Evolving from PLG: The Case for the hybrid product-led sales model
Choosing the right growth strategy for your SaaS depends on your product, target audience, and market dynamics. While many SaaS companies begin with a product-led growth (PLG) approach to gain traction, they often incorporate product-led sales (PLS) as they scale to target larger accounts and enterprise clients.
Let's explore three core growth models – traditional Sales-Led Growth in B2B, Product-Led Growth (PLG), and Product-Led Sales (PLS) – and how they cater to different business needs and customer segments.
Traditional B2B growth driven by sales teams
Sales-Led Growth is the traditional go-to-market strategy for many B2B companies, especially those targeting enterprise clients. In this model, a dedicated sales team drives growth by engaging directly with customers, providing tailored solutions, and guiding them through the purchasing process.
It is particularly well-suited for businesses with complex products that require expert guidance or a consultative sales approach. It's the go-to market strategy for companies targeting high-value customers or enterprise accounts with specific needs.
Strengths
Fits complex products: Sales teams can effectively guide customers through the decision-making process for high-complexity solutions.
High LTV (Lifetime Value): Tailored solutions and personal support foster strong customer loyalty and recurring revenue.
Deep client relationships: Direct engagement builds trust and long-term partnerships.
Challenges
High CAC (Customer Acquisition Cost): Outbound sales and personalized support come with significant costs.
Slower scalability: Long sales cycles and reliance on pipeline management can limit how quickly the business grows.
Product-Led Growth (PLG): Growth through the product itself
Product-led growth shifts the focus to the product itself as the primary driver of user acquisition, retention, and expansion. Customers experience the product first-hand, often through free trials, freemium models, or self-service onboarding.
When does PLG work best?
PLG is most effective for scalable SaaS businesses targeting SMBs or individual users. It works best when the product can deliver value without requiring significant sales or support involvement.
Strengths of PLG
Rapid user acquisition: The low barrier to entry attracts a high volume of users quickly.
Data-driven product development: User behaviour directly informs product improvements and iterations.
Lower CAC: Organic growth and viral loops reduce reliance on expensive marketing and sales efforts.
Challenges of PLG
Low ARPU (Average Revenue Per User): Many users remain on free or low-tier plans, which limits revenue potential.
High volume requirements: Profitability depends on attracting and retaining a massive user base.
Limited enterprise appeal: Larger companies often require tailored solutions that PLG struggles to deliver.
While Product-Led Growth offers significant potential, achieving exceptional results with this strategy is far from straightforward.
According to McKinsey's 2023 research, only a small percentage of companies using PLG manage to outperform their peers.
Those who succeed often adopt a hybrid approach, blending PLG with a Product-Led Sales (PLS) motion to maximize growth and capture higher-value opportunities.
The hybrid approach: Product-led sales (PLS)
The hybrid approach of Product-Led Sales (PLS) combines the best of bottom-up (PLG) and top-down (SLG) strategies to maximise value and conversion at every stage of the customer journey. By blending these approaches, PLS enables companies to scale efficiently while also targeting high-value enterprise clients.
PLS leverages the product as the primary driver for demand generation, creating initial interest and engagement through self-serve adoption. However, it doesn’t stop there.
PLS pairs this self-serve momentum with traditional sales efforts, allowing companies to capitalise on larger opportunities. For example, leads generated through campaigns or free trials are nurtured into sales opportunities, with dedicated sales representatives stepping in to close enterprise-level contracts.
This hybrid model not only boosts efficiency but also ensures no customer segment is left untapped. While SMBs and individual users engage independently with the product, enterprise clients benefit from tailored support and guided decision-making, helping unlock the full potential of the solution.
The boundaries between Product-Led Growth (PLG) and Sales-Led Growth (SLG) are also increasingly blurring:
PLG companies are building sales teams to serve enterprise clients better, while SLG-driven businesses are incorporating product-led experiences to help their sales teams demonstrate value and attract a new-wave of SMB customers.
When does PLS work best?
PLS is ideal for businesses that serve both individual users and larger organizations. By blending product-led adoption with a consultative sales approach, companies can scale efficiently while capturing enterprise accounts.
Strengths of PLS
Hybrid approach: Captures a broad user base through PLG and converts high-value accounts through SLG.
Improved retention: Combines scalable adoption with tailored support to build customer loyalty.
Diverse revenue streams: Freemium users can drive volume, while sales efforts focus on high ARPU customers.
Challenges of PLS
Operational complexity: This model requires investment in both product-led growth initiatives and a sales infrastructure.
Balancing priorities: Aligning product development and sales goals can be a challenge as the business scales.
Choosing the right strategy for your SaaS business
Selecting the appropriate growth strategy depends on your product complexity, target audience, and market dynamics. While many SaaS companies begin with a PLG approach to gain traction, they often incorporate PLS as they scale to target larger accounts and enterprise clients.
Consider these factors when choosing your sales strategy:
Product complexity and learning curve
Your target market (SMBs, enterprises, or both)
Average deal size and customer lifetime value
Resources available for sales and marketing
Competitive landscape
Remember, it's not always about picking one strategy – finding the right balance between these approaches could be the key to unlocking sustainable growth for your SaaS business.
