Introduction
More companies today are choosing to go Product-Led than ever before, but there’s a dirty little secret most PLG newbies are learning…
The best PLG companies ALL have sales teams.
High-performing teams at the best PLG companies have been practitioners of Product-Led Sales (PLS) for a few years now, but education on the topic remains scarce. Product-Led Sales, or PLS for short, is a bottom-up GTM model that leverages existing product users as the main funnel for the sales team.
But, the roadmap for laying sales on top of PLG is not clear. Companies like Zoom, Atlassian, Slack, and Dropbox have successfully turned their self-serve user growth into impressive revenue growth… but how?
We were wondering the same thing.
That’s why Pocus and First Round teamed up to create the first-ever Product-Led Sales Benchmark Survey to learn how PLG companies structure, plan, and execute their sales strategy.
We designed this benchmark report to help PLG companies who have added a sales team - or are thinking about layering in sales - accelerate revenue growth.
Our very first report includes 200+ respondents from some of your favorite PLG companies (both veterans and newbies represented).
We dug into some questions top of mind as we go into 2022:
- When do PLS companies add a sales team?
- What sales roles do PLG companies prioritize?
- What does the sales organization structure look like?
- How do you compensate sales reps in PLG?
- And more!
The myth of no sales ❌
In the data, we clearly see the myth of “no sales” at PLG companies has been dispelled. Over 97% of survey respondents either have a sales team or plans to add sales soon.
So why is Product-Led Sales not more widely understood or adopted?
The Product-Led Sales 🚢 boat hasn’t left the dock
Product-Led Sales (PLS) is still in its infancy, attracting primarily innovators and early adopters of PLG. Top PLG companies like Slack, Datadog, Zoom, Atlassian, MongoDB and others have been layering in sales on top of their PLG motion for several years. Instead of bolting on a typical enterprise sales motion, the best-in-class PLG companies realized that it is much more efficient to direct sales efforts towards an existing base of users — thus PLS was born.
Most companies are still in the exploration phases trying to figure things out as they go along. PLS is taking off with early adopters but the sheer number of ‘no, I don’t know what that is’ makes it clear that the strategy is nascent within the broader PLG community and SaaS overall.
Going beyond the basic definition of Product-Led Sales, what does it really mean? And what does it look like when it's executed?
Product-Led Sales reorients your sales team (and go-to-market functions) towards your existing base of self-serve users. The playbook for PLS is different from your typical enterprise sales approach, where there is a lot of up-front demoing and relationship development. Instead, with PLS, sales is focused on nurturing existing users, guiding them towards realizing value, and assisting users with upgrades/enterprise expansion.
The traditional enterprise sales approach relies on customer fit data (company size, geography, industry, etc.) to inform the identification and prioritization of leads. But Product-Led Sales teams base their outreach on customer fit and product usage data. A Product-Led Sales approach is all about understanding how a team is using your product, who the product champions are, and when the sales team should engage.
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Practically, this means sales teams are not blindly chasing leads or relying solely on outbound tactics to get in front of customers. Instead, PLS teams will prioritize Product-Qualified Leads (PQLs). PQLs are users that have realized value in the product, are in your ICP, and/or have indicated buying intent.
No more flying blind - sales teams can more accurately pinpoint their best opportunities and reach out at the right time with more personalized outreach.
Product-Led Sales teams still do ‘outbound’
How do PLG companies deploy their sales resources?
Unsurprisingly, since PLS is still in its infancy, many PLG companies with sales teams still behave like a traditional sales team.
While a majority of respondents (72%) have sales conducting outreach to inbound leads, many have started to conduct outreach to PQLs (47%). However, 50% are still relying on MQLs to inform outreach and 44% conduct cold outbound, both of which are more traditional enterprise sales tactics.
Along the same lines, for enterprise licenses, “contact sales” is the most popular path (even at PLG companies). It seems few are ready to let users completely self-serve for enterprise licenses, but some are making strides in that direction (about 7% offer a self-serve path for enterprise plans!). Our assumption was that those that choose to offer a self-serve path for enterprise plans also don’t have plans to add a sales team anytime soon. We broke down the data to validate this assumption and found that those that answered “No sales team and no plans to add one” made up the majority of the 7%.
Sales-assist is sneaking 🥸 into the sales org chart
As a founder or small PLG team, it can be difficult to figure out when to start adding a sales team. We asked survey respondents when they added their first sales hire, how big their teams are now, and how they deploy sales resources.
Turns out the sales team structure at PLG companies is not too different from any other SaaS company, with the first hire normally being a Head of Sales, VP of Sales, or a CRO. 48% of respondents made their first hire between $500K and $1M in ARR and that hire typically reported directly to the CEO/Founder. Compensation also looks as it did in the traditional enterprise sales world, although it will be interesting to see this shift as more PLG companies adopt new pricing strategies that are less predictable (we’re looking at you usage-based pricing).
Where things get interesting is with the role of sales-assist, an emerging function within PLS. Sales-assist is exactly what it sounds like…helping/assisting a user in their journey, whether that means they are ready to purchase or have hit a point of friction, and everything in between.
The sales-assist team offers a human touchpoint for users who are potentially good sales opportunities and need help solving their problem, getting value out of the product, or making a purchase decision. Currently only ~29% of companies have this role, but we expect to see adoption of the sales-assist role accelerate in 2022.
CRMs are required even in PLG
A bottom-up go-to-market motion like PLG puts the existing tech stack to the test. However, given the infancy of Product-Led Sales, it’s no surprise that CRMs still dominate. Although, as more companies place a greater emphasis on product data, we predict this will decrease over time as the data warehouse becomes a better source of truth.
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Most respondents either use Salesforce or Hubspot as their CRM with a few smaller companies opting for a Google sheet, Notion page, or Airtable base.
When it comes to the data warehouse, 24% of respondents still don’t have one. We feel pretty strongly that this number will continue to decrease as more PLG companies recognize the power of leveraging the data warehouse as the system of record for their company. You can read more about our thoughts on CRMs and why we believe the data warehouse is a better backend for your GTM tech stack here.
Conclusion
Product-Led Sales is still in its early days. We’re still in the innovation stage of Geoffrey Moore’s technology adoption curve. So, it was no surprise that our first benchmark report on this emerging category shows that many companies are still figuring out how to harmonize their PLG/self-serve go-to-market with sales.
Unsurprisingly, we’re still seeing a ton of PLG companies following traditional enterprise sales strategy, but we’re excited for future versions of this benchmark report when Product-Led Sales moves into the mainstream (after all, 24% of survey respondents did indicate they are looking for a third party PLS platform). As more PLG companies realize the 1+1 = 3 power of adding PLS motions, we’ll begin to see new playbooks, sales compensation norms, metrics, and tools.
Key Takeaways
- The myth of no sales at PLG companies has been completely debunked. Most companies see the need for sales AND PLG, but many are still figuring out how to harmonize both motions.
- We still see PLG companies leveraging conventional frameworks for enterprise sales from compensation to sales team structures, further emphasizing just how new the Product-Led Sales approach is for these teams. GTM playbooks have not yet been adapted.
- The future of PLS is definitely bright. 24% of respondents are looking to add a third-party PLS tool while another 12% are pursuing internal tools to enable PLS. This bodes well for an interesting follow-up to this report.