If you’re in SaaS, you know the phrase product-led growth, or PLG—and it’s not going away any time soon. This is not an easy business model to maintain and grow, even if it seems like a “rocket ship” from the outside.
Stacey Epstein (Freshworks CMO), Sara Varni Bright (Twilio CMO), and Carilu Dietrich (1Password Fractional CMO) share with moderator Viviana Faga, General Partner @ Felicis (and a former CMO herself) how they’ve faced the challenges of PLG and led their companies through successful transitions.
Product-led growth and virality aren’t synonymous.
When people hear “product-led growth” there’s an assumption it’s the same thing as a viral product that sells itself. But PLG and virality aren’t necessarily the same thing.
You can have a pure PLG model where the product does sell itself—the buyer can dive into the product, experience it with someone they know, and unknowingly make a customer out of that person. Think companies like Zoom, Calendly, Slack: if someone who uses Zoom wants to schedule a meeting with me, I’ll need to download it as well. I then become a Zoom user. Behind that viral product are a ton of market and customer research, a massive research and development team and budget, and a dedicated community.
“Product-led growth is using a product that sells itself and giving people access to use it right away without ever talking to a salesperson. It’s the consumerization of enterprise software.” – Carilu Dietrich
Keep in mind, viral word of mouth is important, too. Tools that don’t have product virality like Zoom, but that have die-hard fans like customer experience tool Freshworks, can be viral products as well. Users will brag about the product to their fellow experts and connections from other companies, which will likely result in new customers for Freshworks.
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Sales teams add the most value at the Enterprise level when selling to department heads and C-Suite executives.
The big question you might be wondering: at what time does establishing a sales team in a PLG company add the most value?
The short answer is it depends. Sales can be particularly helpful with upselling, cross-selling, and accelerating deals. For most companies, the perfect time to add sales is when you expand into an enterprise market—your new sales team can focus on selling to department heads and C-suite executives. You just need to make sure your company has the revenue and growth to justify additional sales expenses and personnel.
“We’re a 14-year-old company with a 3-year-old sales team.” – Sara Varni Bright
If you have hot leads moving through the funnel quickly, let those leads convert on their own. Put your salespeople, money, and resources on leads that might need a little more nudging and education. It might feel risky to not have your sales team work the most eager consumers, but if you’re looking for efficiency with your sales process and budget, it’s the right move.
You may find a dedicated growth team is something you need, as well. Whether they sit under sales, marketing, or live independently, a growth team can serve as a cross-functional attack force on different issues facing your product, growth, and total addressable market.
Product-led growth doesn’t work for everyone—and it doesn’t look the same for everyone, either.
If you’re trying to slap a PLG ideology onto your sales-led growth product, it will not work the way you want it to. Customers will know what you’re doing and it will confuse the market, potentially causing you to lose revenue.
PLG requires market research and expertise, a hyper-focus on the product and how it helps (not hinders) your users, and constant review and revision. Your sales and marketing teams need to be aligned with each other, as well as with the product team, to succeed.
“Everything that I’m doing in marketing is helping the salespeople win, and everything that’s happening in sales is leveraged in marketing. It’s a group effort all the time. As long as you get the sale, that’s what matters.” – Stacey Epstein
What’s your threshold for when leads get kicked over to sales from marketing? Should it be lower or higher? Are you listening to your customers, leads, and what they need, and are you responding to those needs? Without the answers to these questions, it will be much harder to succeed with a PLG model. Sales and marketing are tools in your toolbelt that will serve you at different times, but your company has to be set up for long-term success.
Product market fit, sales and marketing collaboration, defined systems to rapidly identify hot leads—these are all the keys to success when it comes to PLG. A sales organization will likely add the most value in complex enterprise deals. Build and maintain a self-serve, possibly freemium, model for non-enterprise deals, and you’ll find your way on the path to success and growth.
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