Annie Pearl (Calendly): Avoiding Pitfalls When Expanding Your Company’s Market
At a certain point, any successful product-led growth (PLG) business will need to embrace the enterprise. Eventually, breaking into the larger market by selling to organizations instead of individuals becomes the next goal. Once your product has fulfilled its growth potential with single users, this upmarket transition is the next natural step.
However, changing over from a self-service model to a sales-led model can bring down your business entirely if you’re not careful with how you manage it. To make matters more difficult, the strategies that brought you success so far could hurt you in the long run as you expand to this new market.
So, how exactly do you avoid disaster? Annie Pearl, the Chief Product Officer at Calendly—the scheduling platform used by over 50,000 companies worldwide—recently sat down with Blake Bartlett on the BUILD podcast to discuss just that. She reviewed the reasons why embracing the enterprise is inevitable, what to watch out for when making the transition, and discussed strategies to help successfully navigate this new sales world.
Change is the only constant
According to Annie, embracing the enterprise is a natural evolution for a PLG business. Once revenue hits the hundreds of millions, by the law of numbers, credit card swipes can no longer facilitate steady yearly growth.
In order to continue thriving, a PLG business needs to actively search out larger clients, ultimately integrating a sales-led business model as well. With this change comes risks, but also as Annie puts it, the potential for incredible gains.
“The introduction of the sales-led model on top of this PLG model can actually sort of [not only] reignite growth, but also accelerate it. So if you can get these two flywheels, the PLG and the sort of sales-led flywheel to be working in tandem, you can actually sort of produce compounding effects on the business,” said Annie.
When you’re ready to take the leap into embracing enterprise growth, you may want to jump all in. But before embarking, it’s important to know what has the potential to fall apart.
Annie lays out three key elements of a PLG business that are at the highest risk when adding in the sales-led model:
- The people. Your existing employees will have to acquire new skills, or you’ll have to bring in new experts with different skill sets. You may go from no sales team to having to build one from scratch.
- The process. Different departments can no longer operate in isolated silos, simply carrying out their individual tasks. A sales-led motion requires tight integration between the following:
- The product roadmap;
- The marketing roadmap;
- The sales team plan for the year;
- The customer success team hiring plan;
- and more.
- The product. PLG businesses focus on having as frictionless a user experience as possible. However when your product starts serving larger organizations across different industries, it’s going to require greater functionality, potentially at the cost of that original simplicity.
“You’re sort of moving from serving just the needs of individuals to teams of users,” said Annie. “You’re going from serving these individuals to department leaders, from individuals to the IT buyer. So you have a shift of the audience of who the product needs to be solving problems for.”
But at a second glance, it seems like the entire company is in danger. The people, the process, and the product are all at risk of breaking? It’s just the nature of the game.
Any PLG business considering such a change needs a solid plan of attack. Annie draws from her experience and lays out strategies for ensuring a smooth transition, going over each of the three elements one by one.
It all starts with the people
First, the base level—your product-building talent. Selling to larger organizations requires experienced employees to build for larger organizations. These crucial people will know what admins and IT departments require in terms of security, compliance, and more.
Wider usage of the product also brings with it assurances that there aren’t going to be unexpected updates. Naturally, your talent needs to understand that they won’t be able to slap changes onto the product whenever they want to and simply send it out.
The next level is your sales talent. Whether you’re building a sales department from the ground up or reorienting your current one, the goal is the same: having sales reps and leaders who understand the maturity model of your business.
If you’re just starting to make the transition, you don’t want people who are anxious to jump into high-touch sales or quick to negotiate product customization to close large deals. Those kinds of leaps can lead to tension between sales and marketing teams. Ensuring alignment on sales strategy from the start helps lead to smoother sailing.
Lastly, the executive level—you. It’s time to make some big decisions about how you’re going to win in enterprise. Are you going to target Chief Information Officers or whole IT departments? Are you going to chase large deals by adding product requests, or will you preserve the simple user experience?
“The most important first step is getting alignment starting at the executive level and then trickling that down into the company around what your approach is going to be towards this transition,” said Annie.
If you have a clear vision, and promote consistent terminology and business growth strategies throughout all levels, that will help ease the massive cultural shift that will happen when your company takes this step.
The process of changing process
When selling to larger organizations, the importance of cross-functional dependencies goes way up. Instead of just concentrating on PLG revenue, now there’s increased annual recurring revenue (ARR) and sales-led revenue to consider, which can get hurt if you simply optimize for PLG.
As Blake put it, “It’s kind of going from single variable or single factor optimization to multi-variant and lots of complexity.”
Annie suggests two ways to tackle this issue: first, new feedback loops. A typical PLG model focuses on feedback from end users. A sales-led model by contrast requires feedback from admins, organization buyers, and department leads, to make sure the product is meeting their more expansive needs.
Second, communication. When your product has an increasing number of dependencies, it’s going to require advance warning for changes and tests. These new product launches will have a lot more work to do in ensuring cross-functionality.
Essentially, you may want to avoid stepping on the gas to get the product into as many customers’ hands as possible. Pivoting to the sales-led model requires slowing down in the moment in order to go fast in the long run.
A product with the same great taste you love
PLG product philosophy aims to make the user experience simple and intuitive, in order to get your product into customers’ hands so they can start using it and loving it right away. For larger organizations across a multitude of industries however, you’re going to have to add more functionality. And as we all know, those bells and whistles will necessarily increase product complexity.
Finding the balance between the simplicity that your users love and the functionality that larger organizations need requires clear product strategy. Here are three business growth strategies that have successfully dealt with this issue:
- LinkedIn. “If you use LinkedIn as an individual person who signs up and creates a profile and networks on it, it’s kind of been the same way that it’s always been,” Annie said. “But then the stuff they sell to the enterprise is a talent solution, a recruiting solution, a sales solution, an advertising solution, and adding that complexity and orienting towards that solution doesn’t actually affect you as somebody who’s on the network, but it does add that value, and it does give them that ability.”
- Slack. Organizations have the ability to create complex Slack instances with all sorts of integrations, essentially making it their company-wide OS. But individuals are still welcome to simply use it for basic chat too.
- Calendly. As the CPO, Annie notes that the product needs to serve many different personas: sales, recruiting, customer success teams—all of them are priorities. However, each experience that’s available for those specific audiences either doesn’t impact the broader product, or simply isn’t available if it’s unnecessary for them.
At the end of the day, just because you’re adding functionality, that doesn’t mean every user needs that functionality. More likely, they won’t even need to see it when they’re using your product.
In fact, if you build your product right, you won’t have to worry about what parts to hide or show. Allowing for customizable user experiences on your product gives the organizations themselves the ability to craft it exactly to their own needs.
“[You] could really offer it up as a platform, choose your own adventure, let the organization really build more of a purpose built version of your product for their employees to make them most productive based on their use cases,” says Annie.
Five key takeaways
1. What got you to this level of success is not what will lead you to continued success. As Blake says, “You kind of have to unlearn some of the ways that you’ve gotten to this point of being successful today.”
2. People alignment starts at the top with the executive level. Decide what your philosophical approach is going to be toward this transition, and keep that consistent throughout the entire company.
3. Process alignment requires slowing down to speed up. New feedback loops with buyers, new dependencies across organizations, and new sales teams that require both enterprise experience and context for your business’s current goals.
4. Product alignment doesn’t have to be all or nothing. You can serve the needs of larger organizations with greater functionality, and you can also give the individual customer the ability to opt into complexity.
5. Don’t skip steps. Breaking into a new market can be exciting, but simply hiring enterprise talent without a strategic direction is setting yourself up for failure. Make sure you have a concrete strategy before taking concrete action.
Note: Calendly is an OpenView portfolio company. For a full list of OV portfolio companies, please see our website.