Product-led growth, Product-Led Sales, sales-assist…it’s hard to keep track of all the terms for SaaS companies and their products.
Just like the term product-led growth, we’re seeing Product-Led Sales get a bit buzzwordy on LinkedIn. So, we’re here to nip this in the bud and provide a real definition.
A year ago, when we started Pocus, we created a pretty simple definition for Product-Led Sales (PLS) based on the hundreds of conversations we had with go-to-market leaders at PLG companies.
Here is that initial definition:
“Product-Led Sales (PLS) is a go-to-market strategy that uses self-serve users as the primary funnel for the sales motion.”
Our desire to define PLS came from a key observation. PLG companies like Slack, Zoom, and Atlassian were touted as shining examples of products that “sold themselves” without the need for sales teams. But, in reality every one of those companies eventually added a sales team to accelerate their revenue growth.
We surveyed GTM leaders at B2B SaaS businesses in 2021 and found that 98% of PLG companies either had a sales team or had plans to hire a sales team. What’s more, when we ran the survey again last year we found that only 4% of companies surveyed were “pure PLG” with no plans to hire sales. Half of product-led businesses have already implemented a hybrid sales approach (49%) and more are planning to do so (14%).
But these sales teams behave differently. Their hybrid sales model is more product-centric, consultative, and data-driven - making them much more effective.
The motion doesn’t resemble a traditional sales-led approach, but it clearly doesn’t fit the definition of product-led growth either. Product-led growth is both a go-to-market and product strategy that positions the product as the primary channel for acquiring, converting, and retaining customers. The sales funnel is replaced with a self-serve motion, where users can try your product without talking to a human first.
Product-led companies use inbound tactics to capture new users via free trial and freemium models. They focus on activation and conversion through the customer journey inside the product, without relying on traditional outbound sales.
So what is this hybrid approach called Product-Led Sales and how does it differ from PLG?
(Re-)Defining Product-Led Sales
Creating a new category is an ever-evolving process. After spending a year building with our customers and community that are evangelizing the future of PLS, we’re ready for the next iteration of the definition. There are two key changes we’re suggesting:
- Product-Led Sales is more than just converting self-serve users to paid customers. Yes, PLS can help GTM convert self-serve users to paid customers, but PLS can also drive sales motions beyond the self-serve channel. Companies use the PLS methodology to convert free trials and drive expansion, upsell, cross-sell, and renewals.
- Product-Led Sales is for more teams than just sales. Every member of the go-to-market team from SDRs and account executives to account managers, customer success, solution engineers, product teams, and marketing can drive revenue from product usage insights.
So, given the above learnings, we’re suggesting a new definition.
What is Product-Led Sales?
Product-Led Sales is a go-to-market approach that relies on existing users of the product to drive revenue, including conversion, upsell, cross-sell, and expansion.
How did we arrive at this revised definition? Over the last year, we’ve worked with a lot of Product-Led Sales teams. We noticed some key themes from the best-in-class companies that informed this new definition.
What does it mean for a sales team to be product-led?
You reduce friction for customers.
A PLS motion reduces friction between customers and value. PLS optimizes human touch-points and only adds salespeople where necessary.
You create multiple paths for the customer.
PLS is all about meeting customers where they are. Sometimes that means talking to a human, other times it means remaining self-serve to explore the product on their own.
You use product signals to uncover customer needs.
PLS relies on product signals (eg. usage spikes, changes to user behavior, increase in signup velocity, etc) to tell GTM teams when to engage with a customer. Product usage data helps teams learn when to reach out (or when not to).
A combination of product usage signals, ideal customer profile (ICP) fit, and buying intent make up definitions for different types of product-qualified leads (PQLs). These are the users with high conversion potential sales should focus on. PQLs convert at much higher rates than MQLs — increasing sales cycle velocity, customer satisfaction, and overall revenue efficiency.
Learn more about PQL definitions, segmentation, and how to convert them.
You lead with value.
PLS teams help customers - they are never aggressively selling. They are consultative and solve problems for end-users. This value-driven approach boosts overall revenue health by increasing retention as well as conversion rates on expansion and new revenue targets.
Expanding the product-led mindset
The product-led growth model is undeniably an efficient go-to-market approach, but the promise of a product that can truly sell itself has been oversold.
A truly PLG product needs a lot of things to work in its favor:
- A true hair-on-fire problem
- A product that can get users to value quickly
- An easy-to-navigate user experience without a heavy implementation process
- Natural network effects (intentional viral loops)
- A pricing model that makes it easy to pay self-serve
- A product experience so delightful people will tell their friends
That is a lot of things that have to go very well in order for you to rely only on your product to drive revenue growth.
Most teams will struggle to hit targets in the long run if they bet solely on PLG.
That’s why we love the Product-Led Sales approach, where you can pair the best of product-led principles with a modern sales playbook.
Find our more about sales-led growth vs. product-led growth and which motion to pursue depending on your core business priorities, product experience, and revenue goals. (Hint: it’s probably a hybrid!)
Key characteristics of a PLS approach
A well-run Product-Led Sales motion is pretty easy to spot. There are a few distinct characteristics that all PLS teams have in common.
- Strong sales-assist motion. Sales-assist / product specialist teams engage with existing users of the product, helping ideal customers get to value quicker, without being pushy or sales-y.
- Clear rules of engagement. Self-serve and sales should have clearly established workflows that don’t overlap or cannibalize each other.
- Emphasis on product qualification. Product usage data is used to inform the go-to-market playbook, so sales teams engage when the customer is sales-ready.
- A healthy amount of friction. Increasingly users want more control of the buying journey and they want to do a lot on their own. But the best PLS teams understand that a carefully placed human touch-point can go a long way.
Product usage data vs. firmographic data
Instead of relying solely on customer firmographic data (company size, geography, industry) to inform identification and prioritization of leads, PLS teams analyze product usage data as a primary driver of their sales strategy. This product usage data can include:
- Who signed up for your product
- Which teams were invited
- Who the power users are
- How many total daily active users are on your product
- Which features the users are engaging with
Neatly summarized by Aaron Geller, Director of Sales at Cypress,
“Firmographic information about your customer isn’t enough. You must look at the end-user data and product triggers to come up with the right expansion plan so that you are engaging the right customer at the right time.”
A product-led sales approach is all about understanding how a team is using the product, who the product champions are, and when the sales team should engage. Eli Weiner, Vice President of Sales & Success Strategy & Operations at Slack, is a PLS expert and has helped build and refine Slack’s PLS strategy. According to Eli,
“The faster you can identify the signals that correspond to propensity to buy, the better. Once you have a decent handle on them, these PLG signals should drive a big chunk of your sales strategy, sales rep prioritization, and be a main feature of your reporting and analytics.”
Product-led vs. sales-Led: why PLS is a winning strategy
After a PLG company has a successful self-serve flywheel in motion, the sales motion is layered on top as a multiplier to the existing machine. With the self-serve motion continuing as a standalone revenue engine, PLG companies invest in sales to become a two-engine machine, finding a more streamlined and elegant path to larger deals and customers.
A PLS strategy offers two main advantages over a traditional enterprise sales strategy:
Superior customer experience.
The PLS motion is all about meeting customers where they are and aligning on how the customer wants to buy. When a PLS rep engages, they are already familiar with how the customer uses the product and can skip the frustrating discovery questions. It’s a more intuitive, frictionless, and efficient sales process that reflects the values that likely attracted a user to your product in the first place.
Sales reps are expensive, so they must engage with customers who are actually ready to sign up for a paid subscription or buy an enterprise contract. Product-led sales achieves just that. With PLS, sales reps know which accounts and users have a high propensity to buy, so they can spend time problem solving with customers. The PLS sales process enables more efficient sales reps, leading to a lower customer acquisition cost (CAC).
More on: Product-led growth vs. sales-led growth.
Is Product-Led Sales right for you?
How do you know when your company is ready for a Product-Led Sales approach?
Some experts we’ve spoken to look at a few different metrics to determine whether or not PLS is right for them, but it generally boils down to unit economics. Is your LTV or volume of sign-ups high enough that you can support adding human touch-points to your motion?
Some other indicators are more qualitative and depend on whether you already have a self-serve motion or if you are currently sales-led and layering in a product-led approach
Self-serve + sales acceleration
If you are adding sales acceleration to your existing self-serve flywheel, you should look for the following indicators that a PLS motion is right for you:
- You see a healthy amount of “hand-raisers” and their questions are less support related and more about sales (i.e. licenses, pricing, enterprise consolidation, etc.)
- You have a strong bottom-up motion but struggle to go from user adoption to enterprise-wide adoption of the product
- Your revenue goals are pushing you towards mid-market or enterprise customers
Sales-led + product acceleration
If you are adopting a product-led approach to accelerate your existing sales-led motion, PLS will be right for you if the following is true:
- You have an easy to adopt use case that customers can largely onboard and activate with limited support
- You see customers asking for free trials or about pricing early on, indicating that the sales cycle needs to be shortened with a self-serve approach
- You have a clear end-user who can champion the product.
- Your product has areas of friction that can be solved through 1:many strategies like product documentation and group onboardings.
Here are 9 steps to layer in a product-led approach to your existing GTM motion.
Defining your Product-Led Sales strategy
Once you have decided it’s the right time to adopt Product-Led Sales, the next step is to begin defining your Product-Led Sales strategy.
At a glance a Product-Led Sales strategy should have the following components:
- Goal: This can be free to paid conversion, enterprise expansion, churn reduction, or all of the above. Choose goals that get you closer to your revenue targets.
- Team: Who on the team will be running the plays to achieve the above goals? Sales-assist team, SDRs, AEs, Account Managers, or Customer Success?
- Playbook: Who will you target, when will you reach out, and what will you say? These are the core questions you should answer with your PLS strategy.
🪄 Need help with your playbook? Pocus can help go-to-market teams pinpoint the right customers to reach out to at the right time with the next best action. Request a demo or take a virtual product tour.
Join the #1 community for PLS
Want to connect with other leaders adopting Product-Led Sales? Join the #1 community for PLS and get access to frameworks, advice, and frameworks from the best practitioners in the space.
👉 While you wait…Check out our 140 page Product-Led Sales Playbook featuring frameworks and best practices from GTM leaders at companies like HubSpot, ClickUp, Superhuman, Webflow, Asana, and more.