B2B software sales have changed drastically from the days of multi-year and multi-million dollar deals that characterized the last few decades. The landscape is much more fragmented these days and everyone and their cousin is coming up with a new B2B product to revolutionize the status quo. This has led to a change in the way products reach their target audience.
In the big-picture view, this has initiated the decline of overt selling i.e. meeting face-to-face with the decision-makers in the target organization and trying to convince them to give you money or better yet, keep giving you money for the next 3 years. The stage is now set for a new player.
Enter, Product-led growth or PLG.
Although it is not new, SaaS companies focussed on B2C like Slack and Calendly have grown on the backs of PLG tactics, but over the last few years, it has come on its own. And large players like Gitlab & Hubspot have started to adopt it in addition to their sales-led strategy.
Time to take a look at how a product-led strategy differs from a sales-led one.
This is a traditional buying funnel for B2B Marketing.
Nothing fancy, just prospects flowing in from the left and progressing step-by-step until they get converted to customers. Traditionally, a marketer's role is to increase the funnel by bringing in more website visitors and removing friction from subsequent steps to lead them to Purchase, as shown below:
In the real world though, prospects rarely follow a linear process. Information is ubiquitous and there are more sources to discover a product than just through its websites or social channels. Customers may land directly on your sign-up pages (let's say, via a Reddit thread) and start exploring. Then comes a catch.
The only way a user gets to progress from the “Interest” to the “Trial/PoC” stage, and I see this a lot in B2B product companies, is via the holy Request for Demo button/Form on the website. This is followed by a back-and-forth email interaction to schedule a demo meeting, thereby, inevitably delaying the Trial process. A prospect who was interested to try the product is now discouraged by the number of hoops one has to jump through.
This is where PLG comes in and removes the needless human element from the trial process. A user discovers & tries the product, has a smooth experience while using it, takes buy-in from their own organization, and either makes the payment via self-service or reaches out for more information via the Support/Contact Sales button.
This is great from a user’s perspective - they can try it when they have free time, and check if it works with other tools they are using plus, they do not have to talk to anyone (for an introvert like me, this is golden). It is clearly the go-to approach for new products that are locked and loaded to be tried and lack a sales team. But even if you have a sales team, you can make them do better things with their time.
Taking action via PQLs
A new user has signed up and looking to try the product in real life. Now, comes the important role of judging whether a user can convert into a paid user in the near future. The old method to qualify is to actually talk to a prospect and gauge their interest level. An even better way is to observe the user (but not in a creepy way) play around with the product. That’s where the concept of Product-Qualified Leads comes in handy. The actions a user takes in the app have to result in a significant milestone in the product journey.
For example, Kissflow - a low-code, no-code app builder, has many users trying to create an app with the platform. Not every user will convert to a paid license. But if a user creates an app PLUS adds a collaborator from the same organization and that collaborator also tinkers with it, then it shows a higher chance of conversion for the account as a whole. This should trigger some action by the Kissflow customer team like a drip email campaign or a salesperson reaching out directly to the users offering assistance.
There are many tools out there to make PQLs a reality. I will discuss them in the next article in this series.
Sales-Assist
After a user has taken a significant action in the product, the next task is for the sales-assist team. In the earlier model, this role is fulfilled by a Customer Support team while the sales team works only on customers before they try a product.
In the PLG model, instead of working on new leads, the function of a sales-assist team is to convert a user either to a paid one or to a higher tier than what they are on currently. This takes away the selling part and turns it into user enablement - helping them to get the best out of the product. Since every user might have a different use case, a sales-assist resource needs to be well informed on the finer technical details of the product. Also, with this user intelligence, product leads can now discover new use cases for the product.
With so much resource savings a PLG model can bring to a tech product, it begs the question: why don’t we see it in every product? For all its worth, it is not a one-size fits all solution. There are levels to implementing a product-led motion to enterprise sales. How to know if it can be implemented with your product? Try answering the below questions:
Is the product available to try for free?
Can a user find value in the product without paying anything?
Is the time-to-value immediate? (in weeks & months NOT years)
Have you invested more in the product than in the sales?
Is user referral built into the product?
If you answer Yes to anyone, it is for you. If you answer No then consider bringing “product-led thinking” if not the whole shebang. More on that in a later post.
The final word
The B2C space is heating up with PLG companies. It is about time B2B teams stop treating the product like a golden goose shielding it behind a “Request for Demo” button. The user is the king and if they demand to try the product before they purchase it, let’s build it that way. The sales team can follow but start with the product.
I was supposed to write an article breaking down the PLG buyer’s flow but turns out I have much more to write about. Clearly, I’m excited about the future. So I’ve decided to break it into 2 articles. The following article will deal with the challenges to overcome while adopting the PLG approach in any organization and how other SaaS companies are doing it. Be on the lookout for Part 2 soon!
Let me know if you got something out of this piece. See you soon!