Introduction
In 2021 we set the foundation for understanding how revenue engines are built in a product-led world and uncovered a dirty little secret - all the best PLG companies have sales teams. Turns out, PLG is not a silver bullet, but neither was sales. We learned that modern go-to-markets require a complex harmonizing of many sales motions, and the key to success lays in a hybrid strategy powered by data. This is Product-Led Sales.
2022 in many ways has been the year of Product-Led Sales. In 2022, Product-Led Sales was recognized on the famed Gartner Hype Cycle for CRM technology as an innovative technology space with high benefit for go-to-market teams. Companies like Zapier and Canva hired for “Head of PLS” roles. Going into 2023, we’ve even started to see PLS appear as a line item in go-to-market budgets.
Despite the progress, Product-Led Sales is still very much in the early innings. As the category matures, so do the types of questions, concepts, and playbooks teams need to succeed. That’s why Pocus, OpenView, RevGenius, and RevOps Co-Op teamed up to launch the second annual Product-Led Sales Benchmark Survey to get a clear picture on how the space has evolved.
The report includes 200+ respondents from some of your favorite PLG companies (both veterans and newbies represented), to answer nuanced questions like:
- How are customers buying products?
- When should you layer sales in the customer journey?
- What metrics should you track?
- What sales roles are a PLG companies prioritizing?
- What does sales compensation look like?
- What are the top tools used by PLG companies to enable PLS?
The age of hybrid sales
As more companies choose to go product-led, PLS has become a popular hybrid option for go-to-market teams looking to scale both user growth and their revenue engines. Last year’s benchmark report dispelled the myth that PLG means “no sales,” but this year we’re adding a significant caveat.
Not only do product-led growth companies have sales teams, these teams pursue multiple sales motions to reach their goals. You would think, like we did last year, that a PLS team would not pursue outbound sales. The data tells us otherwise.
PLS doesn’t exist in a vacuum, a product-led approach can inform messaging for cold outbound, as well as integrate with outreach efforts backed with product data.
Here’s a helpful way to think about the mix of playbooks.
It’s a two way street, but the key across these various playbooks is product usage data. It makes sense, spending resources to know how users interact with your product can help frame value propositions, get a fuller picture of ICPs, and give sales teams the insights they need to close on enterprise deals.
Revenue drivers
A look into the revenue split between channels tells the story.
33% of revenue comes from self-serve/PLG
28% from Product-Led Sales
56% from sales-led
Diving deeper reveals an even more interesting story. We found that sales-assist is the unsung hero of revenue attribution, ranking highest for respondents. While still an underutilized channel, the companies that offer assistance through Product Specialists or product advocates see the most impact.
“Can I speak to a human, please?”
Most buying paths rely on human touch points. Yes, even in a self-serve motion.
A majority of respondents (52%) have a human touch playbook when an enterprise user self-serves on to the product. Some common playbooks we’ve seen Pocus customers use to reach out to high potential customers includes:
- Sending highly personalized emails when enterprise decision makers sign up.
- Reaching out to assist once onboarding steps are completed.
- Congratulating a user personally when they unlock an important new feature.
- And more…
When should you layer in a human touch?
The challenge with hybrid go-to-market motions is knowing when to pull the right lever. Should sales reach out with a highly personalized email to every target sign up? Should they wait until they become product qualified? Should there be a low touch automated sequence before sales engages?
These are all the questions we hear in the Product-Led Sales community. This year we asked at what points in a customer journey does the sales team reach out:
- 69% of respondents will reach out primarily to “hand-raisers” (this is up from 62% last year).
- 58% reach out once a user becomes a PQL i.e. takes some meaningful action that qualifies them for outreach.
- 45% reach out to these high value contacts immediately after sign up (hopefully to offer help and not aggressively sell).
The most popular PLS playbooks all rely on human touchpoints:
#1 Assist: The assist playbook is all about getting customers who need help to value quickly. This playbook typically targets new freemium or free trial users (first 7 days or 30 days, depending on the length of onboarding and trial), with a goal to get these users to hit a particular milestone in the product that would demonstrate enough value to them.
#2 Convert: The goal of a conversion playbook is similar to Assist but with the explicit goal of converting high-potential free users into paying customers. The goal of this playbook is not to reach out to every free user with better-than-average product usage, sales teams should primarily focus on users with both good or better product usage and very high customer (ICP) fit.
#3 Expand: The goal of an expansion isn’t to go and upsell every existing customer and simply get more money from them. It’s about helping align more usage of the product to the customer's business objectives. The only way to find these opportunities is to look at their usage patterns and build a business case for expansion that is compelling to the key decision-makers.
👉 Learn more about the top 5 common playbooks
Still, some things don’t change: enterprise
For enterprise licenses, “contact sales” is still the most popular path (even at PLG companies). This metric was completely unchanged from last year, so it seems few are ready to let users completely self-serve for enterprise licenses.
Since much of the buyers journey happens before a user even clicks "contact sales," it is likely this call-to-action captures very high intent users. Many enterprises may opt for a cheaper plan to get started and try a product self-serve. If they choose to click “contact sales” for a license, it’s reasonable to assume they have a a higher intent to buy.
Pricing: no one size fits all
According to survey data, respondents with a purely PLG motion all have usage-based pricing.
For the other three go-to-market motions we see a larger variety of pricing models that includes usage-based, seat-based, hybrid, and other approaches.
Pricing is one of the hardest levers to nail for most go-to-market teams but one that can have outsize impact on your growth.
Designing your dream PLS team
When to hire? Who to hire first? Is there a magical ARR number that triggers you hiring your sales team?
When it comes to who to hire first, AEs lead the pack for first sales hire followed by a sales leader like Head of Sales or VP of Sales.
As far as when to hire this person, the data tells us, as early as possible. This is unsurprising for a sales-led motion which stands at the $500K-$1M in revenue mark. With a Product-Led Sales motion we see more variety at what ARR marker you should hire sales, but still a majority are opting for early.
PLS roles are rising in popularity
A more useful data point to look at emerging roles. Sales-Assist/Product Specialist is definitely rising in popularity - it’s represented at almost all levels of ARR. This year we ask how many companies have hired a "Head of Product-Led Sales," a small percentage (6%) have started giving ownership of this motion to folks on their team already.
Let’s talk about compensation
This is a big one! Companies that are setting up their PLS function tend to run into compensation issues when it comes to attribution of revenue. Since Product-Led Sales is a cross-functional effort with new roles like sales-assist, and other roles like customer success owning playbooks like expansion — determining who gets the credit (and therefore commission-based pay) can be a struggle.
The benchmark survey shed some light on how companies compensate the different teams involved in PLS:
As expected, variable compensation applies primary to Sales and Customer Success teams. There are a small number of respondents who are applying the variable compensation model to Marketing, Product, and Growth teams.
At the end of the day, attribution and compensation will depend on how you’ve structured your PLS motion. By giving ownership of different playbooks to different teams, you can base commission on targets reached. For example, if Customer Success owns the expansion playbook, they can be compensated on expansion metrics. Similarly, Sales-Assist compensation could be based on the number of customers "assisted." Lastly, Marketing could get compensated based on a certain Product-Qualified Lead volume achieved.
Incentives should always align to your goals as a company in order to drive the right behaviors on the team.
The biggest hiring challenge for PLS: culture shift
There’s an avalanche of talent jockeying for sales positions. However, the skills and mindset that are successful in sales-led motions don’t always translate to Product-Led Sales.
Most respondents shared their struggles to hire people with enough technical savvy. Defining and operationalizing PQLs, along with a cultural shift from “close the deal” mentality to a “value first” approach, are challenging shifts for a traditional enterprise seller. We’ve seen companies like ngrok hire outside of the typical sales profile for this reason. They searched for talent with a “builder mentality,” natural curiosity, and a love of technology — with great success.
Can I get a vowel? PQAs rise in popularity
You can’t optimize what you can’t measure. Product-Led Sales is no different.
In a PLS motion, you need to measure the key indicators of success which includes the number of product-qualified leads (PQLs) or accounts (PQAs) surfaced, how those leads were actioned, and whether there was a meaningful lift in revenue, conversions, or any other goal as a result.
For most teams, reaching this level of PLS maturity is challenging. In the early phases of a PLS motion, you may be experimenting with many definitions for product qualification, you are testing very different customer segments, and have not nailed down a playbook.
Don’t let that stop you from forming the habit of measurement. Here are the common metrics tracked and their benchmarks.
We’ve seen Product-Qualified Accounts (PQAs) and Product Qualified Leads (PQLs) be used almost interchangeably. But, a mature PLS motion will often hold PQAs as the ultimate success indicator, while PQLs can be a step on the path to land them. The data shows PLG orgs are realizing this, with 17% of them tracking PQAs. This isn't to say you should stop caring about PQLs. Whether you track PQAs, PQLs, or whatever X you are qualifying will depend on your goals and playbooks.
PQLs/PQAs… and then what?
Growth at all costs is no longer the name of the game. Keeping track of acquisition is necessary, but it doesn’t tell the full picture. You need to know the overall health of your sales motion, and inform your strategy based on the bottom line, after accounting for resources spent and churn. Which is probably why over 40% of folks are looking at NDR... and more should be looking at CAC:LTV.
Ping! PLS platforms have joined the chat
The number of companies who have implemented a PLS platform has more than tripled from last year! While 24% of respondents had plans to add a third party tool to operationalize PLS, only 2.4% of companies had made the investment. This year 12% of respondents have added Product-Led Sales platform to their tech stack. While 73% of companies are still using traditional CRMs — and adapting them to PLS frameworks to track PQLs/PQAs — we think that will soon change.
As PLS matures as a category and more companies flesh out their product-led approach, a CRM workaround won’t suffice for GTM teams to experiment, iterate and run multiple playbooks. A PLS platform gives non-technical teams the opportunity to dig into what has typically been black-box data, pin-point conversion signals, and turn them into actionable sales motions that scale.