Discover more from The Product-Led Geek
Product-led sales (PLS), and sequencing B2B monetisation motions
Exploring multiple paths to the promised land
Someone recently commented on a LinkedIn post I wrote asking about Product-Led Sales (PLS):
“Does the term "PLS" just mean a company with both Product-Led and Sales motions. And PLG would be Product-Led and NO Sales at all ...?”
This got me thinking about ways to better articulate the different monetisation motions. I started writing a short reply about my own mental model for all of this, but realised it might be better as a post that I can support with a few graphics.
Let’s start with a few definitions.
Pure-play Product-Led Growth (PLG)
Pure-play PLG is characterised by being entirely self-serve. It’s a bottom-up motion with credit card / crypto / voucher checkout and purchase flows. It’s zero-touch end-to-end.
Traditional Sales-Led Growth (SLG)
Traditional SLG is the polar opposite to pure-play PLG. It’s a top-down motion with manual billing. It’s high-touch at every step of the customer journey.
Product-Led Sales (PLS)
PLS leverages the strengths of PLG and SLG. Bottom-up product usage fuels pipeline for high-touch sales.
It’s more effective than PLG at selling business unit wide or company-wide because sellers can tell a compelling story about the benefits of wider adoption.
It’s more efficient than SLG because leads are better qualified (so win rates are typically higher), and the product has done much of the heavy lifting (so sales cycles can be shorter) in proving value.
The sales narrative and the business case are much stronger with demonstrated usage and value and where trust and credibility are already established.
Product-Led Sales (PLS) is a monetisation motion that leverages product usage as the primary driver of the sales process.
I think about this as a spectrum of monetisation motions with pure-play PLG on one end and Traditional SLG on the other. Product-Led Sales sits in the middle leveraging the strengths of PLG and SLG.
Thanks for reading The Product-Led Geek! Subscribe for free to receive new posts and support my work.
Configurations and sequencing
Typically companies adopting a PLS motion start from one of two places:
PLG-native self-serve only
Traditional top-down enterprise sales only
The reasons for introducing product-led sales differ depending on the starting point.
Starting from PLG-native self-serve only
Companies starting here likely serve mainly low-complexity use cases and historically didn’t solve company-level problems or could not meet company-level needs (governance etc.)
If they now have a product that can solve company-level problems effectively (or can feasibly make their product do so), then the main reason they might want to layer on a PLS motion is to raise their ACV ceiling.
With pure self-serve motions, contract values are limited across two main dimensions.
Credit card limits: hard credit card purchasing limits and soft limits (willingness of people/companies to spend above a certain amount on a card).
Scope of sale: credit card purchases are typically at individual user or team level. That may be equivalent to a company-wide purchase in smaller organisations, but in larger organisations, it’s more common to see multiple pockets of discreet usage. It’s rare that larger organisations purchase business unit-wide or company-wide contracts via the self-serve path.
So PLS consolidation playbooks leverage finding central buying authority, customer desire for negotiation, and communication of company-level value to enable bigger deals than can be achieved self-serve.
Additionally, PLS expansion playbooks enable negotiation of bigger expands from self-serve lands, further helping lift the ACV ceiling.
Finally, PLS enables intervention to assist in higher complexity use cases (complex integrations, migrations etc.) that might otherwise have caused potential customers to stumble. These are more common in larger customers.
PLG-native companies adopt PLS to help them effectively play upmarket.
Once here, companies may add pure top-down sales motions - typically if they see sizeable demand for that from some meaningful market segment.
Starting from traditional top-down enterprise sales only
Companies starting here typically serve higher complexity use cases. They likely historically have not had any means for users and teams to experience value before a paywall.
Note: A free trial or free plan is not a pre-requisite for adopting product-led sales, though without one or both, PLS monetisation plays will be limited to expansion and churn prevention within the existing customer base.
The primary reason a company like this might want to layer on a PLS motion is to improve sales efficiency.
A core PLS playbook is around farming the existing customer base for expansion opportunities.
The product cultivates, and the revenue teams harvest
Additionally, PLS allows companies to improve the ability to detect and mitigate churn risk.
This is the classic customer success play and something companies are likely already doing to some extent already.
However, the opportunity here is to use the rich product data available to bring a much higher level of accuracy to the prediction, with signals providing earlier warnings and improved ability for effective proactive intervention.
Given the above, it’s natural that companies who have developed strong PLS muscles have correspondingly strong Net Dollar Retention (NDR).
Note: for PLS to be effective in generating expansion revenue in the existing customer base, the product should have reasonably strong usage retention characteristics, and investment here should always be prioritised ahead of the PLS expansion playbook.
But PLS also brings efficiencies in some key ways for net new business.
First, better qualified leads mean higher close rates.
Second, with value to the company already demonstrated, the need for evaluations and POCs is diminished, so sales cycles are faster than a fully top-down sale (accepting that product-led sales requires patience and that an account may be active in the product for many months before sales engagement).
Once here (and assuming the right product ingredients), companies can layer on pure self-serve monetisation motions in order to serve the lower end of the market below the sales floor (the point below which it becomes cost disadvantageous to leverage sales resources on a deal).
Getting back to the original question
So, to answer the original question, PLS is not characterised simply by the co-existence of product-led and sales motions. We can see in the chart above that there is a valid (but not recommended) configuration with self-serve monetisation and sales-led monetisation motions, where the sales-led motion is still fuelled by traditional inbound and outbound lead generation. Leads for accounts coming from the product are limited to hand-raisers.
This implies a significant missed opportunity in identifying opportunities (and, inversely, churn risk) from product usage data.
Until next time!
Raising Kids without a support network with Alex Cohen on the Startup Dad Podcast
3 interesting reads: