Product-led sales is becoming the holy grail for SaaS businesses for its potential to achieve faster conversions with less effort. What is the product-led sales model and is it right for you? We take a look.
What is Product-Led Sales?
Product-led sales is a customer-centric sales motion used by companies that already have a product-led growth (PLG) strategy in place. The sales model relies on existing users of a product to drive sales.
The go-to-market approach is based on how customers want to buy and leverages insights on product usage to convert, cross-sell, upsell, and expand revenue successfully. It is a united effort involving insights from everyone on the go-to-market team, from SDRs and marketing teams to customer success and product teams.
Key elements of Product-Led Sales
A product-led sales strategy has the following components:
- A self-service aspect such as a free trial or freemium model. Self-serve customers are the primary funnel for the PLG sales motion.
- Your sales team engages with new users once they have started using your product. The sales-assisted motion helps existing users find value quicker.
- Users have now experienced your product’s value. Your sales reps filter product-qualified leads (PQLs) based on user engagement.
- Your salespeople engage with every potential customer, with a focus on delivering a personalized product experience.
The key features of the go-to-market strategy are:
- It creates human touch points where necessary, avoiding the pushiness of a traditional sales cycle.
- It leverages product signals such as usage spikes and changes in end-user behavior to inform the GTM team when to contact the customer.
- It is a value-driven approach that supports revenue growth through acquisition and retention. A product-led growth strategy makes efficient use of sales reps’ time and lowers the customer acquisition cost (CAC).
A product-led approach differs from a sales-led approach in a few ways:
- PLS centers on the product for monetization; sales-led growth relies on the sales team and follows the traditional sales funnel.
- The freemium pricing model provides access to wider top-of-the-funnel opportunities. As PQLs have derived meaningful value from your product, they’re more likely to convert. So, product-led companies are able to scale with ease.
- As SaaS companies with a sales-led GTM strategy scale up quickly, their sales teams tend to struggle to manage all leads, which often results in narrower top-of-the-funnel acquisitions.
- PLS companies have a shorter buying cycle while their sales-led counterparts typically have a longer sales process.
- Freemium model and self-serve flywheel lower the CAC. The higher sales and marketing capacity and workflows required of a sales-led model contribute to higher CAC and operational costs.
Is Product-Led Sales right for you?
PLG is hailed as the future of SaaS. But it’s prudent to know whether you should be a product-led business before taking the plunge.
Sales activation using a PLG strategy is effective for any SaaS company but particularly for those having a simple product that’s easy to learn or serving smaller businesses. A product-led focus is best if your use case is easy to adopt and customers can onboard with little or no support.
A sales-led approach is more suitable if you have a complex product and target bigger companies that may not have the time for free trials. It doesn’t have to be a binary decision - a hybrid of sales-led and product-led packs a big punch and skyrockets your conversion rates and customer lifetime value (LTV).
Rather than ditching traditional outbound sales entirely, use a hybrid approach. With Toplyne, you can start experimenting with GTM strategies right away and successfully monetize your freemium user base.