There’s a new reality in Saas
Buyer behavior is shifting, and as buyers demand better experiences, companies are experiencing a movement that’s changing the way software is bought and sold. This shift is ultimately changing the role sales teams play in many organizations, but that doesn’t mean product-led businesses don’t need sales. PLG is just adapting the way companies will adopt and leverage sales to further their growth.
What’s driving the product-led vs sales-led approach?
Product led growth is catching on and more companies are embracing it as a business model every day. One major catalyst for this is buyer behavior. History tells us that “how” you sell is just as important as “what” you sell, and with 75% of B2B buyers preferring a product-led buying experience vs a traditional salesperson, businesses can’t ignore the signs.
Consumer software experiences like Netflix, Spotify, & Uber have drastically altered buyer expectations and tolerance for friction in the adoption process. Shoppers now expect instant gratification and seamless user experiences in their personal and business lives.
Companies like Zoom, Slack and Dropbox have caught on and are growing massive businesses that offer easy to adopt, freemium products with a self-service signup model. Just a few of the key benefits of this approach are happier customers, shorter sales cycles and lower acquisition costs.
Key differences between product-led growth and sales led growth
We all know the playbook of the sales-led approach, and in the saas era, you’ll be hard-pressed to find someone who would stand up and say it’s the way they WANT to buy.
Common sales led strategies include an enormous amount of outreach activities like cold calling and cold emailing, followed by a multi-step sales process usually forcing potential buyers into a discovery call before they are allowed to see a demo. With the back and forth scheduling, lead handoffs and demos, it can be weeks before the customer even sees the product in action.
Enter the product-led approach where the goal is to reduce friction and show immediate value. In the time it takes a prospect to earn the right to see a demo they could have already completed a free trial. With the right nurturing and onboarding, many users will happily trial a product and pay to signup without ever speaking to a sales rep.
So in a product-led model sales needs to be positioned as a service; there to consult and help determine if the product is the right fit for the prospect. This is often referred to as consultative selling or solution selling.
When is the right time for sales to enter the conversation?
There are many possibilities for how and when sales should engage with prospects in a product-led buyer’s journey. The methods you ultimately adopt will likely be dependent on the complexity of your product, your pricing model and the sophistication of your lead intelligence. Regardless of which method you adopt to engage with prospects, experimenting to find the most efficient acquisition model should be the ultimate goal. There are a few common approaches emerging as a foundation for more product-led sales journeys.
Inbound sales only
This first approach is the most sales light of all. In general, reps will only interact with the customers who ask for their help. In many cases, you may even be able to rely on your support team or a hybrid sales/support team to provide consultation and assistance. The upside is that this approach comes at a lower cost, however, you may miss valuable upsell opportunities by having a team that’s too service-oriented or isn’t incentivized in the right ways to maximize revenue.
Inbound sales + Product Qualified Leads (PQL’s)
In addition, to fielding inbound questions, some companies choose to assign product qualified leads or PQLs to their sales teams. With this approach, product and/or marketing generally builds a scoring model to identify users who are engaged with the product vs those who aren’t. Users will be nurtured by the product, as well as through triggered or automated messages until they are deemed qualified. Once a prospect meets the scoring threshold, a sales representative can reach out with the intention of closing the account at maximum value.
Enterprise sales/Teams approach
A common B2B pricing model has emerged that leverages individual users as a way to leverage selling at the team or enterprise level of an organization. This is also known as land and expand strategy. Organizations with land and expand models may require more seasoned sales reps, but the product is still the warm handoff between the user and your organization’s sales team. While businesses with this model may still designate a PQL, they may also be blending that with outbound prospecting to decision-makers who can purchase licenses on behalf of an entire department or company. Slack, Zoom and Dropbox are all great examples of businesses that have seen explosive growth with land and expand strategies.
It’s time to adapt to the market
If you’ve already adopted a product-led business model, congrats, you are among the 50% of companies providing the type of experience customers want. If you happen to fall in the 50% of companies who aren’t embracing product-led growth, you may want to take a hard look at your product and determine whether you can offer a more self-service experience. If you can’t adapt, you may risk losing your future customers to companies that do.