Is Outbound worth it for Product-Led Growth (PLG) companies?

In Product-Led-Growth (PLG) circles, outbound has a spotty reputation. Since PLG companies focus on getting customers through the door by having a product they can’t live without — and using it before ever paying, saying “traditional sales” sounds outdated to our shiny new Product-Led Sales playbooks, PQL hypotheses, and sales-assist motions.

Product-Led Sales — engaging with existing users based on their product usage to drive conversion, expansion, and retention —  yields better and warmer leads at a cheaper cost. Still, there’s no denying that there comes a time in every SaaS business’s life that inbound PQLs isn’t enough. Those larger enterprise deals and new target markets can all seem out of reach without an SDR team in place. 

That’s when many PLG businesses turn to outbound. According to Kyle Poyar, who also delved into this topic, 54% of PLG companies on PeerSignal’s B2B Tech Hiring Tracker are looking for SDRs or BDRs. This list includes well-known PLG companies like Figma, 1Password, Vercel and Notion.

According to our own 2022 Product-Led Sales Benchmark Report, 50% of sales teams at PLG companies are still relying on outbound to MQLs and 44% still conduct cold outbound. 

So it’s not an outlier. Outbound is  becoming part of the normal progression of growth at product-led companies. However, it will often show up further down the path than sales-led B2B SaaS vendors. This sequencing offers a great advantage. When PLG companies adopt outbound, they already have insights on their ICPs’ product usage, engagement, features they value, common pain points, and more.

In this article, I’m going to dive into the lively debate on the benefits of cold outbound in the PLS space, with weigh-ins from experts like Nick Mills, President at Pitch, Rob Falcone, Sr. Director of Product-Led Sales at Guru, Kenny Vincent, VP of Sales at Fellow (formerly ClickUp), and Sara Archer VP of Sales at ChartMogul.

But before we go any further, get aligned on what we mean when we say cold outbound.

What is cold outbound?

In the words of Rob Falcone Senior Director of Product-Led Sales at Guru, when done well, truly “cold outbound” (loosely defined as a scenario where the recipient has no prior relationship with the sender or the sender’s company) should look the same at PLG companies and non-PLG companies alike. 

That is, the sender has done extensive research on the recipient and their company, pattern matched with similar profiles the sender’s company has helped, and crafted a message that’s likely to connect the value of the offering with the recipient’s role and goals at that point in time.

Yet, like we saw above, a 2-4% lead-to-close conversion is common for a cold outbound team targeting the mid-market, with a lead being anyone who responds to an email. 

To put this in perspective, the Product-Led Sales motion sees a whopping 10% conversion from lead-to-close according to Openview’s 2022 Product Benchmark Report.

The question is then, how can PLG companies justify outbound? 

There are two main themes that make teams a little reluctant: 

1. Fear of losing the essence of product-led. If you’re out there chasing cold leads, does this mean you’re no longer authentic to providing real value and becoming a need for your customers?
2. Return On Investment (ROI). With PQLs being much cheaper than MQLs, can the deals closed/won justify the expense and labor of building an outbound motion?

The TL'DR: 

On point one - you should make sure your team is doing extensive research on the recipient and their company, pattern matched with similar profiles the sender’s company has helped, and crafted a message that’s likely to connect the value of the offering with the recipient’s role and goals at that point in time.

On point two - most PLG companies will have to layer an outbound motion if they're serious about capturing the enterprise market. But, only when it makes financial sense and you've validated ROI through experimentation. Try to stay nimble and be ready to pivot away from outbound if it doesn't work during testing - this probably means you're a little early for outbound.

Here's what the experts had to say:

Pitch leverages PQLs

Pitch President Nick Mills says:

“With recent advances in tooling, it’s now possible to take a highly data-driven approach to building a system of target segments, and leverage a range of signals to know who to target, when, and with which message. With the right tooling applied to a signal-based system, messaging sequences to high-potential leads can be automated, freeing the SDR team up to focus on running really effective qualification calls to build pipeline.

We’re in the early stages of building a system like this at Pitch. To get it running properly, we’ll need to synthesize a number of data sources. Our first step has been to layer in third-party firmographic data, from sources such as Crunchbase, to help us identify signups as high-growth potential.

As we continue to develop our system, we’ll build in signals from users’ pre-signup marketing touch points and post-signup behavior patterns next. We’re currently enhancing our capabilities to measure, understand and act on those signals.

With all three in place, we’ll be able to create what I consider the gold standard of a product-qualified lead, and a highly efficient acquisition channel.”

— Nick Mills, President, Pitch

Guru says yes to selective cold-outbound within a PLS strategy

Rob Falcone at Guru says the need for strategic cold outbound is largely predicated on a company’s target audience. Take these two scenarios:

• Company A has a product-led offering, but their target end users - restaurant managers -  spend little time in front of a computer actively searching for solutions. A cold phone call may be necessary to guide the restaurant manager to initiate a free trial.

• Company B has a product-led offering, but end users typically need security-approval before starting a trial. A sequence of cold outreaches to a security-executive may be required for security clearance and introduction to the appropriate user-champion, who will then lead the trial.

In both of these scenarios, even though the company leverages product-led resources to help customers evaluate, onboard, and expand — their customer dictates the valuable role cold outbound can play as part of their acquisition strategy.

At Guru, they do strategic cold outbound for people unfamiliar with Guru or non end-user personas and PQL-driven (aka wam) outbound in usage scenarios.

Warm outbound at Guru

"Within accounts using Guru, we’re constantly looking for ways to help users unlock as much value as possible. So the question we ask ourselves when considering PQL-driven outbound is: are there people using Guru today who could be gaining more value? If the answer to that question is 'yes', we might leverage PQL scores and signals indicating Fit and Intent to prioritize who to focus on and to customize our message and recommendations to help them understand the additional value they could be getting from the product."

🪄 For more, read the complete guide to warm outbound.

For ChartMogul, cold outbound wasn’t worth it

As Sara Archer, VP of Sales at ChartMogul, wrote after testing outbound: “The result? A swath of data and learning, but, ultimately, the decision to pull the plug.”

She went on to say that through effort and determination, “We managed to get new users on the product, reactivate old trials, book discovery calls, create opportunities, and win new customers. Importantly we did this in a way that was true to ourselves without burning our brand.

But, unfortunately, the team didn't win enough customers to consider the program a success.

In just under six months, ChartMogul's outbound efforts:

• Set 39 total meetings from an average of 1,650 emails sent/month (~10K emails sent total)
• Created 13 deals (which is less than 1 deals created/month/SDR)
• Converted 7 new customers (which is less than 1 sales/month/SDR) at a win rate of 54% and ASP = 1.5x

You can see that the funnel breaks down from outreach to meetings booked. To counteract this, ChartMogul increased the volume of outreach after several weeks. Still, as Sara reported they were unable to get enough consistent meetings to ensure the program’s success.

So, for ChartMogul’s audience, outbound just isn’t worth it right now.

“Continuing the program could mean winning a new large customer here and there, but the allure of outbound promises consistency. And we must employ sustainable strategies that give us energy and keep us focused.”

A look into ClickUp’s full-fledged outbound strategy

Kenny Vincent, VP of Sales at Fellow (formerly ClickUp) told us that ClickUp's outbound efforts are split into two parts, both important to their overall sales motion: 

1. Outbound within PLS motion: Some outbound happens within the PLS motion to uncover new buyers within existing account 
2. Cold outbound: Completely separate from their PLS motion
   

For perspective, the commercial inbound team is composed of 100 SDRs, which take care of cold outbound to registered domains (within the PLS motion). The fully outbound team has 10-12 reps, which they’ll increase if they see success from reaching out to their lists of ICP accounts. For Kenny and the team at ClickUp, they’ve already seen success with outbound in their PLS motion, reps at ClickUp are trained to not only follow up with PQLs but truly “work” the account level and outbound to decision makers and buyers who may not have logged into ClickUp just yet.

Cold outbound on the other hand is still an experiment that they know is a slower burn to prove (6 to 9 months), but they are seeing some early signs of success to date. 

Learn more about ClickUp’s outbound motion from Kyle Poyar’s analysis here.

Where does that leave the rest of us?

If you ask me, this leaves PLG orgs with a pretty neat outline to explore, depending on who your ICP is. Taking a page from Rob’s book by understanding customer needs and how to reach them, leveraging outbound strategies as part of an integrated PLS motion like Nick at Pitch and Kenny at ClickUp, and being ready to test (and call it quits if necessary!) like Sara at ChartMogul.

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This article first appeared in Sales Hacker.