Product-Led Growth vs. Sales-Led Growth: What’s the Difference?

DEFINITION
Product-led growth is a GTM strategy that leverages your product to acquire and retain your customers. In simpler terms, your product is your mastercard. Sales-led growth is an approach where your sales team takes on the responsibility for your business growth. Your growth potential essentially relies on them being successful.  

💡Understanding Product-Led Growth And Sales-Led Growth 

Customers today want to experience the value of a product firsthand before they make the decision to invest. Product-led growth helps your company achieve just that. 

It’s about making your customer’s first interaction with the product so impactful that they don’t need any more convincing about the value on offer.

On the other hand, sales-led growth is a lengthy process that involves:

• Finding and qualifying your ideal leads through outreach, 
• Identifying their needs and pain points, and 
• Converting them by convincing them about the perceived value of the product. 

Note that throughout the process, the user doesn’t get to use or understand the product entirely.

🖋 Takeaway 

Both product-led growth and sales-led growth have their pros and cons. There’s no one-size-fits-all. The model you choose will depend on your business model and product type.

Product-led growth gives you an edge because of the huge amount of first-party data.

Sales-led growth, on the other hand, helps in converting potential leads at the bottom of the funnel – the sales personnel can identify and address their doubts and concerns. 

You can’t neglect the importance of either. Even product-led growth companies employ a sales team when growing rapidly. Creating a fine balance between the two with the integration of all the collected data is what will help you scale quickly.

What Is Product-Led Growth?

As the name suggests, the driving force here is the product. The marketing strategy uses your product as the vehicle to grow and retain your customer base. 

The customer acquisition strategies are centered around encouraging leads to actually use the product through free trials or freemium plans. Such leads are called product qualified leads and prove to be an easier conversion for the company. 

The lead has already tried and tested the product. As a result, they’re aware of the product’s utility, increasing the odds of conversion. 

In simpler terms, it’s a self onboarding process based on the “try before you buy” model for users who prefer to self-evaluate a product rather than be briefed on its potential benefits.  

What Is Sales-Led Growth?

This is a traditional approach where customers are acquired through sales methodologies like personal selling or identifying prospects and converting them through demos. 

The sales and marketing departments work on identifying the sales-qualified leads (SQL) based on a lead scoring method. The sales team then works on these leads to convert them into customers. 

This works better when the customer needs to be educated about the possible value of the product and if the product is expensive. However, the strategy is best adopted when backed by a very high Annual Contract Value (ACV) because the personal touch greatly inflates the customer acquisition cost.

Product-Led Growth vs. Sales-Led Growth

Product-led growth, in contrast to sales-led growth, allows you to scale tremendously without being dependent on the size and capability of your sales team. 

Apart from the key differences between the two growth models, there are times when a company isn’t able to deploy one or the other.  For example, does your product allow you to offer a freemium or free subscription? If not, product-led growth might not be the best growth model for you. 

But you can still take advantage of the product-led growth model in the form of product-led sales. Start by gathering customer data across every touchpoint, from their engagement with your marketing materials to the live chat on your website. This will give your sales team a gold mine of customer data, leading to easier conversion. 

The problem is that keeping track of such extensive data manually is hard. It’s easy to miss out on a crucial touchpoint, which could be the potential point of conversion.

To solve this, you can use a platform like Breadcrumbs that can integrate with your CRM like Hubspot and Salesforce, and with your product analytics tools like Pendo and Mixpanel.

Which Is Right For You?

There’s no doubt that business growth is on your mind. The question here isn’t what’s more important—but how you choose to go about it.

• Most businesses can be seen heading towards product-led growth, because of the inherent advantages it offers such as low CAC, the potential for scaling, and the “try before you buy” model which attracts large crowds. 
• Customers prefer to self-educate rather than be educated by a salesperson. The freemium plans should be put together after much thought and consideration so they bring in the highest conversion rates.
• Your company’s finances should also back your approach. 
• The mindset of your customers also plays an important role here. Many prefer to “see your face” before they go ahead with the purchase, while others are more comfortable purchasing online, especially if you have a product that’s priced on the higher end.  

Product-led growth requires you to think of the onboarding process as a journey and help your customer understand the value of your product. While sales-led growth relies on tackling objections and answering questions with prospects until they’re ready to buy. 

These strategies don’t have to be mutually exclusive, though. You can always opt for a mix of both models to maximize every opportunity. This might look like having product qualified leads sent to the sales team to ensure maximum conversions and ultimately, growth.