Sales-led Growth & Product-led Growth – What Works for You?

Posted by Amy Kenigsberg on Mar 5, 2024 6:45:00 AM

Business person on a graph, representing success and growthWho’s in charge? Sales or Product? That’s one of the key factors in shaping your organization’s sales and marketing infrastructure.

Sales-led growth has been the “way it’s always been done.” The sales and marketing teams identify, nurture, engage, and convert potential customers into clients. Product-led growth focuses on having the product “sell itself.”Sales-led Growth – Focus on the Customer

The personal touch and tailored solutions are what drive success when offering complex, high-value transactions. The sales team is ideally positioned to provide valuable insights, build relationships, and negotiate customized deals, ensuring customers get custom solutions.

With sales-led growth, the sales and marketing teams need to have strong relationships, coordinating activities to ensure leads become clients. It’s also resource intensive, as budgets need to be allocated for personnel, infrastructure, and communications activities. When companies aren’t willing to commit appropriately, the likelihood for success decreases.

Product-led Growth: The Product is the Star

SaaS companies generally focus on product-led growth. The product itself is what makes the sale. It’s user-friendly, intuitive, and easily accessible. Potential clients are invited to explore the product to ensure it works for them. Free trials are the norm; freemium accounts are what drive growth.

Product-led growth is infinitely scalable; users can try before they buy, so it’s easy for them to recommend it to their friends, accelerating growth. Furthermore, the self-service nature of the sales process reduces customer acquisition costs.

In addition, the data derived from user behavior on the site and within the trial versions allows for fine-tuned analysis, making it easier to transform the site to speed adoption, improve the UX of the product itself, and derive feature improvements.

However, with higher ticket technologies, product-led growth is not as effective. PLG is not useful with complex technologies or situations where enterprise adoption is key.

Combining the Two for Success

“Going hybrid” is often the most effective and efficient way to drive growth. As the company evolves, the balance may change. Therefore, it's essential to assess your product, target audience, and industry dynamics to determine how to combine both approaches for maximum value for both your clients and the organization.

No matter which approach is dominant, site behavior and customer usage data should always be collected and analyzed to ensure that customers’ needs are being met. The products themselves should be designed in such a way to drive adoption and stickiness to keep the clients.

Continuously monitor and adapt to ensure that your solutions serve your clients’ needs, no matter how you close the sale.

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