Growth-related discussions these days are hurdled between two approaches – 1. Sales-led, and 2. Product-led.
A sales-led approach is when all the teams across the company towards one goal – to increase sales within the organization. In this approach, the success of the company depends on the number of sales.
On the other hand, a product-led approach is the one where the product is the main driver of the organization’s success. In this approach, the focus is on the continual improvement of the product.
In recent times, there has been a growing emphasis on adopting a product-led approach, especially in the Software-as-a-Service (SaaS) market.
However, the shift from Sales-Led to Product-Led approach may not be a straight line. The first step towards it involves developing a product-led mindset.
In this article, we have discussed how to move from a sales-led mindset to a product-led one.
Let’s start with discussing what product-led means
As discussed earlier, product-led is when you use your product/service as the driver of your business growth. For this, you, as a team, need to develop a mindset to see your products as a way of serving people.
What makes it unique?
Unlike sales-led businesses, which aim to get a customer from point A to point B in the sales cycle, product-led businesses turn the conventional sales model on its head. Product-led businesses enable this by providing the customer with the “keys” to utilize the product and assisting them in achieving a meaningful result while doing so. It becomes a no-brainer choice to upgrade to a premium subscription. If you have used Dropbox or Slack, you would be aware of how the companies used their products for growth. Slack never advertised itself via blogs or YouTube ads, rather, the SaaS product was made available for free so users would understand it themselves.
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Benefits of the product-led approach
1. Increase in upselling and retention
The biggest advantage of a product-led approach is that it keeps the product, sales, and customer success teams aligned. Alignment of all these teams that everybody is well-aware and engaged with the product, and know-how to enhance its value. As all the teams work hand-in-hand, the Sales team can uncover better quality leads. The Customer Success teams will also be able to identify if the product addresses the needs of the target audience, or what could be done to make it better.
2. Lowers sales acquisition cost
Unlike sales-led businesses, companies that choose the product-led approach their Sales and Customer Success teams optimized. This means that the teams work together to create better output in terms of customer acquisition. This lowers the customer acquisition cost, and it thus leads to quicker growth.
When talking about product-led, companies often take the names of Slack or Dropbox. Reaching their level of growth is a goal for most of them, but they find it difficult to scale accordingly. By adopting the product-led approach, companies can achieve rapid growth as it helps companies scale by directing their resources to improve the product.
4. Boosts customer approval
Product-led growth relies heavily on word-of-mouth marketing. When using this approach for marketing, you need to remember that it is not your company’s job to persuade customers to use your product. Rather, it is your users who spread the word about the product and stimulate adoption. Therefore, by adopting this approach, you can constantly improve your product based on the feedback you get from your customers. This will lead to increased customer approval.
Considering the benefits and uniqueness, it can be said that moving to a product-led approach is a win-win for your business. But when should you consider moving? Let us answer this for you –
When should you move to product-led?
Well, switching from one approach to a whole new one may be a little tricky. But then, it is important to know when to switch to a product-led approach. For this, we’ll give you an analogy.
Imagine you are in a new market or you are creating a new category. In this situation, your audience may not know your product very well. You will have to create a lot of education around it. If you’re in that particular environment, you will have to educate your audience about the solution. In such instances, a sales-led approach is ideal.
However, if you know the market and the problems faced in it, it is good for you to adopt the product-led approach. It is the best way to conquer the market and position yourself as the best before the competition does so.
The Change Comes from Within
The shift from sales-led to product-led may be associated with certain uncertainties. You will have to understand that the transformation starts internally – when the entire team adopts a PLG culture.
The teams should understand that it is a new approach, a new method of seeing and acting on the product. Changing culture is not an easy task and it requires continuous and constant effort. Keeping this in mind, the leadership has to support the teams, giving them what they need and aligning communications.
Along with the cultural change, you should also focus largely on aligning your teams, especially the product, sales, and customer success teams. These teams play a very important role in the transition. Therefore, these teams should work together, establish a common goal if required, and also ensure better communication.
Additionally, the teams should work in the lines of B2C business, which take directly to their customers about their product. However, B2B businesses may find it to be difficult. But the good news is, you don’t have to hire B2C experts to market the product. Rather, you should change your perspective to ‘business to human’. This will help you know better about your customers and enhance your product accordingly.
The roadblocks on the way of being product-led
1. Managing change
This is the first roadblock in the way of your transition. To move to a product-led mindset, it is important that the teams – marketing, sales, customer support, and engineering teams – need come together and collaborate. This is a major change that should be accepted by all the team members. Managing this change is difficult, but in such a scenario, the leadership team has to support and lead the change.
The leadership team needs to –
- Convey why the change is essential
- Discuss how the change will impact the company/product and what would happen if it is not made
- Establish strategic feedback to adopt the change
The leadership is also responsible for ensuring that the teams work on a shared vision and discuss the product feedback openly.
2. Gaining sales support
Gaining support from the sales team when moving to product-led can be difficult, and there can be resistance from the sales team. This is because product-led growth may appear to be slow at first, with fewer prospects in the sales pipeline. It takes time to develop a product-led growth attitude. However, the sales teams need to support it as once the transformation is fully implemented, the growth will be exponential.27
On a closing note, it has to be understood that product-led strategy is not just about giving away the product for free. Rather, it is an important customer acquisition strategy that necessitates a completely different approach to the user journey. It is all about conveying how the product provides value to the customers and how it addresses the customers’ needs. This is how users will fall in love with your product and recognize its true worth.
Anshi has over 12 years of experience in demand generation, digital marketing, and managing global teams. In her prior role as head of marketing operations for a high growth US healthcare tech organization she transformed marketing from cost to revenue center.
Published March 09, 2022, Updated March 09, 2022