Product-led sales describes the ways salespeople at companies with a product-led growth motion can further improve customer acquisition, growth, and retention.
Employed by companies with a hybrid go-to-market motion, product-led sales tactics build on the tried-and-tested foundations of B2B sales and updates them to work within a product-led context.
Sales motions are the specific ways sales teams engage with prospects and customers to drive revenue. Some of the 5 product-led sales motions look similar to their direct sales counterparts while others are quite unique.
This guide demystifies the 5 product-led sales motions. You’ll learn what they are, how they’re executed, and common pitfalls to avoid.
When new users sign up for Confluent Cloud, Confluent’s managed service for Apache Kafka, they come in with a really wide range of experience with the database and the skills needed to use it. Some users have been working with the open source version of Kafka for years while others are seeing it for the very first time.
In addition to our team of inbound SDRs, we also have a “Cloud SDR” function who is primarily trying to remove technical friction for our users by answering questions and directing them to helpful resources like our self-guided training programs.
Additionally, when a new potential customer comes in through our cloud product and may not have significant internal expertise built up yet, we include professional services early in our conversations so we can get the customer to be successful as quickly as possible. Rather than optimizing for ARR, we’re making an upfront investment in the customer because we know the revenue will follow.
Probably one of the most talked-about motions in the product-led growth world, the conversion motion involves turning users of a free version of a product into paid users.
Free tiers can take several different forms—from the time-tested free trial to a fullly-fledged “freemium” model—and are often one of the earlier tactics B2B companies deploy as they begin the transformation to be more product-led. As a result, the conversion motion is often the first sales motion a PLG Transformer must define and execute.
There are many ways marketing, growth, product, and sales teams can drive free-to-paid conversion. In this guide, we'll focus on the role sales plays in this process.
Almost without exception, directing prospects to a free version of a product will outperform other non-product CTAs (like gated content, events, and demos). For a PLG Transformer making the switch from these other offers to a product-led CTA, this instantly drives up inbound lead volume.
Revenue teams are immediately tasked with developing a mechanism for aligning new sign ups with the appropriate follow up. For example, new sign ups from companies on a target account list are triaged into a high-touch follow up sequence whereas those from smaller companies (or associated with personal email addresses) may be bucketed into automated marketing-driven cadences.
Deciding which new users should get what type of follow up is one of the first steps in establishing what is commonly referred to as, “product-qualified leads" or PQLs.
Based on a combination of who the person is (their job title, seniority, etc.), where they work (industry, employee count, etc.) and what they have (or have not) done in the product will determine what degree of human involvement is needed.
It can be helpful to think of the profile of the user (who they are and where they work) separately from what they've done in the product. Comparing the combination of where each user lands on the profile fit scale and on the usage scale, you can start to identify which cohorts are the best prospects for sales. Typically, you want to prioritize users with stronger profile fits who have demonstrated low to moderate product usage.
When first starting out, it's acceptable to "PQL" users with both the strongest fit and the deepest usage. Over time, you should expect that these users will likely convert on their own and any sales intervention will needlessly drive up acquisition costs.
However, identifying which free-tier users are most likely to convert is just the start.
From there, revenue teams must determine the different ways sellers can improve the chances that a given user will convert to a paid plan. Critically, the value that sellers provide in the conversion motion must be clear so that users will forego the self-service experience and instead choose to work 1:1 with the seller.
Examples of value sellers can provide at this stage include:
Sellers used to operating in a more traditional sales-led environment may be most comfortable driving conversion by “gating” resources or features that a free user may not otherwise have access to. For example, offering to temporarily increase usage limits or suggesting a conversation with a technical expert like a solutions architect can be enough of an incentive for a free user to engage with sales. However, these tactics are often not scalable long term and position sellers as gatekeepers rather than value-adding overlays.
Best-in-class benchmarks for free-to-paid conversion rates among B2B SaaS companies are between 5 and 17%1. This means only a small subset of free users ever go on to generate revenue. If pursuing a sales-led conversion motion, beware of devoting too much time to low propensity users through overly-generous PQL rules.
1 2022 Product Benchmarks, OpenView Venture Partners.
We score our customers' likelihood to downgrade or churn based on several product usage factors including how long it took to onboard them, how they are trending against their limits and the number of different features they are regularly using.
These scores are examined and discussed at quarterly churn risk reviews. If a risk is identified, we build a mitigation plan. This plan can include introducing the customer to additional features they may find valuable or sharing resources to help make their usage more effective or efficient.
While the other four motions in this guide focus on increasing revenue from a customer, the retention motion is focused on ensuring that customers continue to use and see value from the company’s products at a constant level of spend.
In a traditional, sales-led motion, retention is thought of over the span of the full contract term (typically a year). As PLG Transformers become more product-led, customer usage (and therefore retention) is more dynamic and can change in a much shorter period of time, requiring a more proactive approach.
It’s no longer sufficient to wait until the last 3 months of a contract to think about renewals. Sellers must start to consider retention strategies from the beginning of their engagement with a customer.
Additionally operating a hybrid go-to-market produces a significantly higher volume of usage signals than a classic sales-led motion. While this helps paint a clearer picture of how customers engage with a company’s SaaS products, it can be challenging to understand which signals are predictive of important outcomes like growth or churn.
Identifying a set of both positive and negative signals enables sellers to keep tabs on which customers need additional support and which can be left to self-serve. However, because defining a set of customer health metrics requires a solid baseline of customer data, a dedicated retention motion typically comes into play later in the PLG Transformation journey.
The division of responsibilities for existing customer accounts among dedicated customer success teams, technical support, and quota-carrying sellers can cause internal friction and inefficiencies that impact retention.
It is critical that revenue leaders establish shared goals and clear roles and responsibilities among customer-facing teams. Additionally, working from a shared source-of-truth ensures all teams have a consistent understanding of the state of the customer.
How do we make it as easy as possible for our customers to expand while maintaining a level of predictability and control over that expansion?
One strategy we use at Vidyard is to build in expansion to our agreements. For example, make extra user seats available for a limited time so other people within the organization have a risk-free way of trying the product. If they continue to use and see value from Vidyard, the additional seats are automatically co-termed to the original agreement.
When expanding the usage footprint of Vidyard in an organization, we’ll often need to secure buy-in from more senior leaders who may not actually use the product. To help them understand the value, we’ll use actual usage data from the accounts of people on their team. For example, we’ll show the number of clicks on videos they shared that (with our paid plan) could have been directed to a salesperson’s calendar. Using this data quantifies the upside and creates tangible “FOMO” that they’d otherwise be leaving on the table.
As the usage of our products increases, the use cases tend to become more complex. This is a great opportunity for my team to consult with our customers to figure out the best option for them. For example, when integrating Vidyard data into their existing systems, we can help our customers develop the right strategy. While we could enable them to add integrations on their own, it would be a missed opportunity to understand why these features are important to them. Additionally, as data from Vidyard is used more widely across a company, it’s beneficial for us to make sure new stakeholders are familiar and comfortable with what our product offers.
Whenever a customer has questions about security, my team can not only point them to the right product features but also help them scope out the right steps to take to keep their data secure. Oftentimes, we’re able to build additional champions in IT departments by giving them additional oversight and governance of the tools people in their company are using on a daily basis.
The expansion motion is the primary way a company can increase revenue from existing customers. Not to be confused with upsell, expansion is specifically the process of growing the amount of usage a customer is entitled to for a product they are already using.
The most common forms of expansion are:
Along with the conversion motion, expansion is the sales motion PLG Transformers will likely encounter early in their journey. In many cases, a version of the expansion motion already exists even before the company pursues a product-led go-to-market strategy. However, the introduction of PLG creates a few differences in how this motion should be executed.
In a traditional sales-led motion, the customers who are candidates for expansion are limited to those whose contracts are coming up for renewal. In a hybrid go-to-market where the customer base is comprised of both sales-sold and self-service customers, expansion potential can emerge at any time from either pool of users.
As customers approach pre-determined usage limits, sellers can intervene to help plan for continued growth and, in some cases, unlock tiered or volume discounts.
When customers hit usage ceilings sooner than expected, it can be received as an unpleasant surprise. Consider automating notifications when users are approaching limits.
Additionally, evaluate overage policies that offer choices for how customers “true-up” usage against their pre-determined limits. For example, allow customers to choose between paying for each unit of usage they incur over their original limit or purchasing an additional bundle of entitlements at a discount. Each option has pros and cons but affords the customer a degree of control based on their level of risk.
Finally, over-aggressive expansion motions can result in customers pre-purchasing entitlements that go unused. In these cases, allowing customers “roll over” their purchase into the next term can lessen the blow, but this scenario should avoided if possible. Instead, opt for more conservative usage limits when negotiating contracts and focus on making the expansion process flexible and straightforward for the customer.
The close cousin of the expansion motion, the upsell motion focuses on expanding an existing customer’s usage through the adoption of a wider set of products or features.
Companies with a portfolio of complementary products are the best candidates for an upsell motion. However, for a company with a single product, this likely means upgrading the customer to a higher pricing tier which unlocks additional functionality. For example, SaaS companies often bundle “enterprise” features like SSO or integrations with more expensive platforms into higher pricing tiers targeted towards companies with larger budgets.
Depending on the structure of a company’s pricing and packaging, upsell and expansion may happen in parallel. For example, once a customer exceeds certain usage thresholds, their only option is to upgrade into a higher plan.
The primary difference between upsell and expansion, though, is that the value a customer gets from new products or features is likely different from what drove them to become a customer in the first place. This often requires sellers to re-qualify customers and execute additional discovery.
Both usage-based signals gleaned from product data along with business context obtained through sales engagements can indicate that a customer may benefit from functionality beyond what they currently have access to.
Specifically, upsell opportunities may arise after major milestones or “wins” where the value the customer gets from the product is top-of-mind. Take a classic upsell example for developer tooling companies: a customer purchases a core product when developing a new project. As the project is launched into production, the customer is likely considering complementary products that help them operationalize, scale, and monitor their deployment.
Upsell motions can be fraught as attempting to upsell customers before they have derived meaningful value from their existing purchase will not only fail but may sour the customer’s perception of the company. This is why the upsell motion should be primarily sales-led as automated or 1:many campaigns can fail to consider the customer context and nuance that is required for a successful outcome.
Our job as sellers isn’t to introduce “shadow IT” into an organization. That happens naturally if there’s a good product market fit. Where we are providing the most value is socializing the ways people are using Miro across the organization. Generally, when we show larger customers how much usage has organically grown without oversight of IT or vendor management, they’re usually pretty blown away.
The initial reaction is often ‘I need to figure out a way to get my arms around this to ensure that we’re complying with all of our security standards and we have some way to predict the tool's future growth.’
Where we come in is helping decisions makers understand which lines of business and functional groups are leveraging Miro. We can show the most frequently used templates, workflows, and use cases. That illustrates how Miro is being used and starts the conversation about how they can get even more value out of the features they already adopted.
For products that can be adopted easily by end-users within an organization, it is quite common for disconnected pockets of usage to organically emerge across large companies.
In parallel, many B2B software companies will provide discounts or additional features to incentivize larger contracts. This means there is often a threshold of usage where a customer can reduce costs by consolidating under a single contract. In exchange, the vendor can secure larger, longer-term commitments that improve revenue predictability.
To evaluate whether the consolidation motion is a good option, revenue teams should consider the following:
Like many other elements of a PLG Transformation initiative, the decision to prioritize a consolidation motion requires coordination across business functions. This ensures the go-to-market activities are backed up by legitimate product incentives while also making financial sense for the larger business.
Unless tangible product or commercial incentives are driving the consolidation motion, it’s likely that users will remain satisfied with the status quo. Similarly, unless consolidation of usage results in a measurable financial benefit for the vendor, sellers’ time may be better spent driving other sales motions.
Additionally, identifying when a single company has multiple instances of your product can be a technical challenge for traditional tools like Salesforce. Oftentimes, this exercise requires data or operations teams to manually inspect lists of product accounts and match them back to accounts in the CRM using imperfect data.