Customer-led growth (CLG) and product-led growth (PLG) are transformative strategies when it comes to the business world today, especially in terms of SaaS companies. While both these strategies share the goal of driving sustainable growth, they achieve it through different approaches.
In this article, we will compare CLG and PLG, uncover their benefits and challenges, and provide clarity on which one is the right strategy for you.
What is customer-led growth?
Customer-led growth (CLG) is a strategy that relies majorly on customers for growth, through word-of-mouth, referrals, testimonials etc. While traditional approaches prioritize achieving internal business goals, CLG focuses on keeping the customer in the center and responding to their needs, preferences, and feedback.
The core idea behind CLG is that businesses should listen actively to their customers and adapt insights accordingly. Here, the customer becomes the driving force behind the company’s growth. The insights gathered from customer interactions influence each decision, from product development to sales and marketing.
Principles of CLG
There are two major principles on which the CLG model works:
Understanding and implementing customer feedback
CLG starts with deep user empathy, focusing on pain points rather than just features. Businesses gather feedback through surveys, interviews, and testing, using these insights to refine products, introduce relevant updates, and shape marketing strategies. This continuous feedback loop strengthens customer relationships and ensures the product evolves with user needs.
Turning customers into loyal advocates
The goal is to turn satisfied users into advocates who promote the product through referrals and testimonials. This organic word-of-mouth growth boosts both acquisition and retention.
What is PLG?
Product-led growth (PLG) is a business strategy where the product itself drives customer acquisition, expansion, and retention. Instead of relying heavily on sales and marketing, PLG focuses on creating a product so valuable that users naturally adopt and share it, leading to organic growth.
- Abhishek Khattri, P&L Leader
Key differences between PLG and CLG
As we discussed before, PLG centers around creating a compelling product experience that drives user adoption, while CLG places more emphasis on customer experience and relationships as the primary force for driving user acquisition and growth.
Let’s take a look at some of their key differences:
| Aspect | PLG | CLG |
|---|---|---|
| Primary driver | The product itself is the main driver; users find value by using the product | Growth is driven primarily through customer relationships, success, and tailored engagement |
| Role of customer | Passive – users adopt and upgrade based on product experience | Active – customers are involved in sharing their positive experiences and that helps drive growth |
| Sales involvement | Minimal human intervention – driven by the product, use of in-app prompts and automated onboarding guides users | High involvement of dedicated sales teams that collaborate closely with the customers to build relationships |
| Growth strategy | Focuses on ease of use, and scalability | Focuses on personalized relationships and customer-driven improvements |
| Customer loyalty | Driven by the product’s value and seamless experience | Driven by trust, communication, and the company’s responsiveness to feedback |
| Engagement metrics | Tracks product usage, activation rates, user retention, and conversion from free to paid users | Measures customer satisfaction, Net Promoter Score (NPS) etc. |
| Strengths | Lower customer acquisition cost (CAC) and scalability | Deeper understanding of customer needs |
| Challenges | High expectations from the product, may lack personalized support for larger clients | Relies heavily on constant feedback, can be resource-intensive to maintain relationships |
When to choose CLG or PLG
Choosing between CLG and PLG depends on your product, target audience, and business goals. While many companies adopt a hybrid approach, the right strategy varies based on different stages of the customer journey and user needs.
Here are some factors to consider when choosing between the two:
Consider the right target audience
PLG is typically suited for industries that offer easy-to-implement, scalable solutions. If your target audience consists of SMBs or individuals who are comfortable with self-service products, PLG will help drive efficient and rapid growth.
CLG, on the other hand, is best for enterprise-focused industries like cybersecurity, financial services, and consulting, where relationship-building and personalized service are critical to success. If your product requires customization or complex support, CLG ensures you meet the unique needs of each customer, driving deeper engagement.
Figure your growth goals
For fast scaling and cost-effective adoption, PLG works best—especially with freemium models or free trials. If the focus is on long-term customer relationships and loyalty, CLG is more effective, emphasizing engagement, support, and continuous improvement.
Resource availability
CLG requires a more significant investment in customer success and support teams to maintain strong relationships, handle feedback, and provide personalized service. While PLG is more cost-effective in the long run, it demands heavy initial investment in product development, as the product itself must be robust enough to drive adoption without much intervention from sales or support teams.
Finding the right balance between CLG and PLG
An increasing number of businesses are realizing the power of combining PLG and CLG to optimize growth. Here’s how the two strategies can work together effectively:
PLG can be used at the top of the funnel to attract and convert users quickly. By offering a free trial or freemium model, customers can experience the product’s value independently, without the need for a sales rep. You must collect customer feedback after regular intervals or specific milestones to better understand how a specific experience has been.
For instance, you can have a customer feedback collection after the onboarding, one after each activation point and so on. This will help you better understand how well the product experience resonates with your customers and you can improve it accordingly for better user retention.
Takeaways
Deciding between CLG and PLG comes down to your product, audience, and goals. While both PLG and SLG have their own specific use cases, a hybrid approach lets you attract users with PLG and keep them engaged over time and improve your product with CLG, balancing quick growth with strong customer retention.
