Product-Led Growth (PLG) has become a popular approach for startups today to respond to new customer behaviors. Indeed, several surveys have highlighted the growing self-service trend. Forrester Research found that 68% of B2B buyers prefer to research independently rather than interact with a sales representative. Gartner also revealed that 77% of B2B buyers believe their latest purchase was “very complex” or “difficult,” leading them to postpone engaging with a salesperson. This result shows buyers’ reluctance to engage with salespeople early in the buying process.
Companies like Slack, Dropbox, Zoom, and Grammarly adopted a PLG approach successfully. But all have incorporated Sales-Led-Growth (SLG) elements in their strategies at some point.
However, both approaches differ, and startup founders willing to balance PLG and SLG to fuel sustainable growth must consider a few points.
Both PLG and SLG approaches have a different focus.
The Product-Led Growth approach
A PLG approach focuses on the product as the primary growth driver, emphasizing user adoption, engagement, and satisfaction. The objective is to build a product that provides exceptional value and a seamless user experience, leading to rapid growth and widespread adoption.
OpenView Partners defines PLG as follows:
“Product-Led Growth (PLG) is a go-to-market strategy that relies on using the product as the primary vehicle for customer acquisition, conversion, and expansion. The idea is to create a product that is so valuable and intuitive that it drives users to adopt and share it, fueling growth and minimizing the need for traditional marketing and sales efforts.”
As the conversion is self-serve, a strong product team is needed to increase conversion through the product.
In fact, PLG emphasizes the product’s ability to deliver value quickly and drive organic growth through effective onboarding, positive user experiences, and viral adoption.
Focusing on creating a superior product experience encourages users to become advocates and drives organic growth.
The Sales-Led-Growth approach
The SLG approach differs from the PLG approach as the sales team is central in driving revenue and customer acquisition. Here is the definition from OpenView Partners:
“Sales-led growth occurs when an organization prioritizes and invests heavily in its sales efforts to drive revenue growth. This approach puts the sales team at the forefront of customer acquisition and expansion, focusing on generating new leads, closing deals, and increasing customer value through upselling and cross-selling.”
Because the sales team drives the conversion, a strong sales team is needed to increase conversions and fuel revenue growth.
The decision to add SLG components to a PLG engine can originate from various factors. As an illustration, startups can be willing to target larger enterprise customers that require a more hands-on sales approach. They can also want to accelerate revenue growth, respond to the product’s added complexity, or counter a change in the competitive landscape. Most successful PLG companies incorporated SLG elements at some point in their development. But this requires preparation to shift successfully.
Slack: One example of a brand that incorporated a Sales-led approach to its PLG roots.
Slack’s success is unconditional. The collaboration tool initially gained significant traction through a PLG approach. The product was intuitive and easy to adopt. Users could sign up for a free plan and start using the product, driving organic growth and viral adoption within teams and organizations.
As Slack grew, it recognized the need to target larger enterprises and expand its customer base beyond self-serve adoption. Therefore they made a strategic shift toward a more Sales-Led Growth approach. They introduced a sales team that actively engaged with enterprise prospects, providing personalized demos and assistance throughout the sales process. This shift allowed Slack to tap into the enterprise market and cater to larger organizations’ unique needs and requirements.
By implementing a Sales-Led Growth strategy, Slack was able to accelerate revenue growth, increase market share and secure more significant enterprise deals.
Some Customer Segments may benefit from a sales approach
Before incorporating SLG elements, you must understand your target market profoundly. That way, you’ll be able to identify the customer segments that may benefit from a more personalized, sales-driven approach.
You can start by analyzing your customers and segmenting them by industry, company size, geography, and specific pain points. You’ll then understand which segments are more likely to require a more hands-on sales engagement.
Enterprise accounts and complex sales are usually good candidates for this approach.
Draft out your sales-led Ideal Customer Profile (ICP) to help you understand where to focus, how to target them, and make sure you put your efforts in the right direction.
You'll need to Adapt Your Marketing strategy..
When you have identified your target segments and ICPs, draft a marketing strategy aligning with your objectives. Start with your goals and explain how you will reach them, clarifying your go-to-market strategy, brand positioning, and marketing tactics that will drive success.
You can, for example, combine a self-serve approach for Small and Medium Businesses (SMBs), a more traditional lead-generation approach for Enterprises, and an Account Based Marketing (ABM) approach for larger target accounts.
Make sure you understand your ideal customer behaviors to adapt your message, brand positioning, USP, and marketing channels in a way that will resonate with your specific audience.
Enterprise segments usually have more complex sales journeys, including multi-touch points and contacts. When a lead from a company can convert by himself in PLG, an SLG approach will usually require touching upon multiple buyers and influencers within the same account to secure a deal. This must be considered, as it can impact your marketing campaigns, conversion process, and analytics reports.
..And adjust Your Marketing Machine
Incorporating SLG elements into your PLG is not trivial. Before hiring a costly sales team, you must ensure you allow them to succeed.
Having the right marketing machine able to feed your sales team is crucial. It will allow your sales team to focus on conversion, driving much more efficiency to your approach.
When the product-led approach focuses on driving leads to try the product, a sales-led approach mindset is different. Let’s say you want to add SLG components to target Enterprise Accounts, which is usually a common use case. You’ll need to understand the specificity of this segment which includes a more complex sales process. Then you’ll need to create a new lead funnel dedicated to the sales-led approach and implement all the mechanisms that come with it within your marketing automation and CRM systems (lead scoring, lead stages, sales notifications, etc.).
PLG-focused marketing encourages users to sign up or try the product. Preferred marketing channels are usually content marketing, SEO, social media, and referral programs.
SLG, marketing is critical in generating qualified leads and supporting the sales team’s efforts to close deals. As a result, marketing efforts involve targeting prospects through lead-generation campaigns or account-based marketing (ABM) and moving them through the sales journey with marketing nurturing.
Ensuring you understand and fuel both funnels will enable you to achieve your growth goals. Of course, these funnels are not really separated, and the magic happens when they start fueling each other.
Marketing, BDR, and Sales alignment are key when adding SLG components
Having the right machine to fuel your lead generation is necessary. But ensuring the marketing and sales departments are tightly aligned and knowledgeable is crucial.
Establish clear communication between departments and make sure your processes are documented. The definition of the different lead stages, from lead to closed deals, must be clear and understood by everyone involved in the conversion process.
Tip: Keep the BDR team within the marketing team
I strongly suggest keeping the BDR team within the marketing team to keep this alignment as smooth as possible. This way, marketing will be accountable for pipeline generation and connected to the field. This keeps communication fluid between both departments, which focus on the same objectives. In such manner, buyers’ necessity directly influences marketing, and sales focus on deal conversions, resulting in greater efficiency. Of course, this statement needs to be challenged according to the specificity of your business and organization.
Invest in training and enablement to ensure your BDR and sales team are equipped to deliver value, guide customers, and efficiently detect potential deals. Establish transparent processes to qualify a deal, such as the BANT qualification method. Make sure you include advice to disqualify fast to keep your teams focused. As product onboarding is crucial for PLG, sales efficiency will determine the success of your SLG approach. With this in mind, be cautious about optimizing the conversion process along the journey.
PLG and SLG can complement each other
Transitioning from PLG to SLG is not a binary choice, and companies usually adopt a hybrid approach that combines elements of both strategies. For instance, they can maintain self-serve options for smaller customers while introducing a sales team to target larger enterprise clients.
Map out your customer journey to identify touchpoints where SLG activities can complement your PLG approach. Then, determine the stages in the customer lifecycle where a BDR or sales touch can provide added value, such as enterprise onboarding, influence support for strategic accounts, custom integrations, or strategic expansion.
If you don’t already have them, implement analytics systems to gain insights into user behavior, drop-off stages, and team expansion. They will allow you to identify patterns and customer segments requiring personalized sales outreach. Continuously analyze based on data to optimize your sales efforts.
Collaboration between product and sales teams is vital for successfully linking SLG & PLG. With this purpose in mind, encourage regular communication and feedback loops between the teams in order to ensure alignment on customer needs, product enhancements, and sales strategies.
Metrics analysis is different.
As you incorporate SLG elements into your PLG approach, establish clear metrics and KPIs to track the effectiveness of your sales efforts.
Be aware that PLG and SLG metrics and benchmarks can be significantly different. While Customer Acquisition Cost (CAC) or Cost Per Lead (CPL) are usually low in PLG, they can be much higher in SLG. This is because SLG usually focuses on Enterprise accounts with more complex and longer sales cycles that bring a higher value deal. For that reason, the CAC ratio in this situation is an interesting metric to follow.
Some metrics will be more valuable for one approach than another. Marketing Qualified Leads (MQLs) and generated pipeline are more relevant in SLG. Product qualified Leads (PQLs) and number of trials are more insightful in PLG.
Tip: Differentiate Your Metrics
I strongly suggest differentiating your metrics per funnel when incorporating SLG into PLG. That way, you’ll be able to measure the success of your SLG approach from the beginning. Make sure you set the right expectations and timeline to determine success. SLG and PLG are like two distinguished languages. If you don’t differentiate your metrics, the risk is to start seeing miscommunication between stakeholders, with a more significant risk of wrong analysis and mistaken objectives.
Here is an example of a conversation between a CEO and a CMO after Sales-Led-Growth implementation occurred.
“CEO: Our Customer Acquisition Cost is increasing. We need to tackle this problem” (comparing SMBs acquisition with Enterprise acquisition)
“CMO: True. But the average deal size is increasing” (Enterprise customers have a higher value)
“CEO: This is not what Annual Revenue Per Account (ARPA) indicates. It’s growing but not as steadily” (ARPA considers the overall revenue distributed across all customers, regardless of the account size. If you acquire deals through PLG and SLG, your account structure will vary significantly, with accounts ranging from small to large. Therefore ARPA can mask the revenue impact of larger deals, as the average is calculated across the entire customer base).
The conversation seems sterile as both speakers speak different languages. Given that point, having distinguished metrics will help discussions and allow proper analysis of the situation. For example, it can be interesting to have differentiated CACs showing the cost of acquiring SMBs’ self-serve customers and acquiring an Enterprise deal.
In any case, continuously monitor conversion rates, revenue growth, average deal size, and other relevant metrics to assess the impact of your SLG initiatives. Constantly iterate and refine your strategies based on the results to optimize the balance between PLG and SLG.
Your whole company will need to be aligned.
If combining an SLG and PLG approach is a matter of growth, this can impact the company culture. As explained above, the focus, mindset, or processes can differ. Therefore, founders need to explain the approach within the company to ensure alignment, understanding, and support from all teams involved. It ensures that everyone understands the overall strategy, how it aligns with the company’s vision, and how their roles contribute to the approach.
Providing training and enablement programs can be interesting for successful implementation. By explaining the SLG elements, teams can receive the necessary support to adapt their workflows, acquire new skills, and align their actions with the approach. This ensures that teams can effectively execute their roles within the SLG-PLG framework.
Additionally, marketing can help build a collective understanding of the organization’s growth strategy. Indeed, it can explain key messaging articulating the value proposition of the SLG-PLG approach, share success stories, updates on key initiatives, and insights from implementing the approach.
All things considered, incorporating SLG elements into your PLG approach can be a powerful strategy to drive your startup’s growth to the next level.
By understanding your segment market, adapting your marketing strategy, and successfully optimizing the approach, you can strike the right balance and unlock the full potential of your growth strategy. Upki can support you in the process, helping you in the different journey steps and smoothing the transition to ensure success.
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