The traditional way to grow your business is through sales. You acquire leads using tactics like cold outreach and emails. Your sales reps go and convert those leads into sales, growing your business.
This is a classic top-down sales motion. It’s how software companies have always sold their products. You find key decision makers, qualify them, then sell to them.
But today, SaaS companies on the bleeding edge are adopting product-led go-to markets to grow their user base. We’ll talk about the two main approaches - product-led growth and product-led sales - today.
Product-led growth is a bottom-up sales motion market where self-serve users drive growth. The idea is simple.
You make it easy for end users - not organizational decision-makers - to try a product. You make the product good and incentivize referrals. As users get value out of your product, they bring on other users, growing your business.
With a pure PLG approach, there’s no need for sales. Growth is baked into the product. Customers sign up for trials, buy subscriptions, and drive sales without your involvement.
In B2B software, an example of product-led growth everyone knows comes from Gmail. They offered a free, beautiful email service with a huge amount of storage to everyone and the rest is history.
A non-software example is Zara. Their clothes are inexpensive, stylish, and easily available. The product sells itself; the brand does no marketing and is immensely successful anyway.
Product-led sales (PLS) is an approach that combines the benefits of a great product with traditional top-down sales
Like with PLG, an excellent product is essential for driving growth. Users love it, spread the word, and increase awareness, conversion, and growth. However, in a PLS approach, there's also a sales team that finds and converts leads into customers.
This helps accelerate sales and sell directly to key decision-makers. SDRs, account executives, and others can also work with self-serve users to increase upsells, cross-sells, and renewals.
Brands like Zoom and Slack started with PLG but ended up hiring sales teams. They are classic examples of PLS. The same applies to most PLG companies who use sales teams despite also having strong PLG funnels.
PLG and PLS rely on product usage to drive growth. This lets you sell a virtually unlimited number of subscriptions quickly. PLG and PLS make exponential growth possible, which is how they put so many products in hypergrowth.
Product-led approaches require a smaller investment in sales. This gives you more resources to work on your product. There’s also a stronger incentive to make your product incredible in order to grow your product’s usage. All of this leads to better software.
When your product attracts and retains customers by itself, there’s no need to spend as much on sales or marketing.
PLS strategies use experimentation, data, and iteration to create better user and customer experiences. This increases customer satisfaction, increasing conversion rates while reducing churn.
Product-led approaches have their own drawbacks. Here are some of the main ones.
Shifting from focusing on sales to focusing on the actual product is difficult (read more here). You need new skill sets, new attitudes, and maybe even new team members to succeed. Some organizations can’t (or won’t) make the effort to change.
It can be hard to determine if a product-led approach is working. Metrics like user engagement, satisfaction, and retention are harder to measure than total sales made. This can be a problem, because a product-led go-to-market is reliant on data.
Developing a winning product is challenging. It requires a strong product development team and support from other departments like marketing and customer success. Iteration and data analysis are often involved.
Two key KPIs for acquisition are lead-gen conversion rate and referral rate. The first measures how many people sign up as leads after seeing your offer.
The second, referral rate, tells you how many users refer new users to your SaaS product. This is a key metric in PLG, since you’re relying on self-serve users to drive growth for you.
To grow effectively with PLG, you need a healthy number of users. KPIs like monthly active users (MAU) and churn rate are important here, letting you know how many people use your SaaS product.
Are users finishing their trials or quitting midway? How many people are buying your upsells, cross-sells, or core subscriptions? Trial conversion rate and time to value are two key KPIs to keep an eye on here.
Salesbricks makes it easy to execute your PLG strategy. Our platform lets you run free trials, create self-serve SaaS quotes that convert users, and more.
Price, quote, convert, and invoice your customers easier than ever before. Focus less on processes and more on developing a product that drives sales and growth.
To see what we can do for you, book a free demo today!
