Product-Led GTM Vs. Being Product-Led

Usha Vadapalli
February 14, 2022

You can end up somewhere in multiple ways. You can stop and ask for directions, take unfamiliar routes or make wrong turns and eventually end up at the right location. You can also take the help of a map to get there quickly and not make expensive mistakes!

Go-to-market (GTM) strategy is the map for your business to succeed. It gives you clarity over the what and how of the route taken so you can repeat and change course if and when necessary.

Gartner describes the go-to-market strategy as a detailed plan to engage with your customers and convince them to buy your product or service and gain a competitive advantage. You should be able to repeat and scale a good GTM strategy.

Your GTM strategy should be able to answer these questions for you.

  1. What are your market conditions?
  2. Who are your target customers?
  3. Why would a customer choose your product over a competitor’s?
  4. How are you planning to reach your customers?

Your answers to these questions will give you a market fit, target audience, value proposition, sales, and marketing strategy. A good GTM strategy also helps you retain and expand by repeating and scaling the process.

The Old Way

SaaS companies in the past decades employed sales-led and marketing-led strategies to acquire and grow customers.

The marketing-led strategy mostly focussed on generating leads and gating content to measure customer intent. Sales-led GTM has its downsides too. More users want to try before they buy and they don’t trust marketing and sales folks.

These methods are proving to be ineffective and expensive because

  1. Focus on quantity and not quality when it comes to leads
  2. The cost of acquisition through paid channels is more expensive than it was a few years ago
  3. Focus on customer acquisition and not retention
  4. Trying to fit the customer into a sales cycle and not focus on solving their problems

Course Correction

As Wes Bush says in the Product-Led Growth book, building a SaaS product costs next to nothing whereas growing one is more expensive than ever. For all the reasons why the old methods are failing and more, changing the way we sell is inevitable to sustain and grow.

Even enterprise customers want their experience to be led by proof and be as frictionless as possible. Businesses are not keen on waiting to complete a long sales cycle to onboard their employees and start using the product that promises to make their lives better.

Product-led growth strategy flips the traditional methods on their heads. It puts the user’s problems and experience — front and center.

There are varying definitions of what is PLG, but a good product-led GTM still answers the same questions, but the emphasis on the distribution channel is lost. Your product is the channel for acquiring, activating, and retaining customers. Your product is not a part of the experience, it is the experience.

Source: ProductLed.com

Flywheel or Funnel - Keep It Product-Led

Does the GTM strategy decide whether a company is product-led?

Not having a product-led growth GTM is not the end of the road for a modern SaaS product. John Cutler of Amplitude says it perfectly. At Amplitude, Product-led means being guided by the potential of products and product teams, and breaking down the silos between “the business” and “the product”.

The product-led growth GTM acquires your customers majorly through a self-serve approach. The bottom-up sales motion works if the product has zero (or low) touch sales considering the sheer volume of the free or trial users. Achieving scalable growth purely through this method is a rare feat.

Not all SaaS products, especially the ones built for B2B use cases have the advantage of a viral networking effect or can be zero-touch. If the product is serving a nascent market, the learning curve is steep and you might not see user adoption with a self-serve approach. You can’t have a product-led growth motion with a product qualification process for lead scoring and assisted onboarding process. The key is to use product usage data to understand, plan, and execute your next steps.

Having a ‘request demo’ CTA on your website doesn’t mean you are disqualified from achieving product-led growth. Reprise and Pendo are great examples of this. The user can look at the demo videos to self-educate on the product and sign up for a free trial. But, the final purchase goes through sales.

Some PLG companies secure customer engagement and retention with the help of a product-led funnel too without having to give up their traditional SaaS funnel. Full funnel product-led growth is not unheard of.

Source: The Mobile Spoon

The Case of Figma

At the risk of sounding like a broken record, it’s not one playbook for all when it comes to product-led growth. A good deal of PLG companies also layer a sales motion on the product-led. PLG needs ABM. It depends on the stage of growth they are in, the complexity of the product, and market maturity.

Figma is a great example. They are a product-led organization because they have a product-led growth motion. However, a lot of their revenue and customers are larger organizations. They are served by a traditional ABM SaaS marketing model. Kyle Parrish, the VP of Sales at Figma said during his interview with Saastr told that Figma has built opportunities alongside a strong marketing team. They are seeing the results of an ABM strategy in terms of the contract value.

Fundamentally, the sales team at Figma, which is 15% of their total employees, listens to product usage data to qualify leads and make better decisions. Product-led growth motion has been the core of Figma’s success from the beginning. They also added the advantage of enterprise sales at the right time to achieve hyper-growth. Kyle says they use all the proven bottom-up motion’s energy and excitement and turn it into enterprise-wide sales.  

Product-Led or Not?

More like product-led beyond the GTM strategy.

Depending on whom you ask, you might hear anything between that product-led growth is the new “bandwagon” to the product that sells itself so there’s no need for a salesperson. Both are misconceptions. The success of product-led organizations is undeniable. It is also proven that after the initial product-led GTM strategy, startups introduce a top-down motion to sustain and accelerate growth.

Not only Figma, many PLG organizations scaling up and achieving hyper-growth use the social-proof attained to fire up their top-down sales. Sarah Wang and David George of a16z — the venture capitalist firm, have seen this strategic dilemma faced by startups.

After analyzing industry pioneers like Dropbox, Slack, SendGrid, and more Sarah and David have insights about the right moment for scaling beyond the first $20M Annual Recurring Revenue (ARR). The right moment to introduce a top-down sales motion will vary by company but two things have to be established before introducing the motion. The bottom-up motion should be working and there should be business demand for top-down sales.

The estimated ARR when these PLG companies introduced top-down sales to add to their successful product-led growth.

Source: a16z

The major difference between companies that employ a PLG go-to-market and ones with only product-led growth motion is that the latter uses sales and customer success to help their customers in realizing the full potential of the product.

The common features of these companies are the non siloed teams across org, customer-centricity, and the product being the primary driver of growth.

Why Care?

Use a map, take the help of an expert navigator, power up the engine with NOS. You can end up at your destination (or a pit stop) in multiple ways. Your amazing product with a stellar customer experience will get you there with some help from proven methods to sell B2B SaaS. The product-led universe is amazingly diverse and has room for different approaches.