"Large enterprise customers - at some point in their lifecycle - want to have a direct engagement with the PLG (Product-Led Growth) company to remove certain blockers and to ensure they are maximizing value from the product. This is also a massive revenue upside opportunity for PLG businesses in general."
Chris De Vylder, the Global Head of Sales Strategy and ops at Atlassian.
Two primary paths—Sales-Led Growth and Product-Led Growth—have long been debated, championed, and dissected. Yet, in this exploration, we uncover a third, potentially revolutionary approach: Product-Led Sales.
Dive in as we explore the intricacies of SLG, PLG, and the transformative power of Product-Led Sales.
What is Sales-Led growth (SLG)?
As the name suggests, sales-led growth is a motion where a business grows using a slightly more traditional method. As in early trade, face-to-face communication dominates the scene, crafting tailored pitches per client needs. The direct and customized approach defines Sales-Led Growth.
Key Components
High Touch Sales Process - SLG prioritizes human interaction. Every sales engagement is an opportunity to understand the customer's needs and customize solutions per the requirements.
Personalized Solution: Rather than going one-size-fits-all, SLG creates personalized offerings and presentations for every prospect, avoiding generic tropes.
Dedicated Sales Team: SLG is a bandwagon of sales folks with intensive product knowledge and exceptional negotiation skills that help them pitch the product as per customer needs.
What is Product-Led Growth?
As consumer behavior changed with digitization, the gradual focus on the customer's digital journey took precedence over it. This is where Product Led Growth entered. In Product-Led Growth, the product itself is a driving factor, leaving decision-making to the customer after using it.
"Products have become the most dominant form of growth. Your product should be designed in a way that it markets itself." -
User Experience: For any PLG model, user experience is paramount. Businesses strive to make their product so intuitive and valuable that the user naturally wants to adopt and advocate its usage.
Organic Growth: PLG relies heavily on Virality and organic growth. It depends on users sharing the product, putting in some good reviews, etc., avoiding any need for aggressive sales tactics.
Self-Serve Model: PLG uses Free Trial, Freemium, and friendly user onboarding to empower its users to explore, try, and even purchase products without any sales intervention.
How to decide between Product-Led Growth vs Sales-Led Growth for your business.
Should one adopt a Product-Led Growth (PLG) approach or veer towards the tried-and-tested Sales-Led Growth (SLG) model?
Both strategies come with their set of merits, intricacies, and challenges.
Before delving into the stories of tech giants and their strategic pivots, let's first dissect the core tenets of PLG and SLG, providing you with a clearer roadmap to discern which might align best with your business vision.
Choosing between PLG & SLG depends on factors like product type, target audience, business model, etc. Here are a few pointers to consider when comparing the two
Product Type
SLG - Enterprise software, complex B2B products, and technical tools often scale with Sales-Led Growth. Suitable for products that require some handholding or have a longer learning curve.
PLG - Ideal for products that have a simpler onboarding and adoption journey. Have early Aha! Moment, which helps them stick to the product for a longer time.
Target Market
SLG - Sales Led approach is most suited for enterprise accounts that often have longer sales cycles, involve multiple stakeholders, larger budgets, and require customized solutions for their requirements.
PLG - If targeting a broader user base, including small business individuals who require scalability, the PLG approach is more suitable.
Sales Cycle
SLG - Works exceptionally well with businesses with longer sales cycles, as building personal relationships that sustain the time is crucial.
PLG - Quick decision-making based on product-defining features dominates PLG growth. Users evaluate the product based on their requirements and make decisions online.
Resource allocation
SLG - Significant resources are spent on building and training the sales team. Additionally, significant resources go into creating sales materials, demos, etc.
PLG - Product development, user experience, and organic marketing resources are available. Customer support plays a crucial role in the post-sign-up journey.
Feedbacks and Iterations
SLG - Feedback is often based on clients' respective usage. They are fed into the backlogs and picked as per priority. Iterations are usually slowly spread over a few months.
PLG - Since a lot depends on user experience. PLG business uses an agile methodology where feedback and rapid iterations are common.
Pricing
SLG - Pricing is often customizable, with bulk discounts. In most cases, pricing is personalized as per custom requirements.
PLG - Pricing is primarily transparent and fixed. Tiered-based pricing is the most common pricing model used.
Market Entrance
SLG - Differentiated, relationship-building, and customized offerings can be key differentiators when entering a crowded market.
PLG - A unique product, key feature differentiator, or ease of use is our highlight of winning in a crowded market
Successful tech titans each chart a unique growth trajectory, shedding light on evolving business tactics. Consider Dropbox. Initially, they fervently embraced the Product-Led Growth (PLG) model, simplifying user onboarding.
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However, as enterprise clientele grew, the allure of a direct sales strategy became undeniable, helping them cater to these clients' nuanced requirements.
Slack's progression paints a similar narrative. Their freemium model, initially, wasn’t just a tool—it was a movement, rapidly embedding itself in workplaces globally.
But as Slack's momentum surged, the brand realized the potential of a tailored sales strategy, especially when targeting heavyweight corporations.
And who could bypass Zoom in such a discourse? Today, they're synonymous with virtual connectivity. Yet, their journey began with the product as the hero—intuitive, reliable, and user-friendly.
However, as enterprises queued up for Zoom's offerings, the brand discerned the merit in a sales-led approach, specifically for these high-ticket accounts.
These tales echo a consistent theme: PLG’s prowess in capturing the market is undisputed, but when navigating the intricate terrains of large enterprises, a sales-led approach isn't just beneficial—it's imperative.
Disadvantages of using SLG or PLG models
Sales-Led Growth (SLG) or Product-Led Growth have disadvantages that make businesses choose one. Let's try to jot down some of the top disadvantages -
Disadvantages of Sales-Led Growth -
High CAC - High CAC is what worries most businesses while adopting the SLG. A personalized approach, building a large sales team, custom demos, content, etc, can significantly increase the customer acquisition cost.
Scalability - Scaling a SLG model requires a large sales team. That's one prominent reason most sales-led companies work on limited mapped accounts.
Longer sales cycle - Large enterprises often involve multiple stakeholders in decision-making, leading to a long sales cycle.
Messaging Inconsistency - Only when the training process is well defined, different sales reps often pitch business, messaging, and value propositions inconsistently. Often leading to brand disruption, longer sales cycles, and loss of deals.
Less focus on products - The product focus often takes the back seat regarding sales-led business. The priority is constantly building relationships, which stagnates product growth.
Disadvantages of Product-Led Growth -
High Ticket Customer - Selling expensive plans or additional tasks without direct sales involvement becomes extremely difficult.
Intense competition - Since PLG realizes a broader audience, it risks high competition and fewer focus times per user, which might make it easier to get users onboarded.
Low Conversion - If the product journey needs to be better defined. It might lead to users only sticking to a freemium model, never upgrading to a paid version.
Product dependability - It is essential for the product to have a good user experience and interaction to convert, which increases the business dependency on the development and associated teams.
Customer Loyalty - Mediocre PLG models often need more customer loyalty and increase churn chances due to no-deep-rooted relationships.
Ultimately, the most suitable model depends on the nature of the product, the target audience, and the company's resources and strengths.
Each SLG and PLG, respectively, come with their own set of advantages and disadvantages. PLG has been a rage for companies starting in the last decade.
But over time, the most prominent advocates of Prodcut-Led Growth realized that to close more significant enterprise deals, they also needed a Sales-Led Growth motion.
"Sales isn’t going away, but the old sales model is undergoing a paradigm shift. The companies that understand this transition and skillfully combine sales efforts with Product-Led Growth are the ones that will thrive."
Product-Led Sales is a strategy that infuses the best elements of Product-Led Growth and Sales-Led Growth.
While the product remains the primary driver to attract users, there is also a proactive sales process to amplify growth for high-value accounts or complex product requirements.
How does Product-Led Sales work?
Product First - Like the PLG model, the product is at the forefront. User starts their journey with a free trial or freemium to explore the product, and various features are retained on the platform.
Sales Intervention: Once a user's high usage and intent are observed through product analytics, the sales team develops them further, offering customized solutions or premium offerings for higher pricing.
Customized Approach: Unlike traditional Sales, PLS is not invasive. The sales process is triggered only based on customer usage data and interest.
How to Implement Product-Led Sales: A Step-by-Step Guide
Product Optimization: Ensure your product offers an intuitive and engaging user experience before anything else. Display key features prominently and have a detailed user-onboarding flow. Have a feedback loop that addresses usability concerns and ensures core feature adoptions.
Segmentation: Use a product analytics tool to track user journeys, actions, and engagement. Divide user groups based on geography, organization size, usage frequency, and feature usage to segment them for further flows.
Outreach: Establish triggers based on pre-defined criteria (like feature usage) loop in the sales team when the user hits these trigger points. Ensure sales outreach is personalized based on use and user behavior.
Sales Process: Train the sales team for a consultative selling approach, helping users find more value from the product and its features. Provide custom solutions or packages for complex requirements.
Feedback and Iterations - Actively solicit feedback on products, additional needs, or challenges during sales. Channel this feedback to the product team for feature enhancements or refinement.
Ongoing engagement - Just like organic growth helps build the product's interest. Similarly, periodic organic efforts on organic activities like content development, webinars, tutorials, etc, help engage users regularly. It also helps in re-engaging dormant users.
Conclusion
The trajectories of Dropbox, Slack, and Zoom are compelling testaments to the evolving nature of business growth strategies.
While Sales-Led Growth (SLG) offers a personalized touch and Product-Led Growth (PLG) capitalizes on product strengths, the fusion—Product-Led Sales—hints at the future.
As businesses grapple with rapidly changing market dynamics, embracing strategies that offer adaptability, scalability, and, most importantly, a laser focus on customer value becomes crucial.
The intersection of SLG and PLG might be the strategic sweet spot modern businesses have been searching for.
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