customer-led growth. Each company in the examples utilises the Jobs-to-be-Done (JTBD) framework Anthony Ulwick, to inform their product and marketing decisions and optimise customer acquisition.
Why the Jobs-to-be-Done framework? Because it is almost synonymous with deep customer insight, consequently with the customer-led approach.
Church & Dwight’s Arm & Hammer™ baking soda is the example Clayton Christensen, used to explain the framework. The company researched the circumstances (read: jobs) for which customers used Arm & Hammer. They found out that consumers used the baking soda for a lot of stuff, besides the usual.
Church & Dwight realised that most customers didn’t know what the other uses of baking soda were. So, they turned these ‘job insights’ into a plethora of new products:
The candy bar manufacturers have applied Jobs-to-be-Done for marketing growth strategy tons of time going as far back as the 1980s. One example is this commercial – 1980’s Snickers Commercial
The company understood that Snickers does the job of keeping hunger at bay until a person can find their next meal.
Therefore, they made the bars synonymous with a meal replacement. Over the years, Snickers has used JTBD for adverts, again and again, to target customer needs and fuel their growth.
Snickers and Arm & Hammer are ideal examples for a sales team of a physical product. But what about SaaS or a product whose value proposition is not as clear cut? Do they benefit from a customer-led roadmap? The answer is yes, as proven by Intercom.
Intercom used Jobs-to-be-Done to figure out:
Using the JTBD interview technique, Intercom mined the first thought – what’s the starting point of a customer journey that ends with them buying Intercom software?
More than that, it helped them gain deep insight into their customers’ purchasing decision:
Overall, the framework spits out one undeniable learning – software purchases are multidimensional and very complex. So, to drive purchase, they needed to capitalise not just on emotional triggers but also functional aspects, and personal frustrations.
We’ve stuck to just three examples here, but the JTBD approach is the go-to-market strategy for the likes of Slack, Salesforce, and several other SaaS companies.
Most businesses think excellent customer service will lead to good customer experience. And that makes them customer-led.
No, it doesn’t.
We see why you may feel so. But the logic is faulty. The keyword in a customer-led approach is ‘approach.’ You have to focus the entirety of your business towards it, not just customer service.
The transformation should be from the ground level to the very top. Every person and every department must have active intent in fulfilling your customers’ jobs and outcomes.
It is due to this complexity that people often misinterpret the customer-led approach. With that in mind, we unpack four common myths surrounding it:
We’ve said this before, and we stress it again, a customer-led growth strategy is not about chasing your customers’ opinions, feedback or suggestions. It might give you more customer engagement or even reduce churn, but it is short term.
A customer-led approach means creating what your users genuinely value. We will use a famous example to explain it better.
“If I had asked people what they wanted, they would have said faster horses.”
It might be possible that Henry Ford never said those words, but the fact remains that he had a firm grasp on what customers value. Therefore, instead of asking customers what they needed, he got to making what they valued – mass-produced, affordable cars.
Rushing after customer satisfaction surveys on all touchpoints or Net Promoter Scores to evaluate loyalty doesn’t give you the right cues every single time.
Yes, NPS will show customer support to a certain extent. But all you get is data, not insight. Any decision made based on it may lower your acquisition cost or lessen customer churn, but it won’t help you in innovation and sustainability.
Why? Because measuring business success on hard stats is half the story. The other half requires assessing factors such as brand sentiment, customer advocacy, effort, etc.
A customer-led approach is about digging deep into your customers’ persona. To do that, you need to combine data from surveys with qualitative and observational insights.
It is then that you gain well-rounded customer knowledge like:
A customer-led company is more than a business that delivers exceptional customer service. The growth strategy places customers at the core of decision-making – all of them.
Good customer support puts customers front and centre in after-sales. You may get positive customer experience, but you will fail to build genuine, long-term relationships.
Being customer-centric implies putting your customer first and at the heart of everything – the entire sales cycle. Combine this with great CRM, and you end up with a wealth of data that delivers a full view of your customers, enhancing the experience.
McKinsey defines an agile company as:
“…a network of teams within a people-centred culture that operates in rapid learning and fast decision cycles which are enabled by technology, and a common purpose that co-creates value for all stakeholders.”
In simpler words, agile companies don’t work in divided groups. They encourage collaboration and responsiveness among teams to improve performance. In addition, business agility keeps customer experience as the hub around which everyone rotates. It drives them forward and guides them to adapt.
A customer-led approach is similar. It keeps customer values and experiences at the centre. Also, it is meant for everyone in the organisation, from customer service rep to the co-founder, from dev ops to product managers. Each one knows their role in delivering the ideal customer experience.
Think of agile and customer-led as the two intersecting streets in your working roadmap. For example, when your development ops use customer feedback to push improvement projects, they can be said to be agile and leaning on the customer-led approach.
There is no trade-off. You can be customer-led and product-led/ marketing-led/ sales-led.
The customer-led approach doesn’t tell you what product, marketing or sales experience you should offer. It offers insight on what jobs your users expect your product to do.
It gives you a deeper understanding of not just your users but also what product outcomes to deliver. And that influences which other strategies you can implement: product-led marketing-led or sales-led.
We talk more about this myth at a later stage because it really does deserve an individual section.
Customer-led growth makes the customer the real boss of your company. Everything you do as a business should first be seen from the customer’s perspective.
This approach empowers you to differentiate from your competitors, foster deeper brand loyalty and be financially stronger. Why? Because most people are ready to pay more for outstanding customer experiences.
“81% of consumers are willing to increase their spend with an organisation in return for a better experience.”
Let’s unwrap some other benefits of a customer-led approach:
When you look at your business from the customer’s point of view, you begin to develop a customer-led model that leads in several other business areas:
It provides a purpose and a guide that leads to an end-to-end transformation of your business.
In the current environment, any company that keeps customers on the side is destined to fail. They not only invest in the wrong resources but also develop the wrong products. This drains the goodwill among the customers. They stop retaining customers, and CAC goes through the roof. In short, they don’t survive for long.
A customer-led organisation does the exact opposite. They focus all their decisions and consequent actions on the customer. Every team trains their ears to listen to the customer. As a result, they not only anticipate jobs to be done by the customer but also meet the product outcomes they expect.
In the long-run, customers welcome your attentiveness, which pushes them to stick around and become loyal patrons. The boost in retention rates means you reap in the rewards and get a leg up on other players in the market.
A recurring problem with sales is customers struggling to understand what they are offered. A lack of comprehension leads to lack of confidence in their decision.
For instance, there’s Mr John Doe who knows that he needs a new smartphone contract. To pick one, he must weed through the many options he has, most of which he doesn’t understand. The likely outcome is he picks a random contract offered by your company. Another and a worse one is he opts for a competitor.
This was a simple example. What happens when the product or service is more complicated?
This is where a customer-led approach swoops in with a cape on – it offers customers support while making a purchase decision or considering different options. As a consequence, getting quality leads and customer-acquisition becomes more natural and sales are improved.
For SaaS teams, it is easy to overlook what’s important – onboarding. They are so preoccupied with completing customer acquisition targets that onboarding processes get neglected.
The customer may have activated their account, but to actually use it and get the desired outcome, they have to understand it. This makes onboarding crucial.
It helps them see a product’s core value and grasp how it assists them. Therefore, they are more likely to continue using it.
With customer-led strategy, the focus of SaaS teams shifts to where it belongs – on the customer. It ensures that onboarding becomes an unbroken chain, starting from acquisition and ending with retention.
A perfect example of customer-led onboarding is Dropbox’s strategy to reach the Aha! Moment early.
What’s Aha! Moment? It is that instance in life that becomes etched in our memories. It could be sad, happy, funny or embarrassing.
For customers, it is the tipping point when they realise the value of a product and set themselves up to return.
How do you achieve it? By engaging the customer and helping them attain value. For Dropbox, it means getting the user to put at least one file in one Dropbox folder on one device.
A customer-led approach encompasses every field of a business; we know this. So, when you make marketing customer-centric, you make customers the centre of your brand messages.
Your strategies become fixated on delivering relevant and helpful content to users, not just before sales to MQLs but also after. Think inbound marketing coupled with customer advocacy. Such marketing tactics turn customers into promoters. They start advocating for your brand and ultimately, generate more customers through referrals.
In 2015, Clair Murphy took on the CMO role for Tabcorp. Her first decision was to transform marketing into customer-led. In her words,
“We need to place the customer at the leadership table, advocate for the customer and create marketing strategies with a base in customer insight.”
For this to happen, she based marketing on “…what the customer wants, needs, thinks and feels” by investing in CRM first across sales, then marketing the products. It helped her get 360-degree insight into their customers’ perceptions.
She further invested in a Voice of Customer platform to better learn customer journeys and improve them. Besides this, she applied an NPS tool across the organisation to evaluate customer satisfaction.
It was her customer-led approach that turned a failing brand under Tabcorp’s umbrella into a revenue-generating one.
A company that works with customers to make sure that they gain value while using a product or service expands their operational efficiency.
Think of a busy train. For a train to run effectively as per the desired schedule, both the train’s operator and its passengers must play a central role. It will fail to stick to the plan of helping passengers reach from point A to point B if its passengers are left wondering about:
In business terms, it means your users should never have to wonder what to do next and how to do it. The best way to attain this is by hand-holding the customer and walking them to the goal they consider as success.
Slack is the quintessential example of attaining operational efficiency through a customer-led approach. They offer guided tutorials to users with brief descriptions of all their features. The tutorials allow users to achieve success. Slack even gives customers an opt-out link, if they prefer to move ahead without any support from them.
There is no doubt that customer-centricity has become more important than ever before, and social media can tip the scales in favour of your customers.
A single misstep on your part and review sites and socials fill up with screenshots, videos and texts about your lousy customer experience.
A customer-led business understands this inherently. Therefore, instead of waiting for a bad experience, they proactively ask customers:
By controlling a situation, rather than just responding to it, later on, you get vital customer insights that can be utilised for quick actions and solutions.
There is a difference between customer-led, marketing-led and product-led. That said, there is no conflict between them. Just because you are product-led doesn’t mean you can’t be customer-led too. Or because you are sales-led, you can’t also be customer-led.
They are not mutually exclusive.
Then why is it that many people think of it as a customer-led or product-led/marketing-led growth? Because there are certain differentiation points between the three. But, we reiterate, they are still meant to co-exist.
Now that we’ve sufficiently driven the fact home, let’s look at how they differ.
In case you’ve landed directly here, let us give you a quick overview on what it means to be customer-led.
When a customer-led business makes a decision, the most important consideration is – what will be the effect on its users. It doesn’t matter when they make the decision (day 1 or day 1000) or who takes the decision (co-founder or product manager), the outcome must have value for the customer.
Why do they put customers first? Because it builds customer satisfaction, which leads to loyalty, and that brings in referrals through word-of-mouth marketing.
In the present-day scenario, where customers have a lot of choices for the same service or product, being customer-led is not optional. If you want to build a business with sustainable and long-term growth, your approach has to be customer-centric.
Product-led Growth or PLG is the term OpenView has made popular. They define it as:
“A capital-efficient model through which companies can scale quickly. They rely on the products themselves to supply a pipeline of satisfied users and ‘hand-raisers’ they can turn into paying customers.”
You either give away some of your service/product for free to the user or give them a free trial of the whole thing.
Slack and Dropbox are classic examples of product-led growth. Both expanded because of their product, and both offer freemium accounts to users. With Dropbox, you get 2GB storage free. With Slack, you get free access to 10,000 of your team’s most recent messages.
It’s like sampling ice creams before you decide which flavour to buy. The freemium model allows users a product experience. So, when you get qualified leads, they already know the value of your product and are more willing to sign up for the paid version.
As OpenView points out, because product usage drives customer acquisition, you don’t have to spend oodles of money on marketing and sales activities. Therefore, your acquisition cost is much lower.
In a gist, the idea behind product-led growth is that product usage and customer experience help you acquire users, expand and retain. That’s why word of mouth is the biggest sales channel for PLG companies.
Sounds similar to something you read earlier? It is. A customer-led approach does the same – get you more users through referrals.
A sales-led or marketing-led company depends upon its sales or marketing people to help users reach a meaningful outcome. (In product-led growth, the user reaches a meaningful outcome on their own.) It will also spend a huge chunk of their revenue on acquiring users.
This creates two issues:
The first problem is the reason many businesses use a mix of customer-led and sales-led approach. They offer freemium versions with self-serving experience, but they also provide handholding in some cases.
“Sales comes into play in this scenario when someone in that audience we’ve built has needs that are too complex to be handled by our self-serve onboarding experience.”
Following a mix of product-led and sales-led approach lessens the overall costs, compared to relying only on sales-led growth.
Customer-led growth solves the second problem. It gives you an unbroken chain starting from acquisition and ending with retention because you market to users, not buyers!
Another characteristic of a marketing or sales-led company is a focus on perceived product value. There are two types of product value:
The difference between the two is called the value gap. Customer-led growth helps you close it because the customer experience is centric to all decisions.
Imagine a ladder. The two side rails are product-led growth and sales/marketing-led growth. The rungs connecting the two is customer-led growth.
It is when all of them work together that you can climb the ladder and attain growth. It is when you find the right equilibrium between them that the ladder is stable.
So, customer-led growth is not meant to replace a product-led or sales/marketing-led approach. It is intended to work in tandem.
Here, we’d like to point out one last thing: you can choose to be marketing-led or sales-led or product-led. You can choose to be a combination of any two. But being customer-led is not an option. In the world we live, where customers reign supreme, it is all but essential.
Slack didn’t start as a messaging or team collaboration app. They began as a multiplayer online game called Glitch. They spent years developing it and what was the result?
It is now dead.
But while creating it, they realised that productive work is painfully hard when a team is scattered geographically. So, they built an internal collaboration tool.
That tool is known as Slack today.
What’s the moral of the story? Some say it is to build a product that solves real user pain. We don’t disagree. Rather we echo it.
But we feel the bigger lesson is – a change of perspective.
If Slack would have kept harping on Glitch would they have reached unimaginable success? Probably, not.
It was their pivot in the frame of mind that did it.
So, the first and foremost step to becoming customer-led is a change of perspective. And, by now, we’ve made it plenty clear that it applies to all businesses – sales-led, marketing-led and product-led.
Here are some other steps you can take to start becoming more customer-led in your decision making:
Consistent communication with new users lets you understand their expectations. More than that it shows you ‘how they are phrasing those expectations.’ You can then use those same words and phrases for your:
Talking to new users also gives insight on what jobs, constraints or unmet needs they hope to fulfil with your product or service. This information tells you your true competition – alternative products that your users may switch to complete their jobs.
And finally, it informs your targeting strategies and helps qualify (or disqualify) leads better.
Frequent communication with your ideal customer helps you:
Combined, they create a benchmark for what your true value is and therefore, what must you expect from all users. Conversations with power users are also great ways to discover expansion channels and opportunities to go viral.
You can’t please everyone. It’s a truth every business accepts.
So, when a customer leaves, they stop existing to the business. For customer-led companies, that is not the case. Churned users are just another avenue to improvement. So, talk to ex-users to:
In short, understanding why a user doesn’t love your product/service can prevent further attrition.
To be customer-led, you’ve got to communicate both frequently and regularly with all your users. We’ve made that clear.
But that communication must also be instant. So, build in feedback surveys in your user experience. Encourage people to fill and share that feedback.
The digital world gives you countless touchpoints to do so. From chats to emails, from in-app messages to message boards, you can use any of them to collect feedback.
The sheer volume of quantitative data you can extract from these feedbacks will help you build an amazing product. Just remember, being genuinely customer-led means mingling this data with qualitative feedback too!
A customer-led company keeps the customer’s experience as a priority before, during, and after the purchase, which makes feedback essential.
That said, you should trust and follow the feedback only to an extent. Why?
Because blindly trusting requests or leads from the feedback gives you ideas that, at the most, may improve a product’s functionality or capacity. Not to forget that different customers will always have different opinions.
If you are gunning for real growth, you need impactful innovations. Those can only happen if you make it a habit to understand the problem and search for the root cause of requests.
As Clayton Christensen had aptly said, “If you just listen to them or follow them, they will misguide more than guide you.”
“User Stories made sense when customers and product teams were far from each other. That’s no longer the case.”
The main issue with user stories is that they depend upon a lot of assumptions. On top of it, they don’t factor in causality. So, if you’re creating a user story, it will be like this:
“As a regular customer, I want an email after my order is submitted, so that I don’t place a duplicate order.”
What’s wrong here?
Job stories get rid of both these issues. It shifts the focus from the user to the job that needs to be done. With a job story, you focus on:
Job story template
For the same example we gave above, a job story would look like:
“When an order is submitted, I want a warning so I can avoid order duplication.”
By adopting user stories, you accept a different way of thinking about your product’s features. They make you question ‘why,’ and that leads to becoming customer-led.
Witty homepages. Hilarious welcome emails. Creative display ads. These are part and parcel of business. We spend tons of money to create dynamic branding and lure in customers.
Once those customers are in through the door, we wipe our hands off them and focus on getting more. Everything after the acquisition is filled with dull copywriting and technical jargons.
Messages describing bland features or long how-to guides don’t scream great customer experience. That is why a customer-led company treats copywriting for every stage of the buying journey as a celebration of the user.
When a user reaches a customer-success milestone, they make it sound like a personal achievement.
“Companies that actively engage in Voice of Customer programs spend 25% less on customer retention than those that don’t.”
What’s Voice of Customer (VOC)?
It is a research strategy that helps you discover what customers think of your service/product/business. What do you get from it? You can collect customer feedback on:
Part of being customer-led is to remove silos from your business. You include every team to identify ways to improve product or service based on user outcome expectancy.
So, when you conduct regular VOC sessions with your entire team, you not only remove those silos but also empower them to think creatively.
That’s why the likes of Apple and Amazon invest heavily in VOC programs.
“A lot of times, people don’t know what they want until you show it to them.”
– Steve Jobs
A customer’s success is in the very DNA of a customer-led business. When you are deciding on a new feature, when you are thinking of a partnership or when you’re building a new product, you ask ‘does this help my customers?’
If at any possible moment the answer is no, you don’t walk the path further. That’s how you become customer-led. You anticipate what product your users will need to be successful in their job, and then bring it to reality. It is what Apple did with the iPhone. They anticipated a need that even customers didn’t realise.
There is no finish line to becoming customer-led. It is a continuous transformative journey that begins with bringing change in your perspective. You stop obsessing over companies with products similar to you. Instead, you focus on businesses that are used as alternatives by your customers to do the same job your product does.
So, when you’re ready for the first step of the journey, take the plunge and contact us!