How the best PLG companies move upmarket

We recently launched our third annual Product-Led Sales Benchmarks Survey and we’re seeing some interesting early results. 

This year, we added new questions to better understand GTM leadership priorities for their teams going into 2024. The top 3 priorities thus far by a wide margin are: 

1. Going upmarket (increase ACV) 
2. Find new sources of pipeline 
3. Improve sales productivity / improve pipeline efficiency

Let’s dive into the #1 priority, moving upmarket and increasing ACV. 

As PLG companies mature, they turn their focus from user growth to revenue growth. But, scaling revenue beyond the initial ‘land’ with individuals, teams, and SMBs is not easy with a self-serve motion alone. Products can’t support an enterprise sales cycle without some enterprise sellers in the mix. So how do best-in-class PLG companies overcome the challenges of moving upmarket?

The allure of moving upmarket in PLG

If you’ve sold B2B software in the last two decades, everyone from analysts, investors, and operators will tell you that selling to enterprises is the fastest path to $100M. 

When selling enterprise value you can demand higher ACVs, albeit with slower deal cycles and higher acquisition costs. With a traditional sales-led go-to-market, this meant hiring a large sales team to go outbound to find, close, and expand customers in your target markets. 

Then a shift occurred. Companies realized that selling to individuals within businesses by going directly to them and asking for a credit card (PLG) could be a cheat code for enterprise sales. Instead of selling the entire enterprise in one swift move, start small with pockets of individuals or teams who would demonstrate value before an enterprise purchased a large license. 

With the rise of this PLG motion in B2B, it got easier to get end users to try and even buy products without large sales teams. But, as companies built products that optimized for end-user value and ease of end-user onboarding, another challenge emerged. How do we create the right mechanisms to turn individual users value into value for an entire enterprise? Self-serve (when done right) should be a well-lit pathway to enterprise expansion, but why do so many PLG organizations struggle to move upmarket? 

Avoid the upmarket trap

Moving upmarket is not something that just happens, even for the best in PLG. It is an intentional go-to-market strategy and investment. For PLG companies focusing on upmarket typically means layering in a sales-assist motion where the sales team looks for enterprise opportunities to convert, upsell, or expand, within the existing self-serve user base. This is the ideal scenario if your product allows for this. 

For some PLG companies, end users on the product may not have direct access to decision-makers who can sign an enterprise agreement. In this scenario, layering in a sales team may also mean doing outbound to decision-makers who may have never touched your product. 

The high-touch sales motion required to align multiple stakeholders for company-wide deployments might conflict with the end-user focus of self-serve acquisition. This conflict is why many PLG companies struggle to combine their already successful product-led motion with the B2B sales tactics required to move upmarket.

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Whatever the case, we’ve seen that companies that make this shift intentionally have a few things in common: 

 Lead with value 

The best PLG companies lead with value even when moving upmarket. It may seem enticing to reach out to every enterprise ICP that signs up for your product the minute they start a free trial or create a free account, but that is a sub-optimal playbook. Instead, spend the time to understand how users within an enterprise are using the product and reach out to drive additional value. Don’t create artificial (and selfish) reasons to engage with a user because you want to sign an enterprise contract in the future. 

Clear differentiation in their enterprise tier

Pricing and packaging can make or break your move upmarket. Giving too much away in free or cheap plans disincentivizes upsell to enterprise plans. Many companies fall into the trap of creating weak differentiation in their enterprise offering (SSO tax anyone). To create a smooth upsell path from individual usage to enterprise deployment you need a strong value proposition to justify why someone should pay 3x more. 

Conviction that a percentage of SMB customers will grow with them 

When companies think of their product offerings in silos, i.e., one SKU for SMBs while another for enterprise, we see a disjointed go-to-market motion emerge. The best PLG companies, like Hubspot, did not rebuild a separate product for enterprise when they moved upmarket. They built features that unlocked enterprise value for companies as they grew. Hubspot is a force to be reckoned with and they bet on the fact that much of their early SMB/mid-market user base would grow with them into enterprise-level contracts. 

Understanding that PLG is more than just a GTM motion

Just because a PLG company moves upmarket does not mean that it should abandon the PLG DNA that made it successful. Companies that conflate PLG with only self-serve acquisition will fail to see how PLG can be helpful when moving upmarket. PLG is not just a GTM motion to acquire new users. It’s a strategy to create products that drive value for end users and reduce friction for more delightful experiences. PLG companies that successfully move upmarket and continue growing will keep strong feedback loops between end users and product teams, continuously innovating to improve the product. 

Iterating on Product Market Fit (PMF) 

Some companies mistakenly think PMF is a box you must check once and never revisit. This tends to be the culprit behind why a PLG company struggles to move upmarket. That company may have found PMF with their SMB and Mid-Market customers, but Enterprises have different needs, ways of buying, and ROI measures. To sell your product to an enterprise, you need to repeat the process of finding PMF with this new segment. 

Real Example: Dropbox

Our Head of Marketing, Sandy, recently sat down with Travis Womble, former Head of Strategic Sales at Dropbox, to discuss how his team successfully translated self-serve users into enterprise revenue. 

Travis shared what Dropbox did to make their enterprise motion successful from how the team was trained and operated, to using product usage data in the sales cycle, to tapping into a border ecosystem. 

On helping users find value

By looking at product usage data, Dropbox sellers could better understand the potential use cases that existed within that team or department to help build the case for an enterprise deployment. In some cases, those users would not have naturally expanded because they were not aware of the additional value available to them. 

“They may not even understand the full benefits of the portfolio. They may not understand that the greater organization might be able to benefit from a key feature that's causing major pain in their organization today. And we understand that because we've sold that a couple of times already. So you still need to bring up that even though the customer understands the solution, they don't understand it as well as the seller and they certainly don’t understand the premium parts of the solution they don’t have access to today. Additionally, teams and sellers going upmarket from SMB customers need to be prepared with value messaging for multiple personas and multiple levels. This is important for both sellers, leaders, and executives on the sales side to know and to be actively leveraging.

On sales profiles

A well oiled sales process wins, even in PLG you can’t discount moving faster and creating a smoother process for buyers. 

“Our sellers were super gritty. Compared to my experience at VMWare where where our solutions were inherently part of most cloud projects, our teams were looking for pockets of usage and then convincing someone to care about an enterprise license. This made the team grittier and also required them to be faster. Faster to get to the pain point, demonstrate the enterprise value, and move through the sales cycle quickly. SMB sellers that move up to this level need to quickly move past their feature/function strengths that work at entry levels in a small organization to more complex conversations with more experienced buyers.  

Ecosystem selling 

Sometimes moving upmarket means that you need to do more than provide software to your customer. This is what Dropbox did with their ecosystem. To create even more value for the enterprise segment, they leveraged their partner ecosystem to create compelling bundled offers or leaned on partners that had deep relationships with those accounts. 

“By leveraging our ecosystem, not only can we bring a more complete solution to a single customer, but we can also have multiple sellers talking to a single customer.  A reseller, MSP, or system integrator may have a ten year relationship in an account where we have a lot of usage, which means we can create a lot of value and need to secure a meeting quickly. We worked closely with our channel teams to connect our best sellers with their sellers and get our value prop in front of the customer faster.”

Final advice on moving upmarket

I’ve spoken to many GTM leaders in the community, like Travis and our customers about moving upmarket. One thing is clear from those conversations - moving upmarket does not mean abandoning PLG. 

I’ll leave you with one last quote from Travis on this: 

“The PLG motion has completely changed the sales process. Customers are much more informed before they sit down and talk to you. now they can experience a solution without meeting with a sales person first. I think that creates a certain type of champion that we didn't have back in the day. Given that customer experience expectation, you'll always have a PLG type motion in in place.”

Connect with experts like Travis

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