5 Keys to Product-led Growth Success in an Enterprise Sales Driven Startup
Learn how to minimize disruptions to your current sales and marketing efforts when introducing a product-led growth strategy.
I’ve recently been spending a lot of time talking to startup founders and leadership teams in B2B SaaS startups about the go-to-market challenges they’re currently facing. A common issue that came up in these conversations was the difficulty of implementing a product-led growth strategy when the company already had an established sales-led approach.
Introducing a product-led growth strategy in these situations can be tricky. This article highlights 5 critical planning considerations to help you minimize disruptions to your existing go-to-market strategy while enhancing your prospects for success with PLG.
The 5 Keys to PLG Success
Partner with Sales: Sales will be a key source of feedback on how prospects perceive a new self-serve product, and the sales team must be prepared to handle objections.
Brace for impact: Introducing PLG requires careful planning and execution to avoid disrupting existing sales and marketing efforts.
Define a playbook: Minimize losing qualified leads by defining a strategy on who your team should engage with and how.
Do the unscalable: Use a personalized approach to stop the bleeding at critical touch points while developing scalable solutions to prevent future issues.
Plan for incremental change: One of the biggest challenges is shifting the company mindset and building a team with the right skills and resources.
Plenty of early stage SaaS startups start with a sales-led go-to-market strategy, and for good reason. Solving complex problems often requires complex solutions, which means that acquiring, onboarding, and retaining new customers while ensuring that they get the most out of your product requires a lot of direct interaction with your team. For these startups, landing a few big customers early on can have a significant impact on the company's trajectory. Those close relationships you build with large customers create tight feedback loops that help the company prioritize product development to create better product-market fit, while also generating revenue. There are trade-offs of course, mainly that scaling a sales-led organization is expensive.
Product-led growth as a go-to-market strategy focuses on delivering value to customers through a self-service product experience. This can lead to increased sales efficiency, as customers are able to find and adopt the product on their own, without the need for extensive sales and marketing efforts. Companies that have been able to successfully leverage PLG have topped the charts in terms of cash & sales efficiency, earning truly impressive multiples in the public market. Klaviyo, a customer data platform, showcases these efficiencies in their recently filed S-1. As Tomasz Tunguz wrote in a recent blog post, “The PLG efficiency is tremendous both in cash & sales efficiency, which tops the charts of public software companies at 1.03 for the last 6 months. When the company spends $1 in sales & marketing expense, Klaviyo produces $1.03 in gross profit next year.”
Sales efficiency is one of the many benefits of PLG. However, if your business currently relies on a traditional sales pipeline for growth, introducing a new sales motion can be challenging and poses some real risks to the business. I have recently spoken to a number of founders who are currently in this situation. Having worked in companies where PLG was introduced after an established sales-led motion (ultimately successful but with some false starts), I wanted to highlight some key areas you can focus on to mitigate the short-term risks and optimize for long-term success. It is important to note that the ultimate goal is not to replace your current sales-led efforts with product-led growth (PLG), but rather to embrace both motions in a complementary way.
Partner with Sales
Sales will be one of the primary sources of feedback on how prospects perceive your self-serve product in the context of your existing product portfolio. At launch, your new self-serve product is bound to compete with the enterprise sales motion. Some prospects will start testing the product instead of engaging with sales, leading to less pipeline. Other prospects may see the self-serve solution as a less expensive option to solve their problem, leading to cannibalization. Enabling the sales team to properly handle objections can help reduce the risk. Unlike objection handling against competitors, both products must be presented in the best possible light with clear distinctions between them. The insights gleaned from these interactions can inform the product strategy to create better product differentiation, as well as how the products are uniquely positioned in marketing materials.
It's also possible that your enterprise sales team will use the self-serve product as a sandbox for customer pilots and longer term demonstrations, disrupting the 'pure play' delineation between the two motions. They will need to be prepared to take on a more consultative role and focus on helping customers succeed. Their role will evolve to include providing support and training to customers. They’ll need to be more knowledgeable about the product and help customers get the most out of it. Whether compensation adjustments should be considered is a conversation to be had with sales leadership.
PLG is not supposed to compete with your sales-led motion; it should create a net new channel of highly-qualified leads for your sales team to close with greater efficiency (Later in the post we’ll cover some strategies for this). Realizing the benefits will come with challenges along the way. That’s why it’s absolutely critical to communicate the strategic importance of the initiative and how you plan on implementing it.
“...you need to repeat yourself so often, you get sick of hearing yourself say it. And only then will people begin to internalize what you're saying.”
Jeff Weiner - LinkedIn Executive Chairman
Brace for Impact
Introducing PLG ultimately means introducing a competing call-to-action on your website. Instead of website visitors submitting their contact info on a lead form, now they’re signing up to use the product instead. Worse yet, if you have a digital team running paid campaigns to get new leads, without carefully segmenting campaigns and metrics between the two audiences, ROI on ad spend will surely be impacted. The bottomline is that marketing generated sales pipeline goals run the real risk of being missed.
The first step in any transformation is acceptance, followed by planning. The team driving your demand generation will need to find ways to increase the efficiency of their existing strategy, as well as evaluate new tactics that can scale. This includes improving content, optimizing landing pages, and improving audience targeting capabilities, all of which take time and technology to improve. In an ideal situation, increasing the budget during annual planning to compensate for the short-term ROI impact can help mitigate pipeline disruptions. The team can also consider making adjustments to the pacing of the current budget until spend normalizes to more predictable patterns and the concurrent efficiency initiatives begin to yield results.
Introducing the self-serve product on the website doesn't have to be as simple as "flipping a switch." There are plenty of tools available that will allow you to create personalized experiences for specific segments of your visitors. Are there geos where you don't have sales coverage? Is there a specific marketing segment you want to target? How about excluding Fortune 500s or accounts that are actively in the sales cycle? Your ultimate goal is to use personalization to gracefully introduce your new self-serve product without disrupting your existing sales motions (pissing off sales, causing people to quit!). The tools available today allow you to personalize website experiences in some simple or very sophisticated ways, and likely your only limitation is imagination and your existing technology stack.
Define a Playbook
Now that you’ve allowed prospects to essentially choose their own adventure, some genuinely qualified enterprise leads (that you spent good money to land on your site) will opt to kick the tires on the product instead of engaging with sales. If the current product experience isn’t as good as the enterprise experience, you run the risk of losing highly engaged, qualified leads. So what are you going to do about it? A PQL/PQA playbook defines who fits the criteria of being a qualified lead for enterprise services and how your team should engage. You’ve almost certainly heard or read about product qualified leads (PQL) and/or product qualified accounts (PQA). If not, there’s plenty of existing content out there on the subject, like this article by Elena Verna, so the focus won’t be on how to develop a sophisticated definition, but rather where to start.
As with any new self-serve product, you likely haven’t dialed in the growth loops yet. Wherever you see the biggest drop in your user funnel, define the PQL/PQA criteria accordingly. For example, complex products present onboarding challenges that lead users to churn before they even start using the product. In these situations, usage thresholds are irrelevant. If the user would have met the criteria for sales outreach having filled out a lead form on your website, you can use the same criteria to define a PQL/PQA. If you have plenty of product usage but few upgrades, consider combining this PQL/PQA criteria with product usage thresholds. While PQL/PQAs define who you will engage with, the playbook defines what you will do. Remember that the user signed up to try the product, not to be sold to. The sales outreach should be focused on helping customers realize the value of the product as quickly as possible (the A-ha! Moment), before attempting to sell.
The PQL/PQA playbook will evolve as you learn more about your users. You may find that some engaged users don't want to talk to sales, or don't have buying power, so you'll need to adjust your targeting criteria. As the self-servability of the product improves, product usage thresholds may get more complex.
Initially, a key goal from the PQL/PQA playbook is to compensate for the current gaps in the product experience that would put qualified, engaged leads at risk. These one-on-one customer interactions will also serve as feedback on how to improve the overall self-serve experience for users, both in and out of the product. Be thoughtful with your initial approach, but don’t over complicate things. Don’t let perfect be the enemy of the good.
Do the Unscalable
With some basic product metrics in place and a steady stream of sign-ups rolling in, you’ll quickly see the touch points that cause the most user churn. Creating scalable self-serve experiences that resolve these pain points takes time, and users are unlikely to wait for you to fix them. Leveraging unscalable tactics means you manually tackle the areas of highest friction for the users, effectively attempting to stop the bleeding, while more scalable self-serve experiences get developed in parallel. For example, if a significant percent of new users never show any meaningful product usage after signup, you may have an onboarding problem. This can be due to anything from poor documentation, a confusing UI, or a critical feature that is missing to help the user get started.
One of the easiest things you can do is send an email to these users directly offering support. The support you offer can be directly through email, 1-on-1 live chat, or a group webinar with live Q&A. There’s no one magic tactic to make it work. Find the problem, stop the bleeding, and prioritize a scalable solution. Then move on to the next problem, rinse and repeat!
The primary goal of these high-effort engagements doesn’t necessarily need to be preventing individual users from churning. The insights gained can be used to prevent other users from facing the same issues in the future. How you calibrate the approach depends on the volume of users, their potential lifetime value, and other factors specific to your business. Generally, the more personalized the approach, the better the engagement will be. 100 plain-text emails coming from a real person within the company will likely get more replies than 100 system generated emails. The appearance that you're giving users some level of special attention goes a long way in terms of building trust with your brand as well.
Plan for incremental change
One of the biggest challenges introducing PLG is shifting the company mindset. The team’s ability to quickly develop innovative product experiences and marketing tactics, taking calculated risks to get feedback from a large number of customers are essential to effectively leverage this motion.
For companies that have started with a sales-led go-to-market motion, the entire company strategy and focus is aligned on hunting large enterprise deals. To be successful with PLG, how you communicate your brand, execute on customer acquisition, and support, all need a systematic and disciplined focus, and not secondary consideration to your enterprise customer base.
Rome wasn't built in a day, and neither were the best self-serve products. To build a great self-serve experience, you need to carefully examine every user interaction and put a lot of thought into how to simplify and streamline the various flows so users can accomplish what they need to quickly and efficiently. This will require a team with a wide range of skills, with the right technology stack and processes in place to be able to develop and test solutions, and have the executive sponsorship to influence change in areas they do not have direct control over.
Generally, you can start by putting together a growth team by leveraging existing resources from various teams, in the form of a cross-functional tiger team led by an executive sponsor. Leveraging external expertise through industry consultants or advisors can help veer your strategy in the right direction from the start. Full disclosure - I am one of those consultants. In time, the team will evolve as the company grows and business needs change. Growth may end up being its own dedicated business unit, or splintered across multiple organizations in Marketing, Product, Data Science / BI, etc.
Random tests result in random data points. Often overlooked is developing solid processes for experimentation that go beyond A/B testing and enable you to create incremental wins from previous efforts. Developing a program that enables the team to identify strategic opportunities, test them quickly with precision, and analyze the results is a relatively niche skill set. Leveraging external expertise through industry consultants or advisors can be more cost effective than attempting to hire or develop this skill in-house (at least at the start).
Conclusion
Introducing a product-led growth strategy poses some real risks to companies that have seen growth through a sales-led motion. PLG introduces new scaling challenges, and not all solutions may lend themselves well to such an approach. Additionally, it can be expensive to implement, as you need to invest in building a great product and marketing it effectively. However, the benefits of go-to-market strategy built around a great self-serve product are many, and implemented thoughtfully, the potential rewards are immense.
Hopefully this article has been helpful in highlighting some key areas to focus on during this transformation. Looking forward to reading your comments and feedback. If you would like to go into any particular area in more detail in future posts, please let me know.