How to Win With Product-Led Sales
Everyone wants the best of both worlds: low CAC with product-led (PLG) and high ACVs with sales-led (SLG) growth models. But implementing both is tricky as they utilize different channels, monetization strategies, growth loops, and even internal resources. If you don’t build connection between PLG and SLG, you will be running seemingly independent business units that will compete with each other internally. That is why product-led sales is crucial as a bridge between two motions, banking on PLG self-serve usage while overlaying SLG sales processes to extract the most ACV.
How to make PLS work is a local decision for each business, but there are best practices that have recently emerged. Our top 10 takeaways are below:
1. PLG has a strong “why now”
Product-led growth capitalizes on the shift in buying power from the budget owner to the end user. Increasingly, users want to cut through the noise and just try products for themselves, which in turn brings efficiency in go-to-market (GTM). Products must be built for people to use, self-serve, not just for enterprise buyers to buy. And the market has caught wind – roughly 70% of companies in the Cloud100 have a PLG motion.
2. …but PLG is just one of the tools in the growth toolbox
Product-led growth alone doesn’t maximize enterprise value. The best companies, over time, will likely employ a combination of product, marketing, and sales-led growth across acquisition, monetization and retention. For example, it might be optimal for your company to be product-led for acquisition, rely on a well-timed sales rep outreach to close the deal, and drive retention through post-purchase campaigns. How teams choose to pursue growth depends on which part of the market they want to optimize for: large enterprise deals or smaller initial ACVs with a land and expand motion.
3. Your growth model can be a competitive advantage
SaaS is an extremely competitive market these days, and your chosen growth model can help you stand apart from competing solutions. In particular, pursuing a PLG approach when your competitors mainly chase large enterprise contracts can help you carve out a wedge in the long tail of the market. Consider the example of Adobe and Figma: Adobe has a super robust enterprise grade feature set for prototyping, but Figma successfully attacked the market from the bottom up with easier onboarding and a much faster time to value.
4. Product Qualified Accounts (PQAs) are the new MQLs
In the world of PLG, what qualifies a free-tier account as a PQA: one the sales team should reach out to? Emailing new users right away is a waste of salespeople’s and users’ time—it’s important to let users get value out of a product first before starting sales discussions. Product usage data shines a light on who to reach out to and when. Key indicators include:
- Volume of usage
- Velocity of usage
- Feature usage or feature wall clicks
5. Be thoughtful about pivoting between sales-led and product-led growth
Changing your company’s distribution model requires a cultural shift and can create whiplash for the growth team, so it’s best to approach these transitions deliberately. Companies should consider pivoting their growth model when they feel a pull toward doing so, rather than being pushed by internal or external stakeholders (looking at you, VCs!). For example, customers asking for POCs is an indicator that it might be time to transition from sales-led to product-led sales. On the flip side, it might be time to incorporate more of a sales-led motion if you see lots of “hand raisers:” self-serve users who want to buy the product for their entire organization.
6. Structure sales team incentives around land-and-expand
Traditional sales incentives (quotas and bonuses) might not translate well to the PLG selling motion, in which companies aim to land smaller initial ACVs and then expand the account size over time. For example, if sellers need to hit a high quarterly quota for new business, they might not spend enough time nurturing those critical expansions. Take a critical look at sales reps’ incentive structure and make sure they are a) not over-incentivized toward high initial ACVs and b) compensated well for closing expansions and upsells. This incentive structure should apply to the entire sales organization, from individual sales reps all the way up to the CRO.
7. If you want to close enterprise contracts, build network effects within team usage
Optimizing for internal collaboration workflows creates virality for your product within organizations. If the multiplayer experience produces “aha” moments, your product is more likely to create a sticky user base that will be a loud advocate in an enterprise contract negotiation. Miro, for example, cares so much about their team experience that they don’t even count individual usage toward their MAU numbers, even though these make up good portion of their user base.
8. Build a bridge to value capture by gating enterprise features thoughtfully
If you want to build product-led sales (PLS), optimize enterprise plan for end users, not just enterprise buyers. By only including enterprise-grade features in the enterprise level product (e.g. SSO, compliance, etc), individual users have no reason to upgrade—it’s crucial to put features in the enterprise plan that users (not just enterprises) want. Some ideas of feature to gate include:
- Usage itself: start charging if an account passes a certain amount of usage
- Integrations: slot seamlessly into users’ workflows
- Features: unlock feature walls
- Manager-view dashboards/reports: This has the added benefit of activating the budget owner to help drive toward enterprise contracts
9. PLG-specific hiring is crucial
Don’t hire an enterprise sales executive to run your PLS driven revenue organization! In executive searches, optimize for candidates that have experience running the type of growth engine you want to build. A key position to hire thoughtfully for in PLG is the “Growth PM:” find someone technical and data driven who can identify revenue opportunities from product usage patterns.
10. Unlock revenue with a dedicated product-led sales platform
When you’re pursuing a product-led growth strategy, so much valuable information is hidden in these high-volume user datasets. It shouldn’t take a statistics Ph.D. to gain insights from this data—modern tooling can help nontechnical users make data-driven GTM decisions and optimize revenue. For example, Menlo is a proud investor in Endgame, which helps sales teams close bigger deals faster by harnessing product usage data in the self-serve funnel. Some of the most iconic PLG companies use Endgame to drive conversion and expansion, including Figma, Loom, Calendly and LaunchDarkly.