.jpeg)
Sales-led growth is dying.
Product-led growth is trending at an all-time high, but the symptoms of its impending downfall are already materializing.
Customer-led growth is the revolution that we have been missing, and it’s already here.
The future of software buying is customer-led
Beyond the software industry, customer-centric thinking is widespread. Companies that are synonymous with unparalleled levels of success — think Apple and Amazon — emphasize the crucial nature of this to their performance.
Yet across SaaS, our discussions oscillate between “product-led” or “sales-led.”
We forget the most important group — the customer.
What is customer-led buying?
Customer-led buying is the process of giving your customers a choice in how they want to buy your software — and proactively giving them the tools they need to be efficient, confident, and successful.
- How: Customers can self-select how they want to buy their product — either with a sales-assisted or a fully self-serve process.
- When: Customers can access your product when it’s the right time for them in the sales cycle. Gone is the need for many scheduled sales calls; they can evaluate in their own time.
- What: Customers test and experience your product as if they have been using it for months already. No more guessing or spending hours setting it up — the product is populated with data and tailored to their use cases instantaneously. They can confidently choose what they need, when they need it.
Why haven’t we done this already?
The sales-led process made sense decades ago — buyers were unfamiliar with and even a little apprehensive of technology. The approach was just as much about selling a specific product as it was about education and training and demystifying this whole new world of software.
This was a huge advantage for the sales teams. They spent significant time with their customers and hooked them on the dream of the product (even if it often didn’t really fulfill it). Customers would make a choice based on these promises and sign themselves up for years of the product — even if it barely met their needs.
In the early 2010s, this changed. Cloud applications became commonplace. People had been using computers, the internet, and software for most of their lives already.
Industry standards were created: Users recognized the cog icon as settings, three horizontal lines as the menu, and a magnifying glass as search. They simply didn’t require the same level of education anymore. The software experience had become intuitive.
Product-led growth became the hot new thing a few years later. The movement recognized the changing landscape of software buying and capitalized on these new conditions — PLG facilitated the self-exploration of products. Companies such as Slack, Figma, and Dropbox exploded, and their teams credited much of their success to a PLG approach.
PLG has become the primary focus for SaaS companies everywhere.
PLG is not the solution; it really only takes us halfway there
The fastest growing SaaS companies in recent years have largely been product-led. PLG is revered throughout our industry. Moving to a PLG motion is a key part of the CEO agenda for legacy SaaS companies — so it’s the solution to what I’m talking about, right?
Bluntly. No. Or at least — by itself, no.
Product-led experiences as they exist today are restricted — only a finite number of companies have successfully deployed this approach.
- Product: Is the product simple enough that users can get up to speed quickly?
- Time to Value: Can templates be easily and quickly created by users? Are they empty and useless, or can they mimic the experience of the product months down the road?
- Seamless Onboarding: Is onboarding so easy and intuitive that users won’t drop out at the first sign of friction?
- Lower Profitability: PLG companies are becoming less profitable to run (10% lower margins than sales-led) — the efficiency of the sales funnel isn’t there. You now have to diligently combine the best of PLG and sales to start maximizing your funnel.
All this, and software buyers are still unhappy.
Their options suck.
Would you rather be in a strictly controlled process where you have no say? Or flounder with an empty product that is hard to get started with?
Customers dread buying software. It’s not their day job. It is time-consuming, uninformative, and at the end of it, they still feel like they’re throwing a dart at a target blindfolded.
The sales-led process is drawn out, with unending yet seemingly pointless meetings across vendors. Months in, customers still hardly know what they have learned.
At least with product-led, you get to play with the product. But typically it’s a shell, and it ultimately tells you very little about what it’ll mean for your company.
Oh, and this is repeated 3–5 times across each vendor the customer had shortlisted.
Buyers aren’t happy and vendors are stressed and confused
All of the buzz says you need to be PLG to be successful. Yet PLG companies are now starting to take on sales teams as they have moved upmarket.
- Should you be PLG only?
- Or maybe just focus on sales-led?
- Can the entire product suite be sold through PLG? Or is it only a subset? How do we get the economics to work?
- How do we optimize the efficiency in the funnel?
- Should the approach change by customer segment (enterprise, mid-market, SMB customers)?
PLG or sales-led alone doesn’t work. They need to merge and become customer-led.
Alright, but how do I even build a customer-led experience?
The customer-led experience actively combines the best of both sales-led and PLG — it’s an efficient sales cycle that provides value to both the customer and vendor throughout the process, significantly faster than ever before.
- How: Design your process so that customers tell you right at the start what process works best for them — self-serve or sales-assisted.
- When: Get your product into the hands of your customers immediately, without needing them to even sign up. Bring testing to top-of-funnel sources such as G2, TrustRadius, and your own website so as to heighten their engagement. They can test it when they want to.
- What: Give your customer a pre-built evaluation sandbox with data and workflows relevant to them. Add in guided walkthroughs so they can learn as they go. Enable the customer to access this both self-serve or sales-assisted.
Ultimately, this is simply about taking the best of both the sales-led and product-led experiences and putting the customer back in control. As we have learned time and again from other industries, this is what not only drives sales but higher retention rates than competitors.
It might be good for the customer, but what about SaaS vendors?
Tl;dr: It’s not just good for customers. It’s great for SaaS vendors too.
Faster deal cycles, higher conversion rates, larger deal sizes, lower churn, lower cost of acquisition, and overall better profitability metrics. All the metrics that sales teams care about… and all the data we have already seen.
When sellers enable buyers to go customer-led through a platform like TestBox, they convert at an average of 41-52.3% of the time. That’s a 25%-100% higher win rate than our customers had before TestBox. They also buy faster and are happier with their experience, meaning greater loyalty, faster time to value, and lower churn.
When software buying is designed around the customer experience, everybody wins. Confident buyers convert faster and are more willing to commit to larger deals. They know that this is the right product for them, and they inherently understand the value.
For too long, our industry has operated in an environment of skepticism. Buyers worry about what they’re being sold. Vendors worry the deal will disappear any minute. Customer-led buying re-establishes trust. Vendors can create even deeper and longer-lasting relationships with their customers.
This whole thesis is the reason that I started TestBox. And now we have the data to prove it. Today, we are already:
- Enabling vendors to improve their go-to-market and shift to the customer-led approach.
- Unlocking testing of products during buying for customers, designed as if they’ve been using it for months.
- Driving faster deal cycles, higher conversion rates, larger deal sizes, lower churn.
Customer-led. It’s already here.
