As someone who spent six years building a customer success software company, I've been fascinated with how product-led growth (PLG) has changed the way that companies relate to their customers. When products sell themselves to users and facilitate those users' adoption, companies can focus less on preventing churn and more on driving expansion, which can include layering a top-down selling motion on top of a PLG model. This new focus has given rise to a new software category called Product-Led Sales.
Pocus, named to Forbes' Rising Stars list this week, is championing the need for tools that help a new type of sales team harness the successes of self-serve users to pitch corporate-level contracts into large businesses. I sat down with founder Alexa Grabell to discuss how to run a product-led sales team. As you'll see, it's a completely new way of thinking about selling.
How is "product-led sales" different from our traditional conception of sales?
In the top-down SaaS world, you pitch the hypothetical value of the software to the customer (typically an executive buyer), form a financial relationship with them, and then roll out the product to the end-users. Product-led growth is the exact opposite. In PLG companies, the end-user has already achieved value through using a product that they purchased independently on their credit card. The job of a salesperson in that environment is to communicate to a senior stakeholder the value that has already been achieved by the self-serve users at the company, and then discuss ways that this value could be enhanced through an enterprise-level contract. We call this product-led sales because the use of the product precedes the sales process.
At first glance, it sounds like such a gift to the sales team, that they can talk about value that's already been achieved. But I know it's not that easy. How would you describe the problem that you're solving?
For a long time, we all have pretended that PLG companies don't have sales teams. We like to subscribe to the myth that the product can sell itself. But that's not the reality. When a customer wants to purchase hundreds of licenses from a PLG company, they are going to want to talk to a human to discuss customized solutions, security features, procurement processes, centralized billing, and more. That's why Slack, Atlassian, Dropbox, and other famous PLG companies have sales teams that represent anywhere from 30 to 50% of their employees.
The lack of recognition of the impact of sales teams at PLG companies has meant that the software industry hasn't supported those teams. The traditional sales tech stack doesn't help you understand what drives individual users to purchase your software, what value they're getting, how they refer their coworkers, how those coworkers use the product together, and how usage expands across teams and business units. If I wanted to help Atlassian's sales team prioritize accounts in which they should pursue a corporate-level contract, I wouldn't find a typical sales tech stack to be useful.
The PLG flywheel can set up a sales team for success, but only if the mechanics of that flywheel are visible. The goal is to maximally leverage self-serve users as the primary funnel for the sales motion.
We've talked about how the best metric for assessing that funnel is PQLs (product-qualified leads). What's the best practice for defining what counts as a PQL?
PQLs are accounts and/or users where self-serve users have already experienced meaningful value from the product (which, by the way, makes them much better signals of opportunity than MQLs).
You should define your PQLs based on a combination of customer profile attributes (e.g. the user's role, the geography of the company) and product activation metrics (e.g. usage, virality, actions, spend). Then assign weights to those metrics based on the relative impact on conversion. Data science can be helpful here, but you'll probably find qualitative feedback from the sales team to be indicative, especially as you create the first version of the score. You'll then iterate over time to improve the predictive nature of the PQL.
PQLs are important for developing a complete picture of your self-serve funnel, but they're only one metric within a more complex workflow. Sales teams need a broader data set, so that they know who the power users are and where are the top opportunities, are alerted when there's a change in usage, and can figure out the next best action to drive bookings. And of course, we're building Pocus as the operating system that helps product-led sales teams do all this.
Who's responsible for driving strong product-led sales in PLG companies? I have a feeling you'll say multiple functions -- but how do they divide and conquer?
I typically see three phases of the product-led sales effort, and different functions are involved in each.
First, you need to optimize sign-ups by individual users. Usually a combination of marketing, product, and growth folks are involved in that.
Second, you need what's often called a Sales Assist team -- Dropbox coined that term -- but it also goes by the name Customer Experience, Product Support, Product Specialist, Growth Sales, and others. The function is new enough that the industry hasn't aligned on one name yet! This team bridges the gap between self-serve and sales, by helping users adopt the product to accelerate self-serve sign-ups and surface big opportunities in the pipeline. Their goal is to help rather than sell. They're like traffic controllers that guide the user on their journey. And they're sharing feedback on the customer experience with the rest of the company. You could probably call them a pre-sales Customer Success team.
Third, the sales team qualifies leads, then highlights value to the qualified leads. Within the sales team, the SDR team prospects into accounts, prioritizing among them based on PQL data. They handle inbound leads from "handraisers" among self-serve users (who are surfaced by the Sales Assist team) and also do outbound prospecting by mining PQLs.
Then the SDRs hand off opportunities to an Account Executive (AE). The job of an AE is then to showcase the value that's been achieved and also discuss how the customer can get more value -- for example, by using a new product feature. Taking Calendly as an example, that new feature could be customized timetables or centralized billing. And these Sales folks are often owning the account across the lifecycle.
Would you say this is a new "species" of Sales? How do you evaluate candidates for each of these roles?
Yes, this is a different type of sales team. For example, when hiring for the Sales Assist role, we recommend finding someone who is:
Consultative: "Help, not sell"
User-centric: Interpret what a customer is experiencing (whether or not the user verbalizes it fully) and figure out how the product can serve them
Collaborative: Communicate learnings across functions
Well-rounded: Skill sets required for this role are a mix of customer support, customer success, and sales
Comfortable with data, which will inform how they prioritize their time
And we're frequently publishing content on how to build the entire product-led sales team.
If you'd like to learn more about Pocus, check it out here.
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