Oliver Jay, former Chief Revenue Officer of Asana, discusses product-led growth (PLG) in B2B sales. He explains PLG's impact, different models, factors to consider, managing trials, and combining PLG with sales-led growth. The importance of measuring metrics and analyzing user behavior is highlighted, as well as challenges and strategies for expanding upmarket in PLG.
Product-led growth (PLG) focuses on using the product as the primary driver of growth in B2B sales.
PLG companies should consider factors like time to value, target user persona, and scalability when implementing the PLG model.
A hybrid approach combining both product-led growth and sales-led growth may be necessary for sustained growth and profitability in some cases.
Deep dives
PLG: A Methodology Driven by Product Focus
PLG, or product-led growth, is a methodology that emphasizes the use of the product as the primary driver of growth in the sales process. Unlike traditional B2B software sales, where sales and marketing operations play a central role in acquiring users, PLG companies rely on the product itself to acquire, onboard, retain, and drive upsells and cross-sells to users. PLG has gained prominence in the last decade, particularly in the SaaS industry, with companies like Dropbox being pioneers of this model. The focus is on product usage, as exemplified by Dropbox, where users could adopt the product without the need for direct sales interaction.
The Differentiation between PLG and Traditional Sales Methods
PLG differs from traditional sales methods in terms of the primary conduit for acquiring users. While traditional sales methods rely on sales and marketing operations, PLG companies prioritize the use of the product as the main driver of user acquisition. PLG companies often provide free trials, freemium models, or self-service options. The success of PLG is dependent on factors like time to value, the target user persona, and the fit of the product offering within a specific market. Additionally, PLG companies should consider the longer lead times and increased complexity that come with scaling the model.
The Evolution of PLG and the Challenges Faced
As PLG companies scale, they may face challenges related to the unit economics and profitability that were initially advantageous. The initial unit economic benefits, such as viral growth and lower customer acquisition costs, can diminish as companies aim to expand into the enterprise market. This may require adding layers to the PLG model, such as integrating outbound sales teams and building enterprise-level features. However, expanding the model successfully relies on having product-market fit for the new layers added. PLG companies should anticipate the increasing complexity and strategize early on to maintain high growth rates in the face of changing market dynamics.
Transitioning from PLG to SLG: The Need for a Hybrid Approach
In some cases, PLG companies may find that a hybrid approach combining both product-led growth and sales-led growth (SLG) is necessary for sustained growth and profitability. Successful companies like DataDog and Atlassian have utilized this approach effectively. The transition from PLG to SLG requires careful planning and consideration of product-market fit for each approach. It can also involve building new products or verticalized versions that appeal to executive buyers. Understanding the differences in motivations and priorities between end-users and executive buyers is crucial when selling to higher levels in a company. The shift to SLG should be aligned with the overall product vision and growth strategy.
Avoiding the PLG Trap: Early Planning and Beware of Outbound
To avoid getting caught in the PLG trap, where growth plateaus and unit economics decline, early planning and awareness are essential. Proper planning involves considering the needs of higher levels of the organization, such as security and executive buyers, and integrating product and go-to-market strategies accordingly. It is crucial to assess if there is product-market fit for a full SLG motion, not just at the user level. PLG companies should be cautious when incorporating outbound sales into their growth strategy, as it may not be the remedy for sustainable growth. Outbound sales should only be pursued when there is confidence in the product's ability to meet the needs of higher-level decision-makers.
Oliver Jay is a former Chief Revenue Officer of Asana and an advisor and leadership coach for various companies.
In this conversation with John McMahon, Oliver Jay discusses the concept of product-led growth (PLG) and its impact on B2B sales. PLG is a methodology that focuses on using the product as the primary conduit for acquiring users, driving sales, and retaining customers. Oliver explains that PLG is effective for certain personas and products, but it requires careful planning and consideration as companies scale. He also highlights the importance of understanding the buyer's perspective and the need to articulate the value of the product in terms of revenue, profitability, and risk.
[00:01:29] Oliver Jay's background and experience in PLG [00:06:41] Different models of PLG: self-service, product-led sales, freemium [00:07:59] Factors to consider in choosing the right PLG model [00:09:40] Steering customers towards the best PLG model [00:11:33] The benefits and ease of managing trials in PLG [00:13:02] Time to value as a key consideration in PLG model choice [00:13:46] Differentiating products for PLG vs. non-PLG. [00:23:19] Combination of PLG and sales-led growth for enterprise sales. [00:24:42] Building a multi-layered PLG business. [00:25:42] Challenges of transitioning to a traditional sales motion. [00:32:40] Major elements of a PLG system [00:48:23] PLG companies need to break down into granular components [00:56:46] Importance of product market fit for SLG [00:57:30] Selling to users vs. selling to buyers [00:58:56] Adding SLG motions is hard for PLG companies
HIGHLIGHT QUOTES
[00:03:27] Oliver Jay: "PLG is an elegant model that uses the product as the primary conduit for acquiring users, driving sales, and increasing retention." [00:39:59] Oliver Jay: "PLG companies should view their self-serve and product-led sales teams as part of the same funnel, not as separate entities." [01:00:50] Oliver Jay: "PLG companies need to be aware that outbound sales is rarely the remedy to growth and should only be pursued when there is product-market fit for a top-down sales motion."
