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This week’s PLS AMA was with Kenny Van Zant!
Kenny is the former Head of Business (and 5th employee!) at Asana, where he led all business functions including sales, marketing, customer support, and finance. Prior to Asana, Kenny founded BroadJump and SolarWinds. At SolarWinds, he pioneered the bottom-up model for selling software and SaaS into enterprises and SMBs. Kenny is now on the board of several companies, including IDERA Software, Puppet, Itential, and Castlight.
1. There are two distinct sales profiles: R&D and Manufacturing.
In the beginning of your company’s journey, when you are launching a product or defining a new lead type, you need to hire “R&D” sales reps. These are the folks who prioritize intellectual curiosity over specific outcomes. They care about flexibility, iterate constantly, and are comfortable extracting learnings through failure. Someone with an R&D mindset enjoys understanding the problems with product and user adoption, and thrives at the frontend of your sales strategy.
That said, once you find a product adoption mechanism that works, you need to inject your “Manufacturing” sales reps. The manufacturing mindset is all about inputs, outputs and the incremental improvement of a system, rather than the definition of that system itself. For your company to truly be successful, you need to hire both archetypes: the R&D reps to be deployed at the edge of new things, and the Manufacturing reps to get you from 25% close rates, to 30%.
2. Hire salespeople who believe wholeheartedly in your mission.
Don’t hire sales reps too early and without maximizing for mission-fit. Why? Because it is best to onboard folks who believe in your company first and have a good grasp of what you are trying to accomplish. If you hire sales reps who are aligned with your mission, they will be adaptable with how they are compensated, and will stay open to some fine-tuning of your reward mechanisms as you figure out your PLG sales motion, and they will grow with you. TL;DR: Filter for sales people who understand your mission and are willing to be flexible.
3. Build in a degree of flexibility into your sales system.
Let’s unpack this. Oftentimes, in traditional sales culture, rivalry breeds amongst sales reps, to the point where many can spend too much time focused on beating the system to increase commissions. This mentality does not lead to an effective outcome for PLG companies. Instead, you should provide your sales team enough transparency and support to have their minds set on goals-based compensation, rather than competition.
“For example, at Asana, instead of having annual revenue and compensation targets, we would set them monthly for each rep. While we would set these targets 90 days in advance, we built in a sense of flexibility into this system. Instead of giving our reps a totally obscure target, we were openly transparent about the fact that our early Excel forecasts could be way off. We also introduced flexibility around lead distribution. Sometimes, we would task a sales rep to work on some leads that could (or could not) turn into something, but if they didn’t, instead of chipping away at their compensation, we made them whole. Our commitment to help our sales reps meet their targets no matter what the circumstance was fruitful: it gave them enough wingspan to focus on ‘seeing a deal, closing a deal’ rather than worrying about whether they got the best leads from an algorithm.” – Kenny
4. Don’t think of sales friction as your enemy.
A certain amount of friction in your sales process is both necessary and good. If you have zero friction, then you could sell to everyone that could be a good fit. If you have a great sales rep, who is trained at objection handling, you could in theory sell anything to anyone. The result is misrepresented hyper-growth.
Instead, you should start with a defined smaller target audience for your product that will continue to buy from you because there is a great customer-product fit. Then, more customer personas will pop up. They may even put up with a friction-filled sales process because they really want to use your product. Then, you start nurturing these relationships because odds are they are going to be your best customers long-term.
5. Combining PLG with top-down is a strong “meet-in-the-middle” strategy.
Whenever people listen to PLG leaders talk about PLG, they often think that a “bottom-up” sales strategy means that a company’s CEO is the last person to join and use the SaaS product. This is not the case. A PLG strategy is a bottom-up motion up to a certain point: once a PLG motion earns enough virality for you to close bigger deals, it’s okay to transition from a product-led model to a top-down model.
But having these two sales motions meet in the middle can be tricky. Why? Because you need to make sure that the sales and marketing folks running the transition understand that this is not a separate go to market approach, it’s the next step in the flywheel motion.
“This is not a case where your team closes a deal with AIG, then they go and knock on the doors of AIG’s sister companies and competitors to try to close more deals by boasting that you’ve secured a contract with AIG. This is bad. Why? Because it reverts you back to sourcing leads from exec handshakes instead of from your reliable product data. This is also bad because it represents a loss of culture. If your sales and marketing teams don’t consistently understand that the PLG/top-down game is a meet-in-the middle concept, then you’re playing with fire.” – Kenny
6. When determining product-qualified leads (PQLs), look for “state changes”.
When you convert a customer from non-paying to paying, or from a simple version to a premium version, you are witnessing what Kenny refers to as a “state change.” Simply put, these are significant changes in the way a user or account engages with your product that you can identify from looking at your product metrics.
“Back when we started Asana, we had no tools, like Pocus, to flag these state changes. So we built our own. My first hire was an engineer to build a data platform to get product data accessible to my reps. It became a CRM front page for them, and every night, we would comb through this user database to try to identify accounts and flag these state changes. Eventually, we identified two types of leads based on two common state changes, which we coined ‘mass leads’ and ‘velocity leads.’ The former were those accounts that had grown into a critical mass of users in a certain period of time, and the latter were those accounts that had generated a lot of new activity in the product, regardless of the number of users. These became our two lead funnels, and our job became to monetize them.” – Kenny
Why are state changes important? Because they let you achieve sales efficiency. Sales efficiency is not about the revenue you generate, it’s about accelerating the revenue that you would have earned from your customers at a later stage. This “delta” is what you can capture when you let state changes be the driver of your monetization. Instead of calling a customer a month before they undergo a state change, contact them after the state change to rapidly capture new business at the right time.
7. If you have trouble identifying state changes, ask your customers.
We’ve highlighted the importance of state changes; but, what happens when you don’t know how to identify whether a customer has gone through a state change or not? Kenny has a simple answer: find a way to ask your customer.
“Here’s an example of a creative way we uncovered a state change at Asana: we realized that a great state change is when your product goes from being used by a single user, to being an application supported by that user’s IT department. But, how could we know if Asana was being supported by our users’ IT? In the beginning, we emailed users: ‘If you have an IT contact we should notify about product changes or programmed down times, let us know.’ Those who responded had clearly passed through that state change. We eventually automated this process by including a new field in our product’s administrative settings called ‘IT Administration Contact.’ If a user entered their IT person’s email address into that field – bam! – we knew the state change had occurred.” – Kenny
8. Marketing needs to be intimately familiar with your product.
A common saying in biology says that “Ontogeny recapitulates phylogeny.” To put it simply, it means that the biological history of an individual mirrors the biological history of a species. The saying holds true in PLG: the growth metrics of an individual company will match the growth metrics of the world’s adoption of your product. For this reason, it is important that your sales and marketing teams understand what your product will look like in the future, so that they can make sure the educational content they create and communicate today, addresses the next issues that a given customer will face tomorrow.
9. Care for the early stages of your sales funnel.
It is okay to focus a tremendous number of resources and time on addressing your front-of-the-funnel metrics, even if in the beginning, this comes at the expense of strengthening your enterprise metrics. Why? Because this grows your user base.
“At Asana, we were focusing on front-of-the-funnel metrics for years! I really wanted to work on those features that would help us grow our enterprise base, but at the end of the day, mathematically, it makes more sense to dedicate a substantial amount of energy on the problems faced by our early-funnel users because it invariably made our funnel bigger. In that sense, it’s better to address 1% of problems in the front of the funnel, than it is to fix 50% of the problems at the later stage of the funnel. Once you have a healthy enough pipeline of users, then you can worry about fixing a later-stage problem for a wider base of users that you’ve already captured.” – Kenny
10. There are two types of customer success: 1) sales in sheep’s clothing and 2) support / adoption focused
There are two models for a customer success (CS) team. The first is really sales in CS sheep’s clothing, and the other is CS that’s support and adoption centric. Both can work, but the latter model is stronger. Why? Because a CS team works best when it thinks primarily about adoption and is looking at renewals solely through the lens of “How can I help customers be successful with this product?” and “How can I ensure the product is being utilized?”. It’s more powerful to have your CS team have a left foot in product and a right foot in sales, than two left feet in sales.
“What it means when a customer success team is focused on support and adoption, is that they can heavily partner with your sales organization to understand where an existing account is headed, and come up with a plan to help get there quicker. If a sales rep came to Asana and said to me ‘What I deliver are logos and deals’, I would say ‘This is not the place for you. We already have more logos than you can stare at. Your job is to take the logos that are doing well and accelerate that growth, and you do that by relying on your intuition, backed by the tooling we give you and partnership with the customer success team.’ That’s where the CS team comes in.” – Kenny
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