Alexa, CEO of Pocus, hosts Product-Led Sales (PLS) “Ask Me Anything” sessions with PLS experts to share best practices, frameworks, and insights on this emerging category. These AMAs are an opportunity to ask PLS leaders any question — ranging from hiring to sales compensation to tech stack — in a low-key, casual environment.
The PLS AMAs are for members of the Product-Led Sales community, the place to learn, discuss, and connect with go-to-market (GTM) leaders at product-led companies. The goal of the community is to bring together the most thoughtful and innovative GTM leaders to build the next generation of sales together.
Interested in joining? Request an invite here.
Now, keep reading for a recap of what we discussed in our latest AMA chat.
Meet Kyle Poyar, Operating Partner @ OpenView 👋
Kyle also writes the Growth Unhinged newsletter that dives deep into the playbooks behind high-growth startups. In his precious downtime, Kyle is either out playing tennis or hiking or staying in to hone his cooking skills at his home base in Boston.
In this Ask Me Anything with Kyle, we talk about some of the trends we observed as the Pocus team worked with OpenView (as well as RevGenius and RevOps Co-Op) to create the 2022 Product-Led Sales Benchmarks Report.
Stay tuned to learn:
- The hybrid approach powering GTM teams in 2023 and beyond
- What PQAs are, and how the economy is pushing PLG orgs to focus on them
- How to find your ICPs
- Why businesses are prioritizing retention
- What Kyle thinks of the “reverse trial” buzzword
Trend 1: More companies embrace hybrid PLS motion in 2023
One of the most interesting discoveries we made in this year’s PLS benchmarks report?
While self-serve and product-led motions can be the starting point for a lot of revenue generation, growth, and success — it’s not where the bulk of revenue is typically coming from.
So, how are modern product-led growth (PLG) businesses ramping up revenue?
It’s all about the hybrid approach: Product-Led Sales.
Kyle calls it “the great meeting in the middle.”
In his observations, he’s found that self-serve is often the starting point for this hybrid motion.
Many PLG companies want folks to be able to try their product before they buy. The reason is twofold:
- Users get to see the value of your offering, which warms them up for the sales touch
- Sales gets to know the user more deeply, so they can tailor touchpoints to the highest-priority prospects
Allowing people to dive in and use your product enables you to create definitions for product-qualified leads (PQLs): users who show high product usage, fit your ideal customer profile (ICP), and/or show purchasing intent.
PQLs tend to convert at better rates, and speeds, than traditional marketing-qualified leads (MQLs). However, individual users who swipe a credit card for a $25 or $50 monthly subscription aren’t where most large PLG orgs gain the biggest percentage of their revenue.
The best opportunity from a lifetime value (LTV) standpoint is usually selling to teams and enterprises. And that's where the more traditional sales motion comes in.
Usually, these buyers will want help navigating legal, procurement, and other steps in the commercial transaction. Or maybe they’ll need support getting their boss on board through customized demos and security reviews. These are core areas where a human-led sales motion is key to conversion and revenue.
“The magic happens when you're pairing the self-serve motion with the human touch — the things that humans are great at doing.”
The challenge with the hybrid approach
You’re probably already thinking about a key challenge here, which Kyle also touched on in this AMA: Where do you draw the line between which users merit a sales touchpoint and which don’t?
Finances are tighter for PLG companies in 2023, making the focus on efficient growth and lower customer acquisition cost (CAC), so we're seeing companies raise the bar on self-serve.
Where sales used to reach out to a very high percentage of signups in the past, companies now recognize it’s time to reserve sales capacity for the highest-priority users and accounts.
There is no singular way to meet this challenge, but Kyle reports seeing a lot of experimentation in the Product-Led Sales realm: Building playbooks that connect sales to the right prospect or product user with the right message at the right time — helping personalize the customer experience with time-saving automation.
Trend 2: The economy is pushing a shift from PQLs ➡️ PQAs
The fact that individual PQLs aren’t where the bulk of revenue typically comes from has implications beyond adding personal touches to the PLS hybrid motion.
It also means revenue leaders may need to reframe sales goals to lead sales folks to look beyond PQLs and prioritize PQAs.
The difference between PQLs vs. PQAs 👥
Kyle describes the PQL as a user-centric metric, wholly tied to a single person and their individual product activities.
In contrast, a product-qualified account (PQA) is a group of connected users who, as a whole, show purchasing potential.
A PQA might consist of a group of multiple product users inside an organization that you can tap into to expand to more users — eventually multithreading your way to the buyer who’s going to write the check for your product.
A PQA could also consist of multiple sub-accounts within a broader domain where the play is to do an enterprise consolidation where you bring them all together into one account.
Kyle says he’s seeing sales generally getting more account-based across the SaaS and PLG space, looking at how overall accounts fit in the ICP and whether a company, as a whole, is a valuable target customer.
After all, he says, in a PLG company, if you only work the PQLs you only work the lower-hanging fruit that may be able to convert on its own. PQLs can be a great signal for helping identify PQAs, but prioritizing PQAs is all about making sure the GTM team's time is spent doing more than what the product can do on its own.
“We got so obsessed with product signals and saw such a strong correlation between product signals and conversion likelihood that we overcorrected. It used to be all about the MQL or SQL signals, and now it's all about the PQL signals — I think the truth is where we’re focusing should be somewhere in the middle.”
Kyle thinks of PQA scoring on a continuum.
For example, on one hand, you could have 20 people from an organization — including a VP — sign up, set up X number of integrations, and use A, B, and C high-value features. That’s probably going to get a very high PQA score.
On the other hand, you might have one user who’s a director at a certain organization that you really want to land — but there’s not much else they’re doing to rack up PQA points. They may get a low PQA score but you still might decide to put a salesperson on that account because there's so much opportunity there and you just don't want them to slip through the cracks.
Scoring this way requires some sophistication and the sales resources to be able to focus on multiple “levels” of PQA scores, but it goes to show how PQA scores can certainly exist on a continuum — it’s just up to the individual company to decide the point on that continuum where an account does or does not warrant sales input.
One type of PQA that’s a bit of an outlier is the hand-raiser. These are people who figuratively “raise their hand” to ask for a demo or get help from sales, because they’re already actively in the buying cycle.
Don’t overcomplicate ICPs
Of course, understanding your ICPs is a critical element in working with PQAs.
Kyle says that people often overcomplicate the process of identifying ICPs. When trying to figure out if a user fits an ICP, it can be as simple as going through this line of thinking:
- Did they sign up with a business email?
- If yes, run their domain through Clearbit.
- Is the user at or above the ideal seniority level?
- Is the user from an organization with the right number of employees?
- Is the organization in a target industry — or at least one where you have reference customers?
- Are they in a geographic area you’ve already created a market around?
For anyone reading this, these are probably indicators that a lead is at least close to being an ICP. Kyle says that this is usually enough to start with, even if it’s not exactly the way marketing has defined an ICP.
Start simple — and if you have too many leads that sales is working, then you can tighten things up and get closer to the marketing team's definition.
Kyle also advises coordinating how you think about ICPs across the entire GTM team. Folks on the marketing team can end up identifying ICPs in a way that doesn’t really land with how sales engages and works accounts.
Defining ICPs and PQAs and taking action on them are two different beasts.
Having a score or a definition is wonderful and all — but it doesn't mean a lot unless you make different moves based on what you know.
These moves are what we typically call “playbooks.”
Playbooks are best practices, outreach templates, and more that guide sales teams to take the best actions, depending on the situation.
We talked about a few earlier:
- Enterprise consolidation: Bringing multiple users or accounts from the same domain together into one account, under one license
- Seat expansion: Growing the number of users within an existing team, with the goal of eventually winning wall-to-wall deployment
Building and making the decision on the best playbook for each type of PQA is another place where the PLS hybrid motion shines. Sales folks can layer their experiences and judgment on top of PLS technology to match playbooks to accounts and drive outcomes.
Trend 3: 2023 is the year of retention
Also related to the economic downturn, Kyle mentions how scrutiny is rising as companies review their budgets and wonder, “Do we really need these many user licenses for X product?”
As churn starts trending, PLS companies will need to shift focus from conversions and expansions to look at retention.
We’ve noticed the same with our customers at Pocus. Companies are spending more time with their install base to make sure they’re happy, make sure they're actively using all the features they paid for, and make sure they feel they’re getting value from the product at every turn.
“Your install base is your most immediate opportunity — especially if there aren’t as many new purchases happening. You really want to make sure you’re taking care of those existing, paying users.”
Trend 4: To reverse trial or not to reverse trial? ⏪
A reverse trial gives users a time-boxed free trial with access to paid capabilities, which goes back to the traditional freemium experience once time is up.
In the PLG model, we want to have a self-serve path for folks to see value, but still have a compelling event to drive conversions — a reason to buy, ultimately.
Typically, that has been achieved via two different strategies:
1. A free product or freemium offering, where there’s only so much someone can do — but they can do it as long as they want. With the freemium model, users as well as their colleagues enjoy a lower barrier to entry — helping you build a pool of folks to convert later.
2. A time-based free trial, where you really open up the product — but there’s a hard cut-off by which users need to make a decision. Free trials convert well because they get users hooked on the full product. And quickly, because if you're going to convert you're going to do it within the window of your trial, or shortly thereafter.
The reverse trial taps into the benefits of both of these approaches. However, there are some challenges.
One, it could feel like a bait-and-switch if the UX and UI of your product don’t clearly communicate what happens after the free trial, and when it’s over.
Two, a reverse trial may not provide enough time for users to fully utilize and find value in your premium features — meaning you have to lose those users or find a way to extend their trials.
Finally, with reverse free trials, you're managing a bigger surface area, you’ve got users at different points throughout the journey, and you have a lot of moving parts to nail from a customer experience standpoint.
Kyle says reverse trials are an interesting experiment that most companies should consider running, if their product flow can handle it, because of the win/win opportunity.
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