Some of the most famous SaaS companies started their journey with zero sales representatives, relying entirely on a product-led growth strategy to increase their customer base and grow their revenue.
And, for a long time, this strategy was extremely successful, resulting in supercharged growth, a loyal base of customers and advocates, and a product that truly delivers a world-class experience.
Today, many of these companies have now added a sales team. This begs the question — in the product-led vs sales-led growth debate, which strategy really delivers the growth gains SaaS businesses are aiming for?
Product-led vs. sales-led growth at a glance
In a product-led growth strategy, the product itself is the main vehicle for growth and retention. Every department in the business, including marketing, customer service, and content will be optimizing campaigns and activities towards specific product actions that are proven to bring the customer closer to conversion.
A product-led growth strategy relies on the organization having either a free trial or freemium product available. Customers will sign up on their own and, guided by tools like a customer onboarding experience, resources hub, automated marketing messages, chatbots, or a community of practice, will discover the value of your product in their organization and decide to become a paying customer.
A sales-led growth strategy relies on a sales team to go out and find leads, service product demo requests, and contract partners.
In between these two extremes is a different approach that is rapidly becoming the norm — product-led sales, a blended model that brings the best of both worlds into one powerful strategy for growth.
What is product-led sales?
Product-led sales is a model where sales and product are strategic growth partners. Essentially the company will have product-led growth strategies, like free trials or a freemium product, in place alongside a sales team who can jump in when needed and take enterprise-level plans to the finish line.
With a customer data platform like Ortto in place, sales teams will be able to identify leads that have already experienced their ‘aha’ moment and will be more likely to invest. These leads are referred to as product-qualified leads, and they can accelerate the funnel and reduce friction in the sales cycle.
Benefits of a product-led sales strategy
Put yourself in your buyer’s shoes and it quickly becomes clear how a show AND tell strategy like product-led sales can be beneficial. Customers are able to get into your product and experience it for themselves, and benefit from a little hand-holding from a sales team when it comes time to expand usage or negotiate terms on enterprise-level plans.
As much as this is a customer-centric strategy, there are numerous benefits to SaaS companies that implement it.
According to ProfitWell, CACs have increased by over 55% in the last five years. A product-led sales strategy reduces CACs by lowering the barrier to entry for customers and allowing sales teams to stay lean.
Higher LTV with revenue diversity
By implementing both product-led strategies and a sales team, your SaaS business will be better equipped to bring in those high LTV enterprise-level customers, while maintaining the revenue diversity that comes with a product-led model.
In a traditional sales-led operation, it was common for a small number of big customers to be the main drivers of your Annual Recurring Revenue, which made losing just one of them incredibly risky. When sales teams are able to focus on these big fish while the product itself sells to the smaller fish, you’ll have a larger pool of customers and the idea of losing just one won’t keep you up at night.
Build a better product
When the product itself is doing the selling, customer feedback is taken on board quickly and innovation becomes top priority for the entire business. Every team is focused on improving the product, bringing different perspectives and solutions to ultimately build a product that is world-class. As SaaS explodes and competition grows fiercer by the minute, a great product is absolutely paramount to success.
No one knows your customer’s business like they do, so even the best sales team could easily skip over a use case, feature, or benefit of the product that the customer sees instantly. This kind of self-discovery is powerful — when we feel as though we’ve reached our own ‘aha’ moment, we are more attached to the outcome and willing to buy-in.
This reduces friction in the sales cycle, saves your team valuable time, and is more likely to create customers who are both loyalists and advocates.
For these reasons and more, product-led sales is becoming the dominant strategy for SaaS businesses. In fact, data from PeerSignal shows that, of 473 SaaS companies documented, 387 are utilizing product-led sales in their go-to-market strategy, 81 product-led growth, and just 5 sales-led growth.
How to add sales if you are product-led
Many of the most successful SaaS companies that started out with a product-led strategy added a sales function once they reached a certain point of growth or identified a specific need in the market.
The size of that sales team varies. According to PeerSignal:
Slack, a company that has its roots in product-led growth, now has a sales team which makes up 20% of its workforce.
Shopify, a product that is as popular with mom-and-pop ecomm stores as it is with major retailers, has just 8% of their 12,500+ strong team in sales.
Zoom, a product that experienced pandemic-fueled growth to such a degree that a sales team alone could never have sustained it, has 28% of their 7,500+ team dedicated to sales.
Zendesk, a company that got to 5,000 customers without a sales team, brought on a sales team (21% of total workforce) after realizing that, as their product suite grew, new and existing customers needed a more hands-on approach to ensure they were getting the most out of the Zendesk offering.
Basecamp got to 3 million customers without a sales team, and now has a small sales department that makes up 4% of their employees.
In all of these examples, the product has experienced natural virality with customers who sign up for a freemium plan or free trial quickly experiencing the value, deciding to pay for the product, and recommending it to friends and colleagues. But at a certain scale, a sales organization can help drive the transformation from everyday users choosing to use the product within their team, to a company choosing to use the product across every department. It’s these deals that drive LTV up and help reduce churn.
If you’re a product-led organization looking to add a sales function, you can think of it in three stages:
Expanding product-qualified leadsIt’s likely you’re already tracking product-qualifying actions in your CDP, and have a number of product-qualified leads for a new sales team to pursue. This is the low-hanging fruit that your sales team can focus on initially to increase MRR on your biggest clients.
Plus, sales, customer service, marketing, and content teams can use these splashy clients for case studies and testimonials, further driving growth.
Servicing marketing-led leads
Content initiatives, paid media, events, and other marketing activities are likely generating leads that haven’t actually gotten in and started using your product. Sales can reactivate these leads, answering questions, negotiating contracts, or helping them with onboarding.
Most SaaS companies have a list of dream customers — these could be the companies that you were thinking of when you built the product or they could be a set of influential companies in a specific industry that you are trying to break into (like ecommerce or agencies).
In either case, bringing just one of these dream companies on board could unlock a whole new world of growth. Narrow this list down to a manageable number, and get sales, product, marketing, and customer service teams together to strategize around how to win them.
How to integrate product-led strategies when you’re sales-led
This one is a little trickier to manage, but can be very worthwhile. As Alastair Simpson, Head of Strategy at Coassemble, shared in our 2022 SaaS Trends article, “By opening your product up to the market you can supercharge your acquisition funnel and see volumes of leads that a sales-led motion just can’t produce. By leveraging rich product data, sales organizations can prioritize who their sales representatives reach out to and when.”
If you’re in a similar position, start by following these three steps:
Some more traditional sales-led companies do not reveal pricing until after initial product discovery calls and demonstrations take place, and product-led initiatives really do require some amount of pricing transparency. After all, if you’re jumping into an opt-out free trial, you’ll need to disclose the amount the customer will expect to pay before they’ll be willing to commit.
Consider how shifting to a product-led model will impact your tiered plans. If free trials or freemium plans are too much of a jump, look at how you could start with a product tour or pre-recorded demos that allow customers to see your product in action without the help of a salesperson. This could be step one to unlocking a more product-led approach.
Follow the data
When operating in a product-led model, a single source of customer truth is essential. You will need to unify your data into one platform to essentially get a look at the customer journey and pinpoint the actions that make up a product-qualified lead.
Ortto has been designed to do just this — we use a collection of no-code integrations to unlock data from marketing, finance, support, sales, and product and collect it into a single customer profile. That way, you can discover the actions important to your business and get a complete view of the customer journey.
Coassemble is currently a sales-led organization, with plans to add product-led strategies in the coming year. Simpson shared, “To ensure success, we’ll be doubling down on tools that let us access richer customer data and use that data to drive customer behaviors. We'll be spending more time in tools like Ortto.”
Our 14-day SaaS trial Journey template is the perfect example of how data can be used to drive customer behaviors. Try it out today.
Make product part of everyone’s life
Product-led growth is a company-wide strategy. From marketing to customer service to sales, everyone needs to be thinking about how the product can be improved upon to increase leads and MRR.
Marketing will become focused on getting the product in the hands of the end-user and ensuring the experience of the product delivers on marketing messages. Sales will share intel with product teams, taking customer feedback on board to continually improve the product. Plus they’ll use new and improved features to reignite old leads and grow existing customers.
Like any strategy shift, there will likely be some road bumps along the way. But it will all be worth it in a year or two when your product is selling itself, your CAC has reduced, your MRR has increased, your product is famous, and your sales team is able to focus on the big fish.
The final word: product-led sales
SaaS businesses that are able to successfully bring sales-led and product-led growth strategies under one roof will be better placed in a growing and highly-competitive market.
Whether you’re adding a sales team, implementing PLG strategies, or starting a new business with a product-led sales approach, unifying your customer, behavioral, transactional, and firmographic data is absolutely essential. You need the ability to see your customer’s journey to pinpoint the actions that are most important to your business. Every member of your team needs to be able to slice, dice, and analyze customer data with ease. That’s where a customer journey platform like Ortto will give you a serious leg up.
What gets measured, gets managed. Embed these three customer feedback popups into your site, store, or app to generate more customer feedback.
“We were looking for a solution that was really easy to use, didn’t require a tech team, and would have a robust integration with Salesforce so we could trigger sales communications in a smarter way. Nobody else out there has what Ortto has.”