Product-led growth vs. sales-led growth: What’s best for my business?

At the risk of going all Ted Lasso (NSFW) on our readers, let’s start with a brief motivational quote: There’s no “I” in team.

There’s also no “I” in Product-Led Sales.

Coincidence?

Yes, completely. 🙃

However, it’s still a good reminder of how much has changed in the sales world. As product-led software companies have exploded, so has the Product-Led Sales approach that unites the full go-to-market team around modern, effective sales playbooks.

In this article, we’ll first define both the sales-led and product-led approaches to acquisition and retention. Then, we’ll dive deep into which approach is best depending on your business plan and priorities.

The sales-led approach (AKA: the traditional take)

In the traditional sales-led approach, sales teams themselves are the main source of customer acquisition, conversions, retention, and expansion.

Sales teams shoulder the burden of hitting the company’s revenue goal. Marketing and product help make it happen, but closing deals and booking revenue is driven by the sales team.

Before the product-led approach, all that existed was the traditional top-down sales motion. It made sense for most companies to take this route to market for a few reasons:

• Products were highly technical.
• Onboarding was complex, long, or both.
• Prospects needed a ton of education up front on the problem itself.
• And more…

The product-led growth model (PLG)

Contrary to popular belief, PLG does not sit in direct opposition to traditional sales, in fact most well-known PLG companies like Zoom, HubSpot, or Dropbox have robust sales teams, they just operate differently — more on that in next section.

PLG is ultimately a strategy in which companies leverage the product itself to acquire and retain customers. It’s about building everything — from teams to business models to the product — around getting new users to find value with as little friction as possible. The goal is to help these users convert to paying customers early on, as they've already seen how your product solves key pain points.

A key difference between sales-led and PLG is initial customer acquisition. In a sales-led approach users must interact with a salesperson before they see and touch the product, delaying their understanding of the product's value. PLG companies allow customers to sign up for their products without talking to sales, by offering self-serve sign up models like:

Freemium:Users can sign up for free — and it will remain free forever, but it's gated in some way. A freemium model works for any pricing tier, from the most basic to the most expensive.

🔮Real-life example: Slack.

Free trial: This time-boxed model gives users free access to your product for a limited time. You can offer free trials for any tier, from the most basic to the most expensive. Real-life example:

🔮Real-life example: Asana.

Reverse trial: This model is a combination of freemium and free trial. Users get started for free on the pro plan (the one with all the premium features!) and then get downgraded to a free version if they don't purchase after whatever time limit you set.

🔮Real-life example: Airtable.

Many of the most successful SaaS companies grow quickly with this strategy because they offer:

1. Easy sign up and ability to see value before buying.
2. Frictionless onboarding experience that creates delight.
3. Invite colleagues and improve the overall service as a result.
4. Faster time to value overall.

Layering in a PLG motion doesn't have to squeeze the sales-led motion out of your GTM strategy. It simply adds another channel or lever for scaling your business. It is especially impactful for SaaS businesses that have a ton of existing demand, are easy to discover through marketing channels, and have an easy to use product.

But, not all SaaS products can fit within a PLG model. To be PLG you must:  

• Have an intuitive product customers can easily try
• Allow users to reach value before hitting a paywall
• Have the potential for viral expansion

‍🪄Learn more: 9 steps to integrate the PLG approach into your existing GTM motion

The hybrid sales approach: Product-Led Sales (PLS)

Most companies fall somewhere between sales-led and product-led.

Enter Product-Led Sales (PLS) — a go-to-market approach that relies on existing users of the product to drive revenue, including conversion, upsell, cross-sell, and expansion.

It’s a hybrid motion that forces your go-to-market team to think about self-serve/PLG channels and sales as growth levers you pull when it makes sense for your business. By focusing on the user experience through product usage signals, customer fit data, and intent, teams can pinpoint the right approach to engage potential customers, whether that's high touch sales or low touch marketing channels or nothing at all.  

Here’s what a use case example of what a successful PLS motion focused on conversion may look like:

1. A user self-serves into a time-boxed free trial of your product.
2. Based on firmographic data (ICP fit) and milestones reached in your product, they’re qualified as a good opportunity for paid conversion. At this point they’re called a product-qualified lead or PQL.
3. A sales rep (in this scenario, most likely a sales-assist role) reaches out to celebrate milestones and offer assistance to unlock further value before trial expires.
4. The user continues with their free trial, but hasn’t shown buying intent signals, maybe usage drops or remains the same.
5. Sales-assist comes back to help the user get unstuck and continue their journey. It turns out, the user has billing questions!
6. Sales-assist passes on the PQL to an AE with more detailed knowledge on the packages and incentives they can offer based on the user’s product usage patterns.
7. AE closes the deal, PQL converts to a paying customer before trial expires.

Now, let’s continue along the customer journey with that same PQL, they’re now a paying customer. Here’s what a successful PLS motion focused on expansion may look like:

1. The customer keeps using the product and starts to show signals that indicate adding more team members will unlock new value. As more users sign up the expected lifetime value of the account increases and it gets flagged as a good opportunity for expansion.
2. A sales rep again reaches out to point out specific team collaboration features and asks if they’re interested in learning more.
3. The customer feedback is that they’re interested in the team collaboration opportunities, but don’t have decision making power, so the sales rep sends along ROI messaging, personalized with product usage data, the customer can share internally with stake-holders.
4. The customer CC’s sales rep in an email to the decision-maker who wants to negotiate directly with the sales team.
5. The sales rep now has the chance to build a relationship with the economic buyer and can rely on product data to prove value. At this point they might offer a new trial for more users, special pricing based on number of seats, or general information on tiered pricing.
6. The economic buyer is convinced and what started out as a single free trial user becomes a paying account with multiple users.

🪄Learn more: 5 Common Product-Led Sales Playbooks

All in all, the self-serve element of the PLS approach minimizes customer interaction with sales, helping lower customer acquisition costs by enabling them to really focus on leads who need help or show high potential — which product usage data helps uncover.

As you can see, the PLS motion is not an obliteration of the sales role, but an evolution of the way we think about sales. In fact, 97% of PLG companies have or plan to add sales teams. (Read more about the “myth” of the pure PLG approach.)

Product-led vs. sales-led: How to choose the right growth strategy ⚖️

You may be able to tell by now that choosing the best go-to-market strategy isn’t black and white.

In fact, we like to think of PLG companies as existing on a spectrum based on characteristics such as level of friction, virality, onboarding experience, average contract value, and GTM strategy.

🪄Learn more about the product-led growth spectrum

But how do you know whether to pursue a product-led or sales-led motion — or some blend of the two?

We’ll help you figure out where you fall by discussing some core business priorities and helping you think through which side of the spectrum you lean toward.

Fully self-serve vs. white-glove walkthrough

Since product-led companies prioritize self-serve, users can typically do a lot of things like sign up for a free trial, upgrade to a premium plan, switch plans, and more without communicating with sales reps.

However, you should only take this route if your product experience is suitable for a self-serve approach. If you’d rather provide a full-service sales walkthrough because your product is especially complex, especially expensive, the buyer isn’t typically the end-user, or any other reason — then a hybrid motion will be a better fit for your buying process.

Take for example FullStory, which combines some features of both approaches due to its unique offering, but leans sales-led.

FullStory offers a 14-day trial of their basic package. They know their product isn’t simple, so for access to their other, more advanced, packages prospects need to request a demo. In this case, speaking to a sales rep before onboarding facilitates the buyer’s journey.

On the other hand, you have an almost pure PLG company like Calendly where the product is exceedingly self-explanatory and viral — and therefore doesn’t require much in the way of sales assistance. They fall very far on the PLG end of the spectrum, but do have a “contact sales” option for Enterprise, which they’ve categorized as teams of 30+.

And then, there are companies like Zoom where the product doesn’t need explaining and there’s ungated free access; yet the end-users aren’t always the ones who can sign an enterprise contract. Zoom is a perfect example of hybrid sales. They identify growing usage in their account pipeline and devote their sales team to account consolidation. They fall somewhere in the middle of the product-led spectrum.

Cost efficiency vs. scale

We probably don’t need to tell you that a sales team is expensive.

It’s true that with a more product-focused sales motion, sales teams tend to be smaller, in the beginning. Although, eventually you may have the same number of salespeople, overall, as a sales-led company. The real difference lies in the way they are deployed and their ability to capture revenue.

A product-led sales process relies on real product usage data to inform what users/accounts to prioritize, uncover what type of opportunities exist, and insight into the next best action to take.  

On the flip side, product-led companies may experience lower initial sales, taking more time to generate reliable revenue. Tried-and-true traditional sales tactics may be more effective for driving sales up front, when the team is young and the product is lesser-known. For example, if you’re a seed stage startup and have a small target account list with 100 companies, it will be more effective to hire a talented sales rep or two to go after them, than to try to get those same accounts to discover your product organically through inbound channels.  

Although, according to the latest data from OpenView’s 2022 SaaS Benchmarks Report, companies with PLG motions outperform peers on Customer Acquisition Cost (CAC) payback. “Companies that see discoverability and a robust free product as core to their strategy return CAC costs four months faster than their peers.”

The direction you take will depend on whether cost efficiency or scaling revenue quickly is your goal. Either way, remember that many companies have successfully gone more product-led or layered sales on top of pure PLG motions later in life. (Find out how to do just that in five steps here.)

Stable sales cycle vs. revenue crunch

The PLS approach usually leads to a shorter sales cycle because there is a lower barrier to use, buy, and even expand within the product.

But with a more traditional sales motion, onboarding is a very hands-on process by design. New customers, especially entire companies, must complete weeks or even months of qualification meetings, demos, negotiations, and more.

Depending on your product and ideal buyer, this workflow may be necessary. But if you find yourself wanting or needing to reduce the sales cycle to speed up time to revenue, moving toward a product-led sales motion may be able to help.

Household name vs. brand awareness

We mentioned the idea of whether or not your brand or product is well-known earlier. Believe it or not, that should factor into your sales approach.

While there is often some element of outbound selling in the mix, there’s no denying that shareability, findability, and virality really help the product-led flywheel spin.

That means lots of people have to be talking about your product — in a good way.

If you don’t have that kind of sway at this point, you will need to rely on more traditional sales outreach (get eight tips right here) and your marketing team to raise your level of brand awareness so people show up to your website and sign up for your product on their own.

Get the best of both worlds with Pocus 🔮

With a Product-Led Sales motion, the self-serve flywheel fills your funnel with self-serve users while your product usage and customer data platform fills your database with information on how they use the product and when it’s best to engage. Product and GTM teams (sales and sales-assist, marketing, growth, CS, etc.) can unite around this information to build modern sales playbooks that boost acquisition, retention, and upgrades — without sacrificing customer experience.

With Pocus you’ll know exactly where, when, and how to best connect with the right leads when they do show up.

Pocus puts GTM teams in the driver’s seat. Sales pros can turn their inboxes into prioritized to-do lists, always know the best next actions to take, and operationalize their best sales strategies using Signal playbooks.

Spin up your single source of sales truth and move your business toward the modern, product-led end of the spectrum. See how by taking a virtual tour of Pocus. 🪄