Product-led growth (PLG) is all the rage these days, but is it the right approach for your software company? This is the question all SaaS leaders need to answer before deciding on a PLG-only growth model.
The answer to the question depends on the type of product you’re selling and what your buyers want. In this piece, we’ll look at some of the pros and cons of PLG, including thoughts on it from several thought leaders in the SaaS industry.
When is PLG-only a good fit?
PLG is a good fit for your company if the following criteria are met:
1. Your product is simple enough that users understand it instantly
PLG works best when the product is dead simple. It should be a straightforward tool that anyone can figure out easily.
For example: Loom is a video messaging tool that helps you create instantly shareable videos. All you have to do is install a browser extension, press record, and share the link.
Another product that fits this approach is Calendly, a scheduling tool that lets you easily connect your calendar and email someone a link with your availability.
Manuel Rietzsch, a growth advisor who led the revenue marketing team at Hopin, says, “We made it easy for people to get into the product fairly quickly. We didn't put up too many hurdles or make prospects go through a long process. People were able to get in there through a free trial, set up an event, and get it all going before they even had to actually pay for it.”
That’s the kind of “keep it simple” approach that can work well with PLG.
2. Sharing is built into the product
When sharing is baked into your product, it creates an ongoing discovery engine. Everyone who uses your tool becomes part of your sales force. You’ve got a built-in referral flywheel that develops organically.
Let’s look at the products mentioned above: Once you’ve created a video at Loom, you can share the Loom link with others. If they see it and enjoy it, it logically follows they’ll want to try the product too.
And since the booking system at Calendly is branded, everyone on the receiving end of a scheduling invite is also being alerted to the product and how it works.
Rietzsch says, “We allowed people to run events for free. People attended those events, saw the platform, and would go off to create their own events. It created a snowball effect.”
3. Your product is inexpensive
It’s easier for lower-ACV (annual contract value) products to sell themselves. But if you’re selling B2B software that requires a company to invest five or six figures in an annual subscription, buyers will probably have a lot of questions before they're willing to sign off on a purchase.
They'll need multiple stakeholders to approve the purchase, and it may even need to go through procurement or a security review. For those types of deals, you'll need a sales team and not just a self-service motion to orchestrate the process.
4. Buyers don’t need to see integrations or complex use cases
Your product should work well out of the box. If integrating with third-party tools is required to truly evaluate your product, many leads will abandon the trial before they ever get the full experience. If complex use cases are common, users typically prefer a guided walkthrough.
Buyers want to see how the product will work months down the road instead of being faced with an empty, overwhelming product trial that's going to require hours upon hours of setting up integrations and adding data before they can really start evaluating.
5. It fits with your company’s business goals
If you’re a small business that wants to stay lean (or just doesn’t have a lot of capital), PLG can be a good fit. After all, you won’t have to worry about hiring sales reps; your app should, in theory, sell itself.
It can also work well if you’re trying to scale by reaching a large number of customers at a low price point. Just be mindful about your operational infrastructure and eventual goals and make sure PLG aligns with your long-term strategy.
When is PLG-only a poor fit?
For some companies, PLG-only isn't a good fit. Here are some signs that PLG isn't right for your business:
1. Your buyers need to see how your product integrates with their other company systems
You want prospects to get to an “aha” moment ASAP. But good luck with that if prospects need to jump through hoops to integrate your tool with other critical company systems (e.g., they need to hook in support emails, marketing automation tools, CRM contacts, etc.).
In a free trial, people are trying to determine if they even want to bother sticking around to evaluate your product further. They won’t get there if there are integration obstacles and/or they have to risk breaking their existing systems.
Tim Davidson, senior director of marketing at Directive, says, “Some products are very dependent on integrations. If your software is like that, PLG makes your product look really bad because you don't have the right setup and onboarding people need.”
2. Your target audience isn’t tech-savvy
People who work in tech are used to tech. They'll follow instructions, click all the buttons, and typically adopt an “I’ll figure it out” mentality. But people in less tech-savvy industries (e.g., education, manufacturing, etc.) often need more hand-holding to discover the value they'll get from software.
Sam Senior, CEO of TestBox, says, “Asana is a really strong product-led company with a free trial. There's a template in there that gives you a small flavor of what the product does. But I tried it and was still just like, ‘But what next?’ I didn't understand the true power of the product or all the different things I could do with it.”
“There's a gap there where a sales rep could have been really helpful: ‘Here's an example of another customer who has built their entire supply chain on Asana.’ With PLG, sometimes there can be a big gap between what’s obvious and what’s possible for customers.”
3. Your product caters to large companies
Trying to sell to both small and large customers with the same approach is often a recipe for failure. Someone from a 10-person company might be the sole stakeholder in the purchasing process; they can do a free trial and make the purchasing decision on their own.
But someone from a 500-person company probably has to deal with multiple stakeholders who all need to be convinced. They’ll probably be more concerned about security, too. They may have highly specific questions that aren’t answered via a free trial or knowledge base.
Andrew Davies, CMO at Paddle, says, “When it's a complex deal, like when there's a buying committee to juggle or a wider group of people that have to work cross-functionally, you probably want to be ‘in the room’ with a more traditional sales approach.”
The larger the company, the more likely it is they’ll want personal assistance.
4. Your software has lots of features
The more feature-rich your software is, the harder it can be for buyers to find what they're looking for in a free trial. If they can't quickly find and understand the features they seek, they'll likely assume you don't have them, leave, and never come back.
“If someone makes up their mind when they're in the free trial that the product doesn't work for them, good luck ever convincing them to come back,” explains Adam Goyette, founder of Curdis.
A more hands-on approach can make a big difference when it comes to complex software.
5. The price point is high
PLG works fine when there isn’t much at risk. But as a product’s price point goes up, the cracks in this approach will show.
Goyette says, “If it's a $59 per month product, I'm totally fine just jumping into a trial and playing around with the product. It's a low-risk investment for me to just buy this and move forward versus a $100,000 platform I'm buying for a company. That's a way different conversation.”
6. Prospects need to discuss the product with a sales rep
Some folks need the human touch that a sales process provides. As Goyette says, “When I worked at an enterprise-level company, I had to get buy-in from four other department leaders before I could make huge investments in things that would touch other things. So I needed to talk to salespeople.”
“A product-led approach wouldn't work for me there because I had to understand how the integration worked. I don't think it's a blanket answer of ‘You should definitely be product-led or sales-led.’ It depends on the buyer you're going after.”
If there are so many downsides to PLG, why is it so popular?
In many cases, the popularity of PLG has nothing to do with delivering a great buying experience for customers. Instead, it has everything to do with the economics of the business.
Andrew Davies, CMO at Paddle, explains:
“Walk all the way back to one of the leaders in the PLG movement, Atlassian. If you look at their original thesis for why they're product-led, it was ‘We don't have a lot of capital, and we definitely don't want to hire sales reps. Therefore, this product has got to sell itself, and we've got to sell to thousands of people at a lower price point.’”
“Their thesis was pretty clearly laid out there, and it was all about their internal underpinnings, rather than what the customer wanted.”
“Now, I think they've executed superbly — don't get me wrong — and they're a very customer-led organization. But the thesis behind how they went to market was more about their capital and their operational infrastructure rather than what the customer actually wanted. They got both right, but I do think there can be a big difference there.”
Goyette concurs: “Everything is built to scale at all these SaaS companies. I can't scale catering to people who want a demo and then also catering to someone who wants a free trial. This person doesn't want to speak to someone, but this other one needs onboarding and training."
“In the past, I think it was easier for many companies to just build out a single flow and shove everyone down it.”
The solution to the problems with PLG
At TestBox, we believe that the problem with both product-led and sales-led approaches is that neither is focused on what's best for the buyer. What buyers want and need is an approach that lets them choose their own adventures, evaluating your product in the way that best satisfies their needs.
We call this customer-led buying. It's a hybrid approach that's probably closest to what the larger industry calls product-led sales, but we prefer the customer-led language because it focuses the narrative on how companies can grow by creating a better buying experience.
Customer-led buying combines the best parts of both PLG and sales-led to create a hybrid model that gives buyers more freedom, flexibility, and choice in the software buying process.
As Sahil Mansuri, CEO at Bravado says, “We got way too caught up in the last 10 years thinking about ourselves. How do we want to do it? What is our territory? What is our structure? And what we forgot is ultimately we're going to do whatever the customer wants because they're the ones who are buying the product and our job is to ensure they have a great experience.”
So how do you abandon the product-led and sales-led dichotomy and move to a hybrid model that's focused on making your buying process better?
- Find out which path prospects prefer. Design your process so that customers tell you right at the start what process works best for them: self-serve or sales-assisted.
- Let buyers try your product, even if you're sales-led. “Everyone benefits when the buyer is actually trying the product and they're hands-on,” says Alex Poulos, CMO at Crossbeam. Eli Rubel, CEO at NoBoringDesign, agrees: “When you have a strong sales process, you can give away more of the product upfront. You know you have something good and you want them to experience it.”
- Focus on making your trial an excellent experience. “Dumping someone into your product and expecting them to get it, which is what a lot of companies seem like they're doing, is not going to work,” Goyette says. “You have to figure out how to get them to understand the product and its value as quickly as possible.”
- Stop hiding value behind discovery. “Hiding your value behind veils of SDR discovery, pricing conversations, and other things will mean you're not even in the fight,” Davies says.
- Meet your leads' expectations. “The expectation from a customer is that 1) pricing is transparent and simple, 2) they can play with the product before they buy it, and 3) there's a knowledgeable person on the other end who can answer questions so they can make an informed purchasing decision,” says Sahil Mansuri, CEO at Bravado.
Remember: Most customers dread buying software. It’s not their day job. It is time-consuming and uninformative, and at the end of it, they still feel like they’re throwing a dart at a target while blindfolded. Do whatever you can to ease their burden.
TestBox can help
If customer-led buying sounds appealing, TestBox makes it easy to pivot your growth model overnight. Our product lets you give your prospects and leads a live product instance that's preconfigured with realistic data, functional integrations, and guided walkthroughs. Schedule a demo with us to learn more.
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