Well, we have good news for you–you don’t have to choose just one.
In this session with João Romão, Principal Product Manager at OutSystems.com, we will explore the benefits of both approaches and how integrating them can create a hybrid strategy that takes your business to new heights.
[Transcript] Growth’s Dynamic Duo: Product-Led and Sales-Led
Although transcriptions are generally very accurate, just a friendly reminder that they could sometimes be incomplete or contain errors due to unclear audio or transcription inaccuracies.
Let’s jump right into the first session of the product track. We now have João Romão. I’m surely not pronouncing it correctly, who is the principal Product Manager at OutSystems.com. He’s going to talk about product-led and Sales-led, the dynamic duo.
So João, thank you for joining us, and there you go with the slides.
Thank you, Massimo. Hi everyone! My name is João Romão. I’m a principal PM owning the growth group at OutSystems, and today I wanted to talk about this duality that we find in B2B companies.
Let me give a quick introduction about myself. So OutSystems, the company I work for, is a global leader in application development. If you want the simple version of it, we are software that helps companies build software. So we have these two very different types of users—the IT leaders that buy the platform and then the developers who use the platform.
So you can start to see the nuances between the ones who use and the ones who buy. This is something that I also bring from my previous past, founding two companies, one in Social Commerce and one in MarTech. Where not always a sales-led approach versus a product-led approach was the most optimal one.
So where do we start? We can start by looking at either sales-led or product-led as two options to drive the growth of your companies.
If we go through sales-led, this is the classic approach. You have a demand generation engine that generates leads, leads become MQLs, they go through a funnel, they’re engaged by sales, and hopefully, they become customers.
Normally, there’s some sort of trial, demo, or professional services involved to show you the product, but pretty much you’re depending on a sales organization to drive your growth.
On product-led, you could think the other way around. So, product led is a growth model where the product usage itself is the main driver of acquiring, retaining, and monetizing your existing customer base. Well, most people think that most companies actually opt for one another. When I joined, my responsibility was to implement product-led growth at OutSystems.
What I learned is that, because there’s a disparity in the way people want to experiment, and want to buy these products, there’s actually value in doing both of them. So what are some pitfalls to avoid when integrating these two motions?
One is, it’s very easy to look at sales versus product as a ‘us’ versus ‘them’ problem. You’re competing with sales, you’re taking leads out of marketing, and you’re taking the attention out of your prospects. You should not be doing that. Rather, you should optimize for collaboration between the two teams.
There’s another pitfall which is when people go too extreme on a product-led approach, they try to make the product as easy as possible. A good example of this is when companies try to minimize or eliminate all friction from, let’s say, a sign-up process, and because they want to shorten the lead time to get to something in the product, they ask you for an email and password. Bam! No friction, in seconds in your product. The problem becomes: “How do you know this customer is on your Ideal Customer Profile?” “How do you know this person is the right one to evaluate your product through its usage?”
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Learn how to create an Ideal Customer Profile and build a successful sales strategy with this Ideal Customer Profile (ICP) Worksheet.
So again, even if you’re collaborating with your sales-led counterparts, how do you make sure that this person that is using your product is someone that you can actually vouch for, and help evaluate the platform from a buying perspective?
Again, joining both of these topics, you’re most likely not going to be successful in merging these two motions. If there’s no alignment, no sharing of incentives and goals between your product, your marketing, and sales teams.
Again, one thing that I like to summarize is, either your sales-led or product-led, it’s more of a mindset. If you are product-led, you have to inspire the whole company into thinking in a product-led approach.
If you’re a salesperson from a product-led team, what you need to understand is, “How can I leverage this product usage insight in ways that maximize my time, my efforts, and my investment into talking with those leads; who perhaps do not want to buy ‘install service,’ but actually want some hand-holding from a salesperson.” “Because of this product usage, I’m more likely to be more successful.”
So here, I’m trying to frame a hypothesis which is, it’s not sales-led ‘AND’ product-led. You have to choose one. It’s likely ‘OR.’
How can we leverage both motions from sales and product path and make a 1+1>2?
Some good ways to find the balance between the three steps system that I mentioned before:
- There’s an acquisition part.
- There’s a retention part.
- There’s a monetization part.
In each way, you can leverage parts of the organization, Marketing, Go To Market, Sales, and Product to leverage your product to drive value in each of these sections. So for example, if you’re going product-led in terms of acquiring new users or prospects, you need to make sure that if you’re using a free plan you’re attracting the right type of users.
Again, this is something that you can do with your marketing teams or product marketing teams. It’s something that you can evaluate through a few questions in your sign-up form to understand, “Are you the type of user that we are looking for? Do you have the problems that we are optimizing to solve? Are you the type of company that buys from us?”
So you can start the relationship with that user through a product experience, but ensure there’s a market fit for the company you’re targeting.
For some users that are going through your product-led approach, it might be the case that they are so self-sufficient, so independent, that they want to buy independently from a sales motion.
For that, you should always have an escape valve for them to buy without being sold to. Most companies have some sort of self-service checkout, and this is a great way to land in a high-velocity way.
Normally companies have a smaller individual plan that targets these very specific usage scenarios where people can just buy and then expand from there.
In regards to expansion, there’s a very interesting path when people learn fast, which is, either they leverage consumption and they need to expand their accounts, or ideally, you and your product are able to evangelize the product in the organization. Then you have more people out of the organization, teams, not individuals, using your platform or product, which then brings you more ARR or expansion revenue.
In practice, what does this mean? It means that if you have sales teams and product teams if you have a sales motion and a product-led motion, you need to avoid some of the pitfalls and the things that are easy to overlook. You should actually confront them. One is, it might be the case that the sales team does want to close many high contracts at a very high value.
You can optimize for small ends with the customers that want to buy small and work on expansion later. You don’t need to sacrifice a huge sales cycle just to get those high-value contracts.
On the other hand, you might want to close as many new customers as possible, but you might be leaving some money on the table for customers who want more features and more benefits. These customers are actually willing to pay more for your product.
So, there must be some contracts and some engagement between sales, marketing, and product to make sure that everyone is aligned with us.
The corollary is that continuous, sustainable growth comes from taking the best from both worlds to make sure that you have a portfolio, and a healthy mix of offerings that caters to those scenarios.
One thing from my experience that helps make this happen is, that you’re actually engaging with your counterparts in marketing and sales to share incentives, share goals, share OKRs to make their success, your success because if you’re maximizing value for the customer, you’re capturing that value and that’s good for your company.
So in hindsight, from years working on this, I learned from the person who actually hired me for OutSystems that this shift from Sales-led to Product-led, you must not look at it as a sprint. It’s a marathon. It takes time, it takes trust, and it takes a lot of effort to make it work, but the results are compounded. You might not see them in the beginning, but then they compound. When you have a very oiled machine, then you can see all the results that this combination can bring to you.
Thank you, folks!
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Thank you, João. This was another very interesting and very hot topic, given that PLG (Product Led Growth) is a bit of a Hot Topic at the moment. Everyone is certainly becoming PLG overnight. I’m sure in a lot of companies, this is creating conflicts with the sales team. I totally agree with you, it should be good for everyone.
Yes, Sales might have fewer leads because more are closing self-service, but on the other side, they can focus on the leads that have higher conversion rates that they raised and want to speak with Sales. So I think that really works well. If anyone has a question just write them in the chat.
To kick things off, I’m curious about the value and shared goal part. How does it work? Do you tie economic bonuses to a shared goal like overall revenue across self-service and sales? Does it have a risk of fighting back and creating even more conflicts between the two teams? What’s your experience?
Now, I’ll give you an example. We’ve done this for the last year: One of the outputs of my growth team is input for the sales organization. So, for example, ‘success’ for one of my teams is the number of product-qualified accounts. Which is the number of companies, regardless of the number of users, who get to a sufficient product usage threshold that sales, in some cases, can engage with.
Why? What we discovered was that over 2022, the companies who got to a product-qualified account had a four times higher close rate than the ones that didn’t. So why am I battling with sales to take this from me, when I know that they can leverage their work if I’m helping them get a bigger pipeline to work with?
So those kinds of shared goals are the ones that I really care about because if I’m good at doing my job, I know sales are going to be competent in delivering theirs. I know that I’m going to contribute to the company’s strategy in goals. So that alignment is a must.
Awesome! Even in closing as self-service, I think there can still be an opportunity for sales as an upsell once they increase product usage and probably need to upgrade to an Enterprise license. So, they still qualify themselves while generating revenue. So that’s amazing.
Absolutely, and like in most businesses, it’s easier for us to expand the customer than acquire a new customer.
So if we can shorten and ease the landing process for a customer that’s willing to buy in self-service, we’re just leaving a hot lead for an account executive to work on expanding motion in the next couple of months. So it all comes as part of the process.
Agreed! Awesome, thank you so much for joining us. Thank you so much for this session.
Thank you! Bye-Bye.