How to Apply PLG in Domains that Prevent it
Combining PLG and SLG to drive growth.
In a recent post, I shared some concerns and suggested a reality check for Product-Led Growth (PLG). To summarize:
Depending on the domain and the nature of the product, it may not be appropriate to implement PLG to the full extent but, instead, blending with classic Sales-Led Growth (SLG) strategies will provide better business outcomes.
Today I want to dig a bit deeper and describe two alternative models for combining PLG with SLG.
Option 1: Let the Product Generate Qualified Leads
What you will often find is a hybrid model of PLG & SLG:
The product does the initial acquisition, then the customer sees some perceived value, then the Sales team steps in to monetize.
James Colgan, (Ex-)CPO of Spendesk, in a recent webinar hosted by the marvelous team of Product People, illustrated that approach:
Essentially, the idea is to combine the best of both worlds:
Quick time to value for the customer with self-service onboarding and some kind of free trial
Extended monetization for the company by qualifying users based on their behavior in the product and then generating well-qualified leads for the Sales team
Contrary to the often-cited “the product sells itself”, Marketing and Sales are still needed as illustrated in this customer journey:
James Colgan’s approach is similar to what Aakash Gupta describes as Product-Led Sales:
Product-Led Sales (PLS) is a go-to-market strategy that uses self-serve users as the primary funnel for the sales motion — Aakash Gupta
However, if you have read this far, you will notice the problem with that approach. Specifically, when your product is applied in domains with top-down decision-making, where users are not buyers, it will be difficult to even start turning this flywheel because the initial push — users intrinsically trying your product — will be missing.
Option 2: Use the Product for Expansion
In these Enterprise-like situations, another approach of combining PLG with SLG will be more promising. In a nutshell:
Continue traditional Marketing to generate demand.
Let Sales close the initial deal — which will make sure your product gets a checkmark for all the compliance aspects and will see an initial adoption inside the customer.
Then apply Product-Led Growth methods to help expand the business:
When onboarding users, run a quick survey or use similar tools — to learn as much as possible about the specific user persona and their needs.
Implement in-product tours or provide easy-to-follow checklists to guide new users — to minimize the work for your Customer Success team.
Likewise, use guided tours to show new features or point toward premium functionality — to offer even more value to users.
If possible, provide reverse trials for premium features — to allow users actually perceive the value before they have to make a buying decision.
Track the satisfaction of users on task-level, directly in the product, such as with Customer Effort Scores — to observe, learn, and remove obstacles as quickly as possible.
With all of that, create Product Qualified Accounts (PQAs) — to indicate groups of users inside customer organizations who appear to be great candidates for expansion.
Finally, hand over these PQAs to your Account Management team — to let them work on increased monetization.
The essential difference here is that during the expansion phase, a commercial relationship is already in place. At least some parts of the product have been rolled out, legal agreements are in place, SLAs have been agreed upon, the vendor is “whitelisted” inside the customer, and all of that.
Expanding the SLG Journey with PLG
To illustrate the change, let’s extend a classic SLG-driven customer journey with that PLG-driven expansion:
In the above, orange indicates primarily human activities whereas blue-ish steps happen inside the product. The latter only happens after the Sales-driven landing phase has been completed — for the reasons described above and here.
As we can see, the actual time to value for the customer still shows rather late — which is sad for both sides: Customers perceive value very late, and vendors spend a lot of effort until they see the result (with a decent risk of losing the prospect along the way).
Dovetailing SLG with PLG
If domain and product allow, a mixed approach that alternates between SLG and PLG might help to overcome this problem:
By dovetailing human activities with in-product experience, the process can be optimized:
Start with classic Marketing activities, as also mentioned by James Colgan, to create demand and awareness, so that visitors come to your website.
While a traditional free trial might not be possible for the reasons described here, show the product using authentic videos or canned demos which allow prospective customers to get a realistic impression.
When you are running a customer community portal or something similar, then referring to happy customers might help — even more so when these reference customers are similar in terms of size or industry segment.
From observing these activities, derive triggers that let the Sales team step in to handle all steps from further lead qualification to the final closing of the deal, to take the first step toward monetization.
Instead of Consulting or Customer Success, most of the onboarding happens inside the product directly which not only puts the user in the driver’s seat but also allows for rich product analytics.
After users have perceived the initial value, premium features can be offered based on their behavior when using the product. In most cases, because the initial deal was closed and all compliance-related topics checked, running a reverse trial, e.g. for some extended functionality, should be possible.
From that, the product can generate PQAs which Account Management can approach to expand, up- and cross-sell.
As can be seen in the above visualization, the actual, productive implementation will still be relatively late due to the reasons we mentioned above. However, prospective customers will get an early real-life impression — and the product can help to generate leads that are well-qualified for expansion.