Touchpoints 01.02.2023

Product-Led VS Sales-Led: How To Choose Your Growth Model

Looking for another "PLG is better than SLG" piece? This isn’t one. Instead, let’s look at the benefits of both models.

Cover image with green background and yellow triangle next to white circle

If you’ve been following our blog for a while now, you’ve already seen us stack sales-led against product-led growth (PLG) a few times.

We’ve flirted with a full-scale comparison and think it’s time we finally brought the two go-to-market models together for a sit-down.

If you’re a startup considering which model should lead you, know that it can be difficult to jump ships halfway through your GTM.

You’ll also shape your business and product model around your preferred strategy.

We’ll explore the product-led and sales-led market strategies separately before establishing how they fuse.

And, finally, how you can get a product-led upgrade if you’re a sales-led company.

What is sales-led growth?

Before the product-led era, the sales-led system was the bread and butter of SaaS companies.

Here, your sales reps develop and manage customer acquisition, starting with marketing qualified leads (MQLs).

Sales then identifies and converts the hottest MQLs into sales-qualified leads (SQLs).

It’s the classic sales funnel managed with a traditional CRM. A once tidy and straightforward sales process has been made more complex by today’s non-sequential selling.

Sales-led organizations are often considered defunct or redundant by PLG ones, but we advise against jumping on the bandwagon.

Elements of sales-led still work well for longer sale cycles and large accounts, as you’ll find out a bit later.

What is product-led growth?

Product-led growth places your product at the center of customer acquisition, retention, and success.

With this model, the sales rep assists a potential customer through the sales cycle, rather than leading them. Product-led companies generally have far fewer sales touches than sales-led ones and try to give the user as much autonomy as possible.

This low-key acquisition process makes your product the hunter, rather than the sales reps, which means a low customer acquisition cost.

Your users are gently ushered toward their “aha moment” and are most likely part of SMBs. At least, that’s what most of the rhetoric focuses on.

You can easily include enterprises in your customer base with a product-led approach, but more on that in a bit.

How does PLG differ from sales-led?

Let’s list the differences between a product-led growth strategy and a sales-led one.

1. The first customer touchpoint is the product

With PLG, you’ll generally generate leads through sign-ups and won’t engage them until they reach your upgrade milestones.

It’s commonplace for PLG customers to join a free trial or freemium plan, spend some time with it, and then jump on a paid subscription or cancel without communicating with a single rep.

The sales-led model is the virtual opposite of PLG’s often silent one. You’ll see reps approach leads from day one of the customer journey.

2. Buying cycle lengths

The buying cycle lengths are shorter with product-led and lengthy with sales-led.

This niftier sales model design is deliberate, as:

  • Leads and sales reps alike don’t need to wade through sales-led’s targeted approaches and stakeholder lists.
  • Customers can onboard themselves, without demos or sales calls, with speedy TTV.
  • PLG has a broad top-of-funnel, meaning far fewer entry barriers to your product.

A product-led model puts the onus on users regarding activation and fulfillment.

The general PLG idea is to:

  1. Let simpler, less valuable accounts onboard themselves with your guides and other related resources.
  2. Use a high-touch sales model for complex and lucrative ones.

This approach differs from sales-led, where a sales rep holds a potential customer’s hand throughout the journey.

Product-led allows users to establish whether they’re a good fit for your product, with your reps engaging when the opportunity arises.

3. Average deal size

PLG companies are generally associated with closing smaller deals than their sales-led counterparts.

This catering to tiny accounts means a smaller average contact value compared to sales-led companies, and overall healthier unit economics.

But that doesn’t mean that PLG companies are exempt from closing big fish.

Far from it.

According to OpenView, 2019’s leading IPOs were all product-led, and PLG companies’ average enterprise value is double the public SaaS index.

PLG Index: revenue from enterprise customers on bar graph

The development of product-led sales ensures PLG companies can cater to large accounts’ needs.

Especially if you follow our high-touch sales model.

What choosing between them means for your company

Every SaaS startup must choose between growth engines at the get-go.

It’s almost like starting a role-playing game.

Do you choose the sales-led barbarian, hacking your way through sales call after sales call, or the product-led wizard, with their arcane knowledge of the customer journey and the spells that bind it?

As TK Kader, the founder of Unstoppable, puts it, the seemingly innocuous decision between slapping a “Book a demo” or “Speak to a sales agent” button on your website firmly places your flag in either camp.

You’ve then sealed strategies for vital business processes, like:

  • How you’ll shape your ideal customer profile (ICP)
  • Where you’ll get your fundraising from
  • What you'll spend your budget on
  • The size of your customer success teams
  • How your sales process will play out
  • Your customers’ general experience

Where sales fits into the product-led picture

Another PLG half-truth is that the product sells itself, making your sales teams redundant.

You might’ve seen stats like “Almost half of B2B customers don’t want to speak to sales reps.”

Yes, your product is central to a product-led strategy, but the user experience and activation need sales’ help.

We'll reveal later that PLG icons like Slack, Zoom, and Zendesk currently have beefy sales teams.

While many potential customers will happily fiddle with your product to find their fit, sales is vital for helping them get the most out of it.

At this juncture, sales and product-led meet and fuse into product-led sales (PLS).

Can you combine the two models?

Many companies made the big time with PLG, getting there with minimal sales involvement.

But once these industry icons finished their hyper-growth era, they realized they needed to get sales back into the picture.

  • 20% of Slack’s staff work in sales.
  • 28% of Zoom’s thousands-strong workforce are salespeople.
  • Zendesk reached the 5,000 customer milestone without a single sales pitch. Today, 21% of the customer support powerhouse’s employees are consultative salespeople.

How did they do it? By embracing product-led sales.

PLS takes the best parts of customer support from the sales-led model to uphold the customer journey.

You can establish PLS regardless of which model leads you.

The product-led funnel is more complex than the idealized, streamlined, self-serve model where everyone happily signs themselves up.

Bigger accounts need help setting up expansive and tailored subscriptions.

Especially when:

  • Your product is more complex than your guides’ solutions.
  • Your ideal customer profile (ICP) members aren’t tech savvy, or your product is unique.
  • You’re introducing something new to the market.

How modern SaaS businesses have adapted to PLG

The blending of sales-led and product-led is far more common than one might think. Most well-established PLG businesses heavily rely on their large sales teams.

Today, more than 45% of the average PLG company’s workforce comprises salespeople.

The Zendesk example

We mentioned earlier that PLG companies can throw both big and tiny companies into the sales funnel.

Zendesk is a great example of this buying process flexibility.

The help desk software recently expanded its product suite to include live chat and data analytics tools - seven in total.

The perceptive people at Zendesk soon realized that while their customers easily onboarded their primary customer support offering, their new tools weren’t being adopted by most.

Why was their user adoption tanking?

You guessed it: self-serve wasn’t covering their customers’ now lengthy needs.

Zendesk’s product teams overestimated their user behavior. Their marketing strategy successfully brought in tons of leads that couldn’t wrap their heads around the new complex products.

New products mean more work in facilitating a straightforward customer experience, and Zendesk’s retention rates struggled to keep up with their business growth.

Unless you’re a developer yourself, you might need the human touch onboarding several, if not all, of Zendesk’s seven products.

There was a glaring, training-shaped hole in Zendesk’s customer service model.

Thankfully, Zendesk saw this as a superb opportunity to bring sales back into their structure as training and onboarding agents.

Let’s back up a bit. Sales-led companies will decide to adopt a PLG model when they reach a wall in their growth, and PLG companies will reconsider the place of sales once their product suite expands.

But there’s more to a PLG expansion than just a flood of new signups.

How to set up a hybrid model

If you’ve reached the point in your business where your growth could use a product-led boost, we’ve got you covered.

If you’re a sales-led company looking to bring on a product-led model, here’s how to get started.

1. Get your ICP down

First things first, you’ll need to establish your ICP.

You probably have an ideal buyer down already, but the preferred clientele in a PLG business is a bit more complex than the standard SQL.

A PLG business prioritizes your most valuable types of customers according to:

  • Firmographic details
  • Product engagement levels
  • Number of subscriptions

Use Breyta as your potential customer source of truth and integrate:

  • Firmographic data activation platforms like Clearbit
  • Usage data sources like Segment
  • Subscription management systems like Chargebee

Breyta website page with integration connections

Now you can use Breyta to configure your Customer Fit score. This lets you score your prioritized accounts according to various values, as seen below:

Breyta tool screenshot showing customer fit score configuration

Simply connect your CRM data to Breyta, and we’ll keep your inbox flowing with hot leads.

2. Give your tech stack a PLG makeover

Your traditional sales-led tech stack and CRM can’t keep up with the flood of free users.

The PLG toolkit lets you sift through your ocean-sized userbase to pick out product-qualified leads (PQLs).

As their title suggests, PQLs have met enough usage benchmarks to be considered sales or CS-ready.

We’ve covered the optimum PLG tech stack in this piece, but here’s the cheat sheet if you’ve got RevOps on speed dial:

3. Know your place in the market

PLG strategies excel with low CAC and straightforward buying decisions for users. So long as your marketing teams do their homework, of course.

You need an actionable solution to your segment’s pain points and jobs-to-be-done.

Luckily, you’ve got data enrichment, your ICP, and all their enlightening insights. Use your ideal customer’s needs as the skeleton for your inbound marketing efforts.

Fire up your blog, invite your impressive associates to webinars, and film or document your customer testimonials as soon as appropriate.

Whatever you create, make sure it’s specific to your ICP and actionable. No one wants to wade through waffling in this day and age - your prospects need practical answers to their questions, fast.

Beyond your fancy inbound machine, word-of-mouth marketing happens to be a PLG powerhouse.

When you fall in with the right companies, you can be sure they’ll sing your praises to others.

4. Ensure your product’s value is obvious, intrinsic, and easily upsold

Your users will generally find their place in your product, provided your value is self-evident.

Ensure that your users’ experienced value aligns with your promised value.

Given PLG prospects’ reluctance to speak to salespeople, DIY demos are essential. Many of your visitors already know what they want, and only need to check if you have it.

Digital solutions provider Pendo’s product tour is a superb example of nifty value assurance.

Not only can you pull the veil from their offerings without waiting for a salesperson’s response, but you can also choose the service you want.

CS can upsell more efficiently to users already winning with your product.

Breyta lets you compile and track accounts that have hit your Customer Fit and User Engagement thresholds.

5. Make user education a priority

This point builds from the last. Experienced value is more easily attained when your self-serve resources like tutorials, guides, and eBooks are high quality.

Just don’t throw them at your customers all at once.

One error we’ve seen repeated in several PLG companies is the over-eagerness of their CSMs. Your customer success teams should never hurry customers through an exhaustive implementation schedule.

Remember that PLG doesn’t necessarily mean a short TTV and agile product adoption. Flooding your customers with sometimes unnecessary training can slow implementation.

Something Skilljar’s implementation manager, Mike Komadina, realized when he realized what was hurting retention.

“We soon realized, not only were we having a lot of repetitive conversations, but we were inundating customers with too much information. We wanted them to know everything but realized they didn’t have to know everything on day one. And since we’re a customer education platform, we stood up Skilljar Academy, which still exists today.”

So, ensure your CSMs know exactly what help your customers need and play it cool. No one needs to know your life story on the first date, and you’ll scare them off if you come on too strong.

They want to get to know you slowly, at a comfortable pace.

6. Stay on top of the customer journey

You might’ve relied on NPS surveys to keep track of your customers’ moods. The problem with sticking to surveys is your customer’s needs and satisfaction can change on a whim.

We want you to monitor your varied customer journeys using Breyta, but there are two major events to be aware of:

  1. Upsell opportunities
  2. Churn signals

We created a real-time customer health score so you can handle these situations well before they slip past your control.

Let your product-centered sales team lead your GTM

We hope by now you’ve appreciated the place of sales in a product-led model and that neither model can succeed on its own in modern SaaS sales.

PLG might be hugely popular today, but it can’t function properly without your sales and CS teams.

Product-led and sales-led aren’t enemies; instead, they’re partners, and their correct fusion will result in a highly successful GTM strategy.

Of course, one model will become more prominent depending on your sales cycle lengths and the types of accounts you focus on.

Large accounts with longer sales cycles means sales-led is your preferred method.

Smaller accounts with short sales cycles are mostly self-serve’s domain, and you can let your product and its attached resources to the talking.

Still, you’ll want your sales and CS pros monitoring your juicier accounts using Breyta, ready to reach out when upsell opportunities present themselves.

Finally, we’d recommend you learn more about the various PLG motions, and find the one that suits your company best.

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