How to Use a Customer-Led Growth Strategy (2024)

While ignoring customer feedback can be tempting, acting on it can be a sustainable growth strategy. Happy customers are loyal customers, and loyal customers become your best advocates. It’s more expensive to hunt for a new customer than to sell to an existing one—five to 25 times more.

Customer-led growth prioritizes the customer’s happiness. By infusing your customers’ perspectives into every part of your business, you’ll build better products, keep your current consumers happy, and reach new ones through advocacy.

What is customer-led growth?

Customer-led growth (CLG) centers a company’s growth efforts on its customer base. By prioritizing customer feedback and consistently exceeding expectations, businesses can drive customer retention, revenue expansion, and advocacy. With this approach, customer referrals become one of the key sales drivers alongside traditional marketing.

For example, luggage company Monos embraces a customer-led strategy. One way it does this is by giving customers points on purchases and referrals, which can be redeemed for discounts. The company has generated $8 million in revenue by focusing on customer loyalty and advocacy.

Customer-led growth requires close cross-functional collaboration. Customer success teams are the foundation for decision-making, but every department—from product development to sales—needs to work collaboratively to align on marketing messaging.

Customer-led growth vs. product-led growth vs. sales-led growth

Businesses typically adopt one of three main growth methodologies, depending on the nature of their product and the level of support required during their buying journey.

Product-led growth

In a product-led growth (PLG) model, a company focuses on the product itself to drive sales and engagement. Product development, sales, marketing, and customer success teams focus on creating and promoting product features—and using those to bring in and retain customers.

PLG strategies often include offering free trials, so users can try before they buy. Similarly, the freemium model is a popular PLG tactic—customers try a free version with limited features, and, once they’re comfortable using the product and understand the value it provides, upgrade to the paid version.

Sales-led growth

Sales-led growth (SLG) is a growth strategy that prioritizes new customer acquisition. In a sales-led growth business, a customer success team tends to take the back seat to sales and marketing teams. Sales-led growth prioritizes closing deals quickly using traditional advertising and one-to-one sales techniques.

Sales-led growth techniques are particularly helpful when the product is complex or requires a high level of personal touch. For example, customers may review a catalog when researching industrial equipment, but they typically need to have a conversation with a salesperson to close the deal.

Customer-led growth

Customer-led growth relies on customer advocacy and loyalty to drive revenue growth. It’s different from product- and sales-led strategies, because it uses customer insights to drive sales—often with great results. According to a 2021 Forrester report, customer-led growth firms grow 2.5 times faster than the alternatives, and they retain 2.2 times more customers per year too.

The goal is to create customer advocacy. This increase in advocacy helps reduce acquisition costs, including ad spend. Centering this strategy around customer insights—often called the voice of the customer (VoC)—has downstream benefits beyond advocacy, like improved product development.

How to get started with a customer-led growth strategy

1. Collect customer feedback
2. Build a customer-obsessed culture
3. Get personal
4. Reward customer loyalty and advocacy
5. Establish your measurement framework

Here are five steps to create a customer-led growth strategy that drives revenue via retention, expansion, and advocacy.

1. Collect customer feedback

Customer feedback is the cornerstone of the customer-led growth framework. A solid VoC program collects data through surveys, feedback forms, purchase data, support emails, and social media conversations. It distills this data into actionable, growth-oriented insights.

There are three main audiences you need to focus on gathering feedback from:

• New customers. Your freshest customers can tell you why they chose your product and how they found the experience.
• High-value customers. Understanding the customers who return and refer you is key to finding more buyers like them.
• Churned customers. There’s a lesson to be learned here. Find out why people leave and how you can prevent it in the future.

Remember to close the customer feedback loop by following up and showing gratitude, whether or not you implement your customers’ ideas. For example, if you adopt their idea, let them know. If you don’t, thank them for their contribution. Regardless, a follow-up email with a promo code can make customers feel appreciated and nudge them back to purchase.

You can also use this feedback to create powerful social proof content like testimonials and case studies to support sales efforts.

2. Build a customer-obsessed culture

Merely collecting customer feedback is not enough. To build a customer-obsessed company culture, share customer feedback, good or bad, with relevant teams and key stakeholders, and use it to guide improvements, messaging, and support strategies. Of course, you can’t change your tactics based on every single review, but it’s crucial to create channels to pass on common customer needs and concerns to relevant departments.

3. Get personal

Personalization is key in ecommerce and customer-led growth. Use customer data to personalize their experiences and communications. Create targeted messaging and offers that upsell based on known purchase patterns. For example, if you know that it takes an average of three months to finish a bottle of moisturizer, send a refill reminder 70 days after the initial purchase.

4. Reward customer loyalty advocacy

In a customer-led growth framework, loyal customers hold the key to revenue. When they put their names on the line to advocate for your brand, show your appreciation accordingly. Referrals go a long way when people decide whether to make a purchase.

Encourage referrals, reviews, and user-generated content that can be used for marketing collateral. When your customers speak for you with user-generated content and other forms of social proof, the message resonates better with prospective customers.

Make it worth their while to take time out of their busy day to speak on your behalf. You can offer rewards such as discounts on future purchases or subscription renewals, exclusive access to customer appreciation events, and samples or early access to new products.

5. Establish your measurement framework

There is no universal standard for measuring customer-led growth success. Still, there are key performance indicators (KPIs) that signal positive outcomes.

Customer-led growth boils down to retention, expansion, and advocacy, so those are the indicators you need to track. These include:

Advocacy can be more difficult to measure, but you can track referral rates with a formal referral program and assess how customers talk about your brand with social listening tools.