Product-led Sales: An In-depth Blueprint for Action
September 21, 2023
Product-led sales (PLS) is a go-to-market motion that acquires prospects efficiently through a self-serve (freemium or trial offering) and converts them into paying customers through a sales-assisted or sales-led approach. Expansion efforts can also benefit from PLS with marketing and sales teams leveraging firmographic and product signals to drive expansion campaigns. Product-led sales can be somewhat of a misnomer though since it requires substantial contribution from Marketing.
Slack, Atlassian and Figma are all prototypical examples of product-led sales despite the common misconception that these are purely self-serve product-led growth (PLG) companies. They may have started out as PLG companies, but matured into product-led sales businesses – they capitalize on PLG to attract prospects, incentivize adoption, compress time-to-value and apply a hyper-focused sales approach to drive efficient predictable growth.
Despite challenges related to the initial investment in an instantly usable product and the need for cross-functional orchestration, PLS provides several advantages. By allowing the product to serve as the primary sales driver, companies can lower customer acquisition costs, speed up sales cycles, and achieve a higher lifetime value from each customer. The product itself acts as a continuous touchpoint, collecting valuable user data that can inform iterative marketing and sales strategies.
A Cross-Functional Blueprint
A best-in-class SaaS company will end up building an end-to-end multi-lane GTM motion that combines product-led advantages with strong sales and marketing skills. So let’s start with the end in mind and reverse engineer the components needed to realize the potential of PLS.
Note: Some of these components are optional in the beginning; you can gradually build these over time and roll them out as your core capabilities mature. We’ll walk through these in sequential order.
Many companies start with a multi-channel inbound marketing motion that combines owned, paid and earned tactics. Typically, these campaigns result in two types of prospects: a) those who are keen to try your product (either in a time or feature-based trial or in a freemium version) and b) those who are further down the decision-making journey and ‘raise their hands’ to signal they’d like to get help from humans.
- Trial or Freemium Only: As prospects sign up for a trial or the freemium version, an entire chain of events is initiated – starting with the collaboration between product and marketing to ensure onboarding, activation, and complete utilization of the trial (or freemium version). As those customers get more value from the product, the definition of a product-qualified lead (PQL) becomes the tipping point for the next series of steps.
- Hand-raisers Only: When prospects engage with content or other marketing activities to signal that they want to talk (e.g. contact us form, etc.) they become marketing-qualified leads (MQLs). Those MQLs can then be routed through SDRs and the traditional qualification process to become pipeline opportunities.
Segmenting & Routing PQLs
PQLs are a tangible signal that a customer has transitioned from interest to intent in a measurable way. They’re not just trying your product, they’re intentionally working to realize the value of your product by taking discrete and quantifiable actions: PQLs can be constructed using the following criteria (the actual thresholds will vary based on the nature of your product and market):
- Product Signals: Meeting the adoption threshold of specific features (or integrations) or high usage frequency that correlates with conversion from free to paid subscriptions
- Firmographic Data: Matching the ideal customer profile, which can initially help identify product-qualified accounts and also segment them for either a sales-assist or sales-led motion
- Persona Power: Users who have purchasing or influencing power, based on their role or title attributes
A Note on Product Qualified Leads and Product Qualified Accounts
A product-qualified account is a prospect account that has signed up for a trial or freemium version who fits your ideal customer profile attributes. PQLs are users within that account (i.e. who work for that company) who are either evaluating or using your freemium product. Not all of these users are alike in the sense that some will have greater purchasing power or influencing power based on the nature of their jobs (i.e. function, role, title, etc.). For a business just getting started with PLS, start simple with PQLs and then graduate to more sophisticated grouping of PQLs with PQAs. For example, you can have multiple users (or teams) from the same company trying a product like Slack or Jira independent of one another. These all belong to a PQA, but not all of them will be PQLs since their usage signals and persona power may vary.
After you’ve defined your PQLs, the next step is to segment them for optimal routing – either steering them toward a sales-assist journey or into an account-based sales-led sales pipeline. For both these routes, it’s crucial to have a well-defined collaboration model between your marketing and sales teams. This ensures that PQLs with a high engagement score are smoothly transitioned to sales without a hitch. The ultimate win? When a PQL turns into a proactive ‘hand-raiser’ signaling to the sales team that they’re not just qualified, but also keen and ready to engage. That’s when you know you’re operating in the sweet spot of high-conversion and customer readiness 🎯
To make the most of every PQLs, your sales team needs specialized training geared toward these high-potential prospects. Equip your reps with a deep understanding of the customer persona, key pain points, and typical objections they might encounter. But don’t stop there; arm them with a powerful toolkit of tailored materials, including ROI metrics and compelling social proof that speak directly to PQLs. A smooth handoff from marketing to sales is crucial here. Nobody likes a broken record; if customers find themselves having to repeat information they’ve already given, it’ll unnecessarily extend the sales cycle.
SDRs will find that dealing with PQLs and marketing qualified leads (MQLs) isn’t a one-size-fits-all situation. Juggling the two can be tricky, but you can make life easier by applying the same demographic and firmographic filters for your PQLs and MQLs. By leveraging both firmographics and segmentation, you’re not just tossing leads into any lane; you’re steering them into the most efficient and effective paths, ensuring that their experience matches how they’ve engaged with your product so far.
In a fully mature model, sales teams will also initiate an outbound prospecting effort targeted at larger enterprise-grade prospects (landing new logos) or customers (expansion motion). They can do this with a targeted account-based motion and also complement that with usage data from existing teams using your product.
Roles & Responsibilities
Product-led sales requires coordination across product, marketing and sales to create a motion that maximizes customer acquisition and efficiently converts trials (or freemium accounts) into paying customers.
To evaluate whether any product-led motion is a fit for your company as a whole or a particular product or segment, consider the following requirements:
- From Promise to Value: How quickly can a user tap into the benefits your product offers? Is a steep learning curve holding back their “aha” moment? For a product-led motion to succeed, users should grasp your product’s value ASAP. If your product involves complexities like intricate data migrations or third-party integrations that are out of the user’s hands, PLS might not be your best route. In such cases, realizing the product’s value could demand more time and resources than PLS strategies can efficiently provide.
- Product-persona Fit: Are your target customers open to self-evaluating your product? If an engineering manager can swiftly input credit card details and onboard their team for a trial, a product-led approach is a strong match. However, if you’re targeting a CXO with limited time, PLS might not be the best approach. This type of buyer is less likely to have the time or interest to personally explore or purchase your product.
- Prospect Journey Friction: Is purchasing or trialing your product a multi-departmental affair involving IT, procurement, finance and risk/compliance? If so, the prolonged approval process can make your product a tough sell for a product-led motion. However, if individual employees or teams have the autonomy to choose tools that meet their needs, they can make quick decisions without the red tape. In this scenario, PLS could be an excellent fit for your product.
- Self-serve Infrastructure: How challenging is it to build and operate a commerce system that lets buyers easily start a trial or sign up for a free version, and then upgrade or buy without human help? A product-led approach thrives on this sort of automated purchase flow. You’ll need a robust system that can handle and process payment transactions for a large customer base, efficiently and without errors. If building such a high-speed commerce system feels too daunting or resource-intensive, PLS may not be the best fit for your product.
If you’re ready to reap the benefits of product-led sales, here are three ways to get the ball rolling:
- Get your ‘product-led’ house in order first. If you have a trial ( time- or feature-based) or freemium offering, you need to ensure instrumentation and visibility across the user adoption and trial/free-to-paid conversion journey. You need to have product and marketing teams in place designing and optimizing the loops and nudges that help users realize the value of your product quickly.
- Start simple on the sales side by first ensuring a universal definition of your ideal customer profile. This will help you start filtering your product-qualified accounts. To get to PQAs, work across product, marketing, and sales to create alignment on the signals that score a product-qualified lead. Assemble a pilot program to quickly learn what’s working (or not) and then start scaling the volume of PQLs/PQAs for sales and marketing to work on together.
- Last but not least, set up a core cross-functional team across product, marketing, and sales to train together. Create a workspace and training for team members so they can align on the definitions and gain necessary agreement to orchestrate the product-led sales motion end-to-end. Establish rituals and metrics for these team members to build this muscle and eventually scale globally across all your products.
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