It’s clear that the U.S. tech sector is feeling the pressure in the current economic climate. In 2023 so far, over 21,000 workers in the industry have lost their jobs as companies look to cut costs and weather the storm, according to CrunchBase News. Staffing is only one of the ways that companies may trim costs as the threat of a recession looms.
With the possibility of cuts in technology spending, the goal for SaaS companies in this climate is to find ways to do more with less. Over the last ten years, the Product-Led Growth (PLG) category has created new ways to engage and more quickly build a user and customer base by transforming the way software is distributed and adopted. And recently, a new sales motion to support Product-Led Growth is giving companies smart tools to help sales teams deliver new sources of revenue.
Product-Led Growth (PLG) companies achieve this efficiency by delivering freemium or trial versions of their offerings that quickly bring value to the user. For successful PLG companies, this can result in tens of thousands of signups in a single month. Traditional sales approaches aren’t designed to effectively sift through users in a rapidly growing self-serve funnel, and this challenge has opened up an opportunity for a new solution. Product-Led Sales (PLS), is an emerging go-to-market strategy designed to leverage self-serve users as the primary driver of a PLG company's sales motion.
PLS motions take a sales-assist approach by factoring inr product usage. to drive conversion, expansion and retention. This approach is intuitive because it focuses on connecting with warm leads at a fraction of the cost of traditional top-down sales strategies.
Product data helps PLG companies identify accounts that are best primed to hear from sales. This strategy is particularly advantageous in a downturn as it can be tailored to fit any budget, and the nature of self-serve onboarding helps to reduce the cost of operations and increases sales productivity.
In fact, OpenView's third annual product benchmarks report found that 'Product-led companies, especially those with a freemium model, are over 2x more likely to be growing quickly (100%+ year-over-year revenue growth) than sales-led models!
Not every company is in the position to take advantage of the product-led strategy, but for those that offer a freemium product, and generate significant sign-ups on a weekly and monthly basis, there is a goldmine of opportunities connected with introducing a Product-Led Sales motion.
Let’s explore how PLS can help your business in hard times.
Understanding the benefits of a product-led strategy isn’t enough to ensure that your company actually experiences them. Many PLG companies don’t effectively track the metrics that unlock the growth potential of the strategy. Leveraging a world-class Product-Led Sales platform lets leaders uncover cause-and-effect relationships when it comes to generating revenue. Whether it’s uncovering what product actions lead to product-qualified leads (PQLs), how fast sales representatives need to engage qualified users in order to maximize chances of closing revenue, or which accounts are ready for expansion.
Bringing these metrics together for each team responsible for facilitating growth in an organization is one of the outcomes of Product-Led Sales.
Product-led sales turns free or low ACV (annual contract value) signups into paid or higher revenue customers by focusing on deepening product usage data to identify PQLs and increasing deal velocity and deal sizes among existing users.
PQLs have the potential to upgrade into more profitable accounts over time with less friction than MQLs or SQLs. Compared to traditionally rigid sales models, these high-velocity deals can keep sales teams nimble and efficient during downturns.
“Doing more with less” may be the unofficial motto of 2023, which means you may need to reach ambitious revenue targets with only a portion of your usual sales team. Layoffs create the need for efficiency within go-to-market teams.
Product-led sales ensures you have efficiency gains and less friction from self-serve signups, as well as predictable revenue from your existing user base. Rather than pay more for top of funnel, you can leverage product insights to uncover upsell deals.
As more and more companies become cognizant of software spend, these initial smaller deals (typically based on usage-based pricing) are more attractive than large upfront commitments. It is a more relevant GTM model during these times.
In a product-led model, sales has to focus on building a different type of relationship with prospects. The “always be closing” mindset has to evolve into an “always be helping” mentality focused on unblocking and educating the customer on the product and its benefits. This is a more consultative process that gathers and communicates feedback to improve and add features throughout the lifecycle of the products and services offered.
In many current enterprises, this data exists, but it is not purpose-built for sales teams to capitalize on the potential of a large user base in a scalable way. Product-led sales platforms unlock the power of sales by building workflows on top of the data that historically have required engineering solutions or existing CRM or other sales tools to be built from scratch on top of the data.
Product-Led Sales platforms are designed to show you how to access your customer data, regardless of your revenue operations team's technical knowledge. Streamlining the data sales needs to identify product-qualified leads and opportunities for expansion is the main focus of a PLS platform.
The foundation of a PLG company’s success depends on its ability to incorporate customer data into the sales process. Failing to do this can result in the collapse of your business in a healthy market, but failing to do it amidst concerns of a recession all but ensures it.
PLS can track what actions correlate to revenue outcomes, so that product teams can focus on creating experiences that maximize chances of users converting to paid tiers.
“Growth at all costs" no longer makes sense in today’s market. Each year, more and more companies are realizing the potential of a product-led go-to-market motion, and its ability to drive consistent revenue from an existing pipeline of self-serve accounts. Deals generated through this motion start small, but have the potential to grow with steady consistency due to the ability to leverage product-usage data to understand and guide the customer journey at every stage of its development.
To ensure this happens, any area of your company that owns expansion has to roll up to sales. In a successful PLS motion, every team connected to the expansion process plays an active role in guiding accounts to upgrade at critical junctures along their journey.
The threat of recession combined with rise of go-to-market strategies focused on a bottom up sales approach is shifting sales teams away from a transactional focus to one that’s centered on fostering relationships both internally and with prospects. Closed won is now the beginning of the sales journey, not the end.
This shift should have an impact on how your organization is incentivized to participate in the growth function of your business. Compensation should scale with a team’s impact on revenue generation from expansion. The tools in place to monitor this type of success should also be optimized to see which parts of the rev ops team impacts growth over time as well.
The current climate is no longer growth focused. Quickly deploying capital isn’t as important when it’s harder to come by, and managing it efficiently is now the primary focus for smart companies. The emergence of Product-Led Sales is happening precisely at this time because it is enabling product-led companies to capitalize on the massive opportunities of a healthy and growing self-serve funnel.
Many companies become singularly focused on cost-cutting during hard times. Mastering revenue efficiency is often overlooked. Investing in solutions that allow your company to get more done with less resources is a key strategy employed by experienced organizations . The Product-Led Sales motion is designed to achieve this by driving transparency and information into the hands of the people responsible for building lasting and profitable relationships with users in a self-serve funnel.
Despite economic conditions outside of your control, leveling up your product-led approach to achieve more with less will allow your organization to thrive—not just survive. Solving for revenue efficiencies is the best way to emerge from the downturn stronger than you went in.
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Stephen is a Sales and Sales Engineering leader with experience at pre-PMF through late stage Series D companies. He currently advise PLG companies on Go-to-Market processes and tooling best practices.
He’s an expert at crafting product-led sales playbooks and the associated workflows to help teams hit their revenue targets.
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