“But we’re product-led. Our product is self-serve. We don’t need salespeople anymore, right?”
I’ve heard this too many times to count.
Product-led is cool, and we have a desire to move away from sleazy sales tactics, don’t we? But it’s a false dichotomy: good salespeople don’t use unscrupulous methods to manipulate someone into buying something they don’t need.
Contrary to popular belief, being product-led doesn’t automatically mean you’re anti-sales.
(Note: this blog post first appeared on Saleshacker.com)
What does it mean to be product-led?
If you’ve ever used Canva or Zoom, you’ve seen product-led growth (PLG) in action. It’s a go-to-market strategy that leads with the product, so you can experience its value firsthand. When done correctly, salespeople can add a ton of value to users in a PLG model. They make the product experience better – especially when it comes to onboarding users.
User onboarding is the process that takes people from perceiving, experiencing, and adopting the product’s value to improve their lives. And making a sales team part of the process can be extremely beneficial.
In fact, sales-assisted user onboarding can increase conversion rates by 3.5 times. That’s why most product-led companies eventually hire a sales team.
Take Slack, for example, a classic product-led company. If you think they don’t have a sales team, you’d be wrong. In 2019, 40% of Slack’s revenue came from their sales team closing deals with larger organizations (companies making more than $100,000 in annual recurring revenue). As a result, they experienced a 66% surge in marketing and sales expenses from 2018 to 2019.
We plan to take a look at how a sales function can complement a product-led growth approach to user onboarding.
We’ll touch on:
- The difference between sales-led, product-led, and sales-assisted user onboarding
- How adding salespeople benefit the self-serve user onboarding process
- How the role of a salesperson differs in a PLG organization
- What PQLs and SQLs are in product-led sales
- When and how a sales team should reach out to users
Difference between sales-led, product-led, and sales-assisted user onboarding
In a classic blog post, Christoph Janzexplains the number of potential customers in your total addressable market. He describes how your business’ annual contract value dictates your “hunting strategy,” i.e. how you acquire, onboard, and retain new customers.
To build a $100 million business, you can hunt for:
- 1,000 “elephants,” or enterprise customers who can each pay $100,000 or more per year
- 10,000 “deer,” or medium-sized companies that each pay $10k or more per year
- 100,000 “rabbits,” or small businesses that each pay $1k or more per year
- One million “mice,” or consumers who each pay $100 or more per year
- Ten million “flies,” or active users you can monetize $10 or more per year each
What you end up “hunting” for largely dictates whether you should adopt a sales-led, product-led, or sales-assisted approach to user onboarding. It also depends on the complexity of your buying process.
To help visualize this, here are these two factors on a two-by-two matrix:
Here’s a little rundown on when to use each approach:
- Suppose you have a high annual contract value (typically over $100,000) as well as a complex buying process with multiple stakeholders and a long sales cycle. In that case, consider onboarding new users using a high-touch, sales-led method. Cisco and Marketo are good examples of companies using this approach.
- If you offer a low annual contract value where users use a self-checkout process to purchase your product, then onboard new users with a low-touch, product-led process. Netflix is an excellent example of a company that employs a purely product-led onboarding approach.
- If the annual contract value ranges anywhere from $2,000 to over $100,000, then you should consider a mix between the two. In this case, the buying process complexity can vary from a simple self-checkout to complex multi-week sales check-ins.
- A company that transitioned from a sales-led to a hybrid onboarding approach is HubSpot. They moved downmarket and released a freemium product for small and medium-sized businesses (SMB). Slack also transitioned from a product-led to a hybrid onboarding approach when they moved upmarket to sell to enterprise companies.
- If you have a low annual contract value and a complex buying process, then you’ll be out of business sooner rather than later. Avoid this at all costs.
The key point here is that user onboarding doesn’t have to fit into one box. You can think about it more like a continuum. On one end is low-touch, product-led user onboarding. On the other is high-touch, sales-led onboarding. Where you end up on this continuum largely depends on your product, pricing, market, and buyer preferences.
Most successful B2B SaaS companies eventually adopt a sales-assisted user onboarding strategy. For product-led businesses like Slack, Dropbox, and Drift, they end up hiring salespeople to onboard new users as they start pursuing larger deal sizes.
For sales-led companies like HubSpot, Salesforce, and Vidyard, as they move downmarket, they shift their sales team to help new users find additional meaningful value with their product.
How adding salespeople benefit the self-serve onboarding process
In general, there are three primary reasons to add salespeople to self-serve onboarding.
1. Direct users to experience the value of your product
Sometimes even supposedly simple products have hidden hotspots that make it difficult for users to experience a moment of value, or what we call the First Strike. This is where the “sales” team can be helpful. We place quotes around the word sales because this frequently looks more like support and customer success than sales.
But the goal is the same: get the user to experience the value of your product, so they purchase it. In a PLG model, salespeople act more like coaches; they guide users to hit more strikes consistently. Above all, coaches identify where users run into limitations and find a solution to overcome those challenges.
2. Facilitate product penetration or expansion
This is the approach in the early days of Slack. Their sales team didn’t send out cold emails that tend to pile up in an inbox: “Hi if you need intra-organizational communication assistance, you should check out Slack.”
Typically, one team within an organization first adopts Slack into their workflow. The role of the “Account Manager” (psst…it’s a salesperson) is to help get other teams within that organization to use Slack.
This is an example of the “land and expand” strategy. After you “land” a few users within a large company to sign up for a product, you “expand” by selling more seats and additional features for the organization. Often, this requires a sales team to make persistent, deep connections with high-level decision-makers. Salespeople work at the account level, not the user level.
3. Guide users in the buying process
For mid-size and enterprise companies, the buying process isn’t always straightforward. For large companies, barriers often exist to purchase a product. This could include security audits, sign-offs from the procurement team, and requests for customized SLAs.
Whatever the reason, some users may want to talk to someone from your company. You could wait for them to schedule a meeting or book a call with prominent CTA’s like “Contact Us” or “Contact Sales” on various pages on your site.
But smart product-led companies anticipate the needs of certain customers. They have sales teams armed and ready to reach out to these users before they run into barriers.
Product-led onboarding is not about removing the sales function. It’s about supporting new users. They don’t badger, nag, or hound users with phone calls, emails, and text messages. Instead, they’re consultative and helpful.
How the role of a salesperson differs in a PLG organization
Consultative selling (also called needs-based or solutions-based selling) is the key to how a sales function can complement a PLG approach. This approach shares many similarities with a product-led mindset.
- Put the needs of users front and center throughout the customer journey, instead of running through a list of the latest bells and whistles, hoping that something grabs the prospect’s attention.
- Maintain a clear focus on helping users achieve their desired outcome instead of trying to close a sale at any cost.
- Deliver a purchase experience that’s more about being heard than about being sold to.
You’re probably wondering, “How is this different from what good salespeople do in a sales-led organization?”
Indeed, PLG doesn’t upend everything we know about sales. Many parts of the sales job remain the same. A deep understanding of the different stakeholders in the buying process remains important. There are still budget discussions to be had. And there’s still a quota to hit. But there are some subtle yet important differences in the sales process of a PLG model.
The salesperson shifts from chasing leads to coaching users
In a traditional sales model, the salesperson explains, shows, and demonstrates the value of the product or service. Prospects might not even have a clear understanding of their problem and your solution yet.
In a PLG model, users have already shown interest in a product. They’ve tried and tested out the product already. Hopefully, they’ve experienced the value of it. In this case, salespeople act more like coaches. Coaches guide users to consistently receive value from the product. Above all, coaches identify where users run into limitations and find a solution to overcome those challenges.
2. The salesperson needs to frame the product in different ways to different audiences
In a PLG model, salespeople need to reframe the product’s value and benefits for the end-user and the department heads and executives. This is a subtle but important difference. What end-users value might be different from what executives value.
To the end-user, they might be using the product to save time and perform their job better. For department heads and executives, they’re likely looking at the expected ROI of the product. Salespeople need the ability to pivot from one frame of reference to another quickly. They need to understand the pain points and opportunities for different stakeholders.
3. The salesperson has to leverage product engagement data in the sales process
In a traditional sales model, salespeople usually qualify leads based on two factors:
- High-value interaction with marketing materials where leads become a marketing qualified lead (MQL).
- Customer or company fit based on a checklist of the most common attributes someone needs to embody to become a successful customer for your offering. If they meet this requirement, leads become a sales-qualified lead (SQL).
After leads pass the qualification process, the sales process begins. It finishes when the prospect becomes a paying customer. Soon after, the user onboarding process starts.
In a PLG model, an MQL could still exist. But since there’s a lower barrier to product entry, the primary CTA for an MQL is the signup. Once users achieve meaningful value in the product, they become a product-qualified lead (PQL). Based on product engagement data and customer fit, the lead becomes an SQL, and the sales process kicks off.
Let’s go into more detail on how a PQL fits into sales-assisted onboarding.
What PQLs and SQLs are in product-led sales
This one sounds obvious, but for a long time, the most qualified leads for a software product have never even used it before. Think about it. An MQL moves into a sales accepted lead (SAL) then finally into an SQL. There’s definitely an opportunity there, but most of the time they’ve only just seen a product demo.
PQLs are important to a consultative sales process. These are the users who are ready for a more in-depth conversation – they’ve already engaged with a product.
Traditional qualification criteria for PQLs include marketing activities (e.g. downloading an eBook, attending a webinar, etc.) or firmographic attributes (e.g. company size, industry, company, revenue, etc.) that imply an interest in the offering. Nothing says “interested” like engaging with a product. So the more PQLs generated, the more consultative conversations a sales team can have.
The SQL in a product-led sales journey
Chances are you don’t want the sales team to reach out to every single PQL. Some might not be a good fit. Can you imagine Canva’s sales team reaching out to a student who only wants to create graphics for her class presentation?
Focus your energy on PQLs who fit your ideal customer profile to make it worth the sales team’s time and effort. To find the ideal customer profile for your offering, create a list of specific attributes that an account needs to be successful with the product.
This could be:
- Company size
- Annual revenue
- Role of contact
- Employee headcount – company-wide and within key departments
- Technology they use
- Size of their customer base
- Level of organizational or technological maturity
Next, find the common attributes of your best customers and create a list of them. Think of accounts that understood the product quickly and have now become raving fans. If they could, they’d give your product a net promoter score of 11!
Now, in a product-led sales journey, SQLs have two components:
- They’ve engaged with your product enough that they’ve become a PQL.
- They fit your ideal customer profile.
Once these are defined, leads who fit both criteria are ideal for sales-assisted user onboarding.
If you map out product engagement on one axis of a four-by-four matrix and customer fit on another, you get the Product-Led Qualification Matrix created by Derek Skaletsky, CEO of Sherlock:
- Users who have high product engagement and are a good customer fit are the SQLs. Engage them in the sales process.
- PQLs are users who have high product engagement and are not a good customer fit. Offer support to them, but there isn’t any need to engage them in the sales process unless they contact your team directly.
- Users who have low engagement but are good customer fit are known as the “heartbreakers.” They’re the dream customers, but they aren’t engaging with the product. Nurture these users and offer support if they reach out.
- For users who have low engagement and are not a good customer fit, feel free to ignore them.
When and how should sales reach out to users?
It’s a bit tricky to know when to get a salesperson involved once a lead becomes an SQL. An overly aggressive sales team could turn off prospects who only want to use the product and be left alone.
Instead, the goal is to recreate the kind of experience we’ve come to expect from the Apple stor – a friendly environment filled with experts who are ready to answer your questions, teach you about products, and help solve your problems. With that in mind, sales outreach in a PLG model generally fits into two buckets: hand-raisers and proactive campaigns.
Hand-raisers are those who ask for help. Maybe they’ve filled out a form, asked a question using the in-app chat, requested a high-value feature, or sent you an email.
In these instances, sales reps should act more like a customer success team. Their role should be seen as a coach who works hand-in-hand with the customer to resolve blockers. They need to have a strong grasp of the product and customer use cases to cater to the distinct needs of different audiences.
These team members should be motivated by understanding the product in a deep and meaningful way, not just crushing their quota.
On the other hand, proactive campaigns are manual or automated outreach to current users that generate demand for paid or higher-tier plans. The focus is on high-value accounts that fit the ideal customer profile.
The key is to find ideal moments in the user onboarding journey so that a sales outreach is welcomed:
- After signing up: sales can help users set up their accounts correctly and use the product to its full extent. This entails anything from implementing a complicated integration to guide the account through a proof-of-concept for a broad company-wide rollout.
- Celebrate wins: when users achieve something meaningful, such as completing their First Strike or setting up their account correctly, sales should show them some love and congratulate them. It’s an opportunity for sales to offer additional support by guiding them to the next step or showing a demo of other helpful product features.
- Going top-down: once enough users sign up from one company, sales can initiate an outreach. The pitch should be tailored to the executive pain point. Ideally, lead with personalized insights based on the usage behavior of existing users from that account. This is what a communication tool for companies, Yammer, did to layer sales on top of their freemium offering. They prompted users to invite their coworkers. Once enough workers joined, their sales team would reach out.
Whatever you do, make sure the sales team adds value to the product experience. You don’t want them to add more friction than necessary.
Sales doesn’t have to die in a product-led growth approach. In fact, salespeople can add a ton of value to the buying process, increasing conversions along the way. The key is to know how – and more importantly – when to approach users.
Also published on Medium.