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PLG: How to incorporate conversational AI chatbots into your product-led growth strategy

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AI chatbots for product-led growth (PLG): How AI can elevate your PLG strategy

Imagine a thriving digital town square where like-minded individuals share their passions, experiences, and knowledge. Think of a platform that seamlessly connects hosts with travelers, customers with drivers, and people with their favorite brands. It's a world where user communication fuels growth and communities emerge as the driving force.

What if your app doesn't naturally fit this mold? What if you're not in the business of connecting travelers, athletes, or hobbyists? Can you still harness the incredible power of user communication to drive Product-Led Growth (PLG)? The answer is a resounding "yes”. The key lies in integrating the innovative capabilities of conversational AI chatbots, powered by cutting-edge Large Language Models (LLMs), into your product-led growth strategy (PLG strategy).

Let’s uncover how AI chatbots can elevate your app's PLG strategy, regardless of whether you are a two-sided network giant like DoorDash or a fast-growing, niche player. Generative AI chatbots are leveling the playing field, enabling businesses to drive user engagement, user retention, conversion, and product success through the art of conversation.

In this blog, let’s review 4 PLG strategies about how generative AI chatbots can supercharge your PLG journey, no matter your industry or niche. But first, we’ll give you a quick refresher on the basics of PLG. (Note that product-led growth and PLG have been used interchangeably throughout this blog!)

What is product-led growth (PLG)?

Product-led growth (PLG) is a business methodology where the product itself is the primary driver of customer acquisition, expansion, and retention. This approach leverages the product as a tool to deliver value, attract users, and encourage organic growth through user experience and satisfaction. A product-led growth strategy often involves freemium models, in-app purchases, and viral sharing mechanisms to enhance user engagement and ensure product success.

Why is PLG important, and what makes product-led growth unique?

Product-led growth (PLG) is crucial as it aligns product development directly with customer needs, fostering a more user-centric approach to business.

  1. Reduce CAC (Customer Acquisition Costs): Because PLG reduces reliance on traditional sales and marketing efforts, businesses can achieve lower customer acquisition costs and increase scalability. Users can rely on their own experience through freemium models and the social proof generated by previous users.

  2. Achieve greater market penetration: By focusing on the product experience, companies can leverage organic growth through word-of-mouth and viral sharing, enhancing market penetration.

  3. Get data-driven insights: PLG inherently relies on user interaction data, providing valuable insights into user behavior and preferences. This data-driven approach allows for continuous product improvement and innovation.

  4. Retain customers organically: Products that deliver value and excellent user experiences naturally encourage customer retention. PLG focuses on continual user engagement and value delivery, leading to higher customer retention rates.

  5. Lower barrier to entry: PLG often involves freemium models or free trials, lowering the barrier to entry for potential customers. This approach increases the user base and creates opportunities for upselling and premium feature adoption.

  6. Use AI chatbots to boost PLG: By integrating conversational AI chatbots in your product-led growth strategy, businesses can significantly improve the user experience. This approach not only facilitates efficient user onboarding but also empowers product managers to gather valuable insights for continuous product improvement.

How does a self-service trial or freemium model drive PLG?

Self-service trials and freemium models are pivotal in driving PLG by allowing users to experience the product's core value proposition firsthand without upfront costs or commitments, fostering initial engagement. This lowers the barrier to entry. This direct engagement with the product encourages organic growth through user satisfaction and word-of-mouth referrals, crucial for a company’s product-led growth strategy.

Additionally, these models provide valuable data on user behavior and preferences, enabling companies to refine and improve their offerings based on real usage patterns. The freemium model, in particular, creates opportunities for upselling premium features, as users who find value in the basic version are more likely to pay for advanced functionalities.

What is a product-led growth strategy?

A product-led growth strategy is a business methodology in which the product itself drives customer acquisition, user engagement, and customer retention, primarily through its inherent value and user experience. In this model, the product is designed to be self-sufficient in attracting and retaining users, often utilizing a freemium or trial model to lower entry barriers.

How do AI chatbots help PLG?

In a nutshell, AI chatbots integrate into a product-led growth strategy by enhancing the user experience through automated, personalized customer interactions. They assist in onboarding processes, provide instant support, and gather user feedback, all of which are crucial for improving and tailoring the product to user needs. By leveraging conversational AI, chatbots can significantly reduce the time to value for users, increasing engagement and satisfaction.

Let’s take a more detailed look at PLG strategies that incorporate AI chatbots.

PLG strategy 1: Increase your app’s user engagement with AI chatbots

With the rise of generative AI, for the first time, chatbots can engage in a human-like conversation, fathom context, and be accurate in their answers. We are far from the legacy scripted chatbot you might have experienced on your bank app, in which the most recurrent answer to straightforward questions was:

“I didn’t quite catch that. Would you rephrase your question?”

With conversational AI driven by models like GPT, Palm2, Llama2, Varco, or the latest Mistral, any prospects expect to engage with an AI chatbot that will resolve their problems. It’s critical to realize that through conversations, humans create an emotional connection with your brand, which drives long-lasting relationships.

PLG & examples of the power of human connection

  • Games like PubG: NewState from Krafton leverage the power of live chat to connect users and increase in-app retention and advocacy. Human connection is at the crux of retention with a PLG strategy.

  • A company like PicPay witnessed a 2x increase in transactions when elevating financial transactions to social interactions. Personal communication became a foundational component of their business growth.

Today, with generative AI chatbots, mere point-and-click navigation turns into human-like conversations, elevating commodity interaction to engaging and rich experiences.

Picture this: You send a marketing notification for a limited-time flash sale on seasonal handbags. It embeds a clickable link that instantly connects your customers to one of your AI chatbots for sales. Your customers engage the AI chatbot with return policy questions. Satisfied by the answers addressing some of their concerns, the prospect decides to proceed with a purchase that would have unlikely occurred without your autonomous customer pre-sale service.

PLG strategy 2: Streamline user onboarding with generative AI chatbots

Consider a marketing professional tasked with adopting a new Software-as-a-Service (SaaS) platform to boost their team's digital marketing efforts. As they log in for the first time, they're greeted by a helpful conversational AI chatbot.

The chatbot introduces itself as their onboarding assistant and asks if they need any guidance. The marketer seeks assistance, and types in a query about setting up their first email marketing campaign.

The chatbot responds promptly, breaking down the process into easy-to-follow steps. It guides the user through creating a campaign, selecting a target audience, designing email templates, and scheduling delivery. As the conversation progresses, the AI chatbot adapts to the user's pace and provides clarification whenever necessary.

Thanks to this, what could have been a time-consuming onboarding process becomes a seamless experience, all thanks to the assistance of the conversational AI chatbot.

To create such an experience, the synergy between generative conversations and chatbot workflows is crucial.

What are chatbot workflows?

Chatbot workflows consist of predefined sequences designed to steer users along a specific path, helping them accomplish their objectives. In our example, these sequences represent various learning paths to a successful onboarding process.

Always ensure your AI chatbot service includes workflows so new users get to value faster and become loyal advocates of your product.

Let's now explore how new AI chatbot capabilities like function calling can further personalize your customer experience.

PLG strategy 3: Enhance your customer experience with efficient problem resolution & personalization

Imagine you're an online shopper looking to purchase a popular smartphone model from your favorite e-commerce platform. You're keen on knowing if the specific color you want is in stock and whether any new promotions are available.

Upon visiting the e-commerce website, an AI chatbot pops up to assist you. You ask about the smartphone's availability and potential discounts. This is where function calling comes into play.

What is function calling with regard to AI chatbots? 

AI chatbot function calling from OpenAI allows your GPT-powered AI chatbot to interact with external online services via Application Programmable interfaces (APIs). For example, an AI chatbot can retrieve weather forecast data from a publicly available database and integrate it into its responses.

The AI chatbot, powered by the retrieval capability, instantly gets real-time data from the e-commerce platform's inventory system. It checks the current stock status for the desired smartphone color and scans ongoing promotions. In seconds, the chatbot informs you that the smartphone is in stock in your preferred color and that there's a limited-time offer with a discount. It even suggests accessories based on past purchases.

Thanks to the function call capability, the AI chatbot provides personalized and accurate information, ultimately enhancing your shopping experience.

PLG Strategy 4: Elevating the user experience

Let’s talk about how AI chatbots can enhance the user experience in PLG.

Contextualizing AI chatbots using RAG

What is RAG?

RAG, short for Retrieval Augmented Generation, represents a transformative technique that bolsters the capabilities of Large-Language Models (LLMs) like GPT-4. LLM models, while proficient, operate on extensive datasets that lack specialized knowledge. RAG facilitates ingesting expert content specific to your business into LLMs, resulting in more comprehensive and valuable responses.

By seamlessly integrating information retrieval with text generation, RAG addresses the limitations inherent to LLMs.

Keeping control of generative AI: Addressing AI hallucinations

A crucial feature to consider in AI chatbots is bypassing the generative LLM engine and providing verified answers directly. This feature eliminates the variability in response quality, especially when considering the potential for AI hallucinations. Prioritizing user experience with this approach ensures consistent and trustworthy interactions.

Going beyond text with AI chatbots: Card views, file sharing, and quick replies

Chat interfaces in AI chatbots have evolved to offer multifaceted interactions that cater to various use cases.

For instance, in an e-commerce marketplace, card views within the chat interface are indispensable. These card views enable shoppers to visually explore product displays, featuring images, descriptions, and pricing.

An e-commerce chat experience
An e-commerce chat experience

In other scenarios like customer support, chat interfaces may incorporate features like file attachments for sharing documents, images, or screenshots. This capability expedites issue resolution by allowing users to convey complex problems visually.

Chat for a customer support use case
Chat for a customer support use case

Moreover, interactive buttons and quick reply options have become prevalent in chat interfaces, reducing the need for typing. These buttons can enable actions like confirming appointments, selecting preferences, or initiating specific tasks with a single click.

Sample of quick replies in a chat interface
Sample of quick replies in a chat interface

By leveraging these modern chat interface elements, businesses can create dynamic, user-friendly interactions that drive customer satisfaction.

Skyrocket PLG with generative AI chatbots

Harnessing the power of conversations is a proven strategy to drive Product-Led Growth (PLG), and AI chatbots take the app experience to the next level. AI chatbots empower businesses to create engaging, human-like conversations without needing direct user connections, excelling in tasks like assisting uncertain visitors, gathering marketing insights, making recommendations, and generating leads. These versatile AI chatbots offer countless opportunities to enhance the customer experience, boost efficiency, and drive growth, effectively bridging gaps in the customer journey and strengthening brand connections.

To achieve your app's objectives and build long-lasting customer relationships, leveraging and partnering with a communications platform is essential. Look for one that offers API products to create a truly secure and branded app experience and add-on software services for critical operations like moderation, support, notifications, and AI chatbot administration. Sendbird, an all-in-one communications API platform tailored for web and mobile apps, is worth exploring. Sendbird will empower your business by harnessing the potential of generative AI chatbot conversations, enhancing your app's success and overall customer communication.

Start a free trial or contact us to learn more about how you can take your digital communication to the next level with AI chatbots.

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