Product-Led Growth (PLG) is becoming the default strategy in modern SaaS organizations due to the plethora of operational, financial, and technical benefits it brings to the table. But what about the traditional Sales-Led Growth? Is it still relevant? Let’s dive into the Product-Led vs Sales-Led comparison and learn about the main differences.
If you are working in a SaaS setting, chances are you have used applications like Slack, Zendesk, Zoom, Calendly, Dropbox, Figma, and Evernote extensively. These B2B-centric offerings have gone mainstream with the PLG philosophy, where end-users discover the benefits of the app by using it, eventually becoming brand advocates and turning into a driving force behind its growth.
The results are evident.
PLG companies now have doubled the median Enterprise Value (EV) from the public SaaS index. These companies also scale up with a CAC payback that’s lower than the market average in general.
What is Sales-Led Growth?
Sales-Led Growth is all about marketing and sales teams. The CMO or VP Marketing sets the tone with the messaging, campaigns are run on various channels to generate leads, content is leveraged to generate inbound traffic, and the sales teams eventually contact the prospects to close deals. There are still many SaaS companies that are using this traditional approach.
Unfortunately, these pipelines are rigid and work in a way that doesn’t really allow smooth scaling. If one of the aforementioned components of the pipeline is not working well, business suffers immediately. For example, if the marketing team is not able to generate quality leads for the sales reps, the whole process is stuck. Likewise, if the sales team has poor leadership, leads can’t be handled.
Besides the operational risks and fragmented approach, SLG tends to focus on the product and not the customer. This is something that simply is less suited to today’s dynamic B2B space , where users want to feel empowered.
What is Product-Led Growth?
As explained previously, Sales-Led Growth was all about creating clearly marketable products and channeling all leads to the sales teams that eventually shouldered all the stress. Product-Led Growth is changing the way SaaS businesses look at their potential customers and business growth. Simply put, the product basically is meant to be used and eventually “sell by itself”.
How is this achieved? With a frictionless onboarding experience.
This starts with the sign up process, a common churn culprit, all the way to selecting billing and subscription options. Other touchpoints also need to be addressed with multiple user-friendly options – login flows, security settings, and in-app support options to name a few. PLG is a philosophy that aims to give the end-user more in-app independence for optimal satisfaction levels.
While this sounds good on paper, getting it done is another story altogether.
Slack, Monday, and HubSpot are achieving their PLG goals by embracing self-service. Firstly, they are more efficient internally by not wasting time on non-core technology issues. Secondly, they are empowering end-users by putting them in the center of their growth motion. No more password reset emails, minimal frustrating support calls, and zero friction points.
Here are some key Product-Led Growth fundamentals:
- Eliminating the gap between perceived and experienced value
- Product feedback loops in real-time for faster response times
- Multiple “aha moments” to ignite sign ups and engagement
- A user-friendly and intuitive interface with minimal friction
- In-app support for lowered stress on support/IT
- Offline nurturing with emails and SMS texts
- Ability to address multiple use-cases
Product-Led vs Sales-Led: The Core Differences
Let’s take a closer look at the differences between the two philosophies:
Sales-Led businesses are rigid, work in only one way, and experience logjams when the company starts scaling up fast. With so many leads piling up, there is also more lost business, not to mention the added stress on support and IT teams. These things simply don’t happen with PLG, which is clearly more scalable and less prone to logistical or operational problems.
- Customer Acquisition Cost (CAC)
Product-Led products self-sell without any intervention from sales and support teams. These are self-sufficient entities that also help SaaS companies spend less on customer acquisition. Sales cycles are shorter too.
- Product Advocacy
Product-Led companies can turn customers and end-users into avid brand advocates. Allowing them to experience quick wins and “aha moments” can lead to quicker onboarding and then into active success stories. Word-of-mouth is one of the biggest growth accelerators today and PLG taps into that very thing. On the other hand, Sales-Led businesses simply can’t do much on this front.
- Customer Lifetime Value (CLV)
Sales-Led Growth can be fast and impressive in many cases, but the drop-off is unavoidable. SaaS companies need sustainable growth with better retention rates. But how much can one rely on customer success teams? PLG!
- Operational Costs
Sales-Led operations are like an orchestra – you need many qualified professionals and freelancers for everything to work properly. This can be challenging, especially for SMBs that are about to enter the hyper-growth stage. PLG eliminates all operational limitations by requiring less manpower, lowering in-house development costs, and letting the product sell itself.
Product-Led Growth with Frontegg
Frontegg is powering the PLG shift with its self-served user management platform. You can now enjoy plug-and-play authentication flows, billing and subscription implementation, role and permission management, audit log generation, and other features that will help you focus on what matters most – developing core tech features while giving your customers more freedom.
Looking to take a plunge into the Product-Led era? Start for Free now.