Why PMs Should Carry a Sales Quota
The way we buy products has fundamentally changed.
It’s not enough to just see a SaaS product before buying, we now need to actively test and use a product before we decide if it’s worth the price.
We see this in the wild. Companies who are product-led—like Slack, Twilio, and Atlassian—are the ones that are winning.
And in this product-led world, your best salesperson is your product. And because it’s your best salesperson, you should assign the team that owns it what you assign every other salesperson—a sales quota. Maybe even an aggressive one.
How to enable your product to sell
Before you can assign your product team a quantifiable quota, there are a few things to consider to ensure you’re correctly enabling your product to be ready to sell.
The first is to decide on either a freemium or a free trial experience. The second is to transition to PQLs. The third is to know—and improve—your product’s time-to-value. Finally, you’ll want to optimize your product with personalized in-app experiences.
Let’s explore how to do each of these four things.
Freemiums and free trials
In a product-led world, your users need to be able to get their hands on your product before paying and without being blocked by needing to speak to a sales representative.
Our friends at ProfitWell put together incredible research on the benefits of both freemium and free trials.
What they found was folks who converted from a freemium plan have a 10% better net retention on an absolute basis than their free trial counterparts. But, those on a free trial still have about a 10% better retention than those who aren’t using either free play.
ProfitWell also reported that both free trial and freemium models reduce customer acquisition costs (CAC).
Ultimately, either strategy can be hugely beneficial. You just need to figure out what works with your product and your company.
From MQLs and SQLs to PQLs
The second step in enabling your product to sell is to have a better predictor of a sale.
Traditionally, marketing teams have used marketing qualified leads (MQLs) or sales qualified leads (SQLs) to benchmark willingness to buy. Once your product has a free trial or freemium experience, you can use it as the indicator that a user is ready to buy—that’s a product-qualified lead (PQL).
In 2016, Mitch Morlando reported that PQLs convert more than 10 times more revenue than MQLs.
So if a PQL is a user of your product who has triggered some intent criteria, to find those criteria you’ll need to consider what actions in the product might show that a user is ready to either buy in a free trial, or is ready for an upgraded plan in a freemium product.
There are a few ways to do this:
- Look at cohort analyses of previous purchasers
- Create gated premium features and tracking clicks or learning more information about those
- Limit use of features and tracking when their limit is tripped
The third step to enabling your product to sell is to make sure your product delivers value quickly.
Mixpanel, a product analytics company, published a report in 2017 analyzing 572 products and 50 billion events. In their research, they found that the top 10% of products outperformed the average by nearly 100% when it comes to retention.
That’s a massive difference that trickles right down to revenue.
So what’s the difference?
If we superimpose the two graphs on top of each other, we see it pretty clearly. The slopes are basically identical. What’s different is what happens in week one. There are a lot of industry terms for this—activation, time-to-value, or the aha moment. No matter what you call it, user onboarding is crucial to get it right.
Now conventional wisdom has told us that delivering an incredible user experience is hard, it’s time consuming, and it’s expensive. One of the things we know about onboarding, is that it’s something that most companies struggle with. Whether because they misunderstand it or don’t execute properly, there’s just a lot of confusion.
We also know that if done well, effort put into improving onboarding can have an outsized effect on a business. Even mature, highly optimized companies like AdRoll, Canva, and YotPo have been able to see major gains with even just simple improvements in their time-to-value with improved user onboarding.
Personalized in-product experiences
The final step to enabling your product to sell is to empower it to be as personalized as a salesperson could be.
Why is that important? Even companies like Apple, Snapchat, and Uber struggle with user experience and explaining their products in an intuitive way. And that’s because all products and all businesses have at least two types of customers.
You can break that down into low spenders and high rollers, new users versus existing users, savvy versus non-savvy customers. Any product that is optimized only for one is missing out on a group of another.
Warby Parker, for instance, is a company that makes glasses for both men and women. Now, they could use some fancy technology to try to predict whether a user is looking for men’s frames or women’s frames, but instead, they just ask. That information helps them personalize the next experience after that.
Whether you ask or use imported data from a service like Clearbit, make sure your product is responding to the unique needs of the individual user.
But remember, the important thing about a personalized experience isn’t the product knowing who the person is, but rather what they want to do.
Wait—what does this mean for our sales team?
So, if the product team is now responsible for all of these things—showing a user the product, defining leads, getting a user to value and providing a personalized experience—what are your sales folks going to do?
The good news is that—by definition—PQLs are the warmest of leads. They have used your product, they know its value and they are (hopefully) happy campers. That should be music to a salesperson’s ears.
But again, your product should be selling most of them. So what work does that leave for your sales team?
In short, the high-value, strategic work. Instead of sales selling features (the folks they are talking to already know and use those), they can become a strategic lever. They should be prescriptive about how to use the product strategically and tailor it each specific organization they are talking to.
It also means that who you’re looking for as a salesperson will change. Find sales folks who are passionate about your product or the problem that it solves. Find folks that are so helpful that they blur the lines between customer success and sales and focus on great customer experience above all.
A shift beyond just product and sales
All of this might sound like it’s only a shift for your sales team and your product team, but in fact, it’s a shift for your entire company.
Assigning your product team a sales quota requires significant cross-functional work, one that requires an intense focus on user and customer experience. For example, marketing will need to be responsible for a user’s journey far longer than they would traditionally—from early awareness to all the way to becoming an active PQL.
As with any cross-functional endeavor, it’s important to have a common language and reporting system to enable internal alignment. A big part of this will be selecting the right success metrics. Consider cross-functional metrics like average revenue per user (ARPU), net churn, or customer lifetime value (CLV). These metrics are important, but slow moving.
Transitions are never easy, but being product-led is worth it. Now, all that’s left is figuring out how to get your product to ring your office’s sales gong.
Kyle chatted with the brains behind Pluralsight’s pricing rebuild about what really went on behind the scenes and how they set the rest of the org up for success for future changes.