Why PLG Needs ABM

Usha Vadapalli
December 1, 2021

What comes to mind when you see long lines of food trucks? For Megan Heuer, VP of Strategic Initiatives at Winning By Design, it’s the similarities between the food truck movement and the product-led growth movement. (Pause for reaction). Yes, that was my initial reaction too!

Megan explains how. “The idea with a food truck is that if you cook something so good, and if you create a positive experience, you're going to have a lot of people who want to eat your food, they're going to follow you around, and they're going to become part of a community around your food truck. That's the idea behind product-led growth, right? You are creating something so good that people want to buy it and be part of your community.”

In the product-led context, your product and the experience you create around it are so amazing, imagine hundreds of people in a given company signing up for your product, independently similar to a food truck with long queues outside.

When you have many customers from the same company, different stakeholders like IT, senior executives, and decision-makers come into the picture. They are all going to start to pay attention. Which is a great thing! And you're going to need to think about that customer relationship a little bit differently. At that point, you might run out of opportunities to grow through the same model you started your business with.

Your opportunity at that point lies in thinking about different go-to-market models that will help you maximize your growth as your growth stage changes and as your buyers and customers change over time.

Working at the number one rated go-to-market consultancy, Megan saw her share of businesses hit bumps after realizing that their initial GTM strategy was not holding well after a sizable growth. Megan brought her insights to Blastoff! 2021 event to help us future-proof our GTM strategy with an easier shift.

Recurring Impact = Recurring Revenue

Many product-led growth companies very much fit into the recurring revenue scenario. PLG champions like you want people to sign up and stay. And, ideally, upgrade and buy more over time. Why would the customers do that? Well, according to Megan, they do that because you delivered an impact to their life or business, like that food truck! Your customers had a great meal and they would come back for more.

Having a successful high-growth, recurring revenue business is the result of consistently delivering impact to your customers a.k.a giving them what they showed up to get and making sure that you continue to innovate, evolve, and support them.

Figure 1: Recurring Revenue is the result of Recurring Impact (Source: Winning By Design)

A company's ability to deliver that recurring impact is the biggest predictor of its ability to grow sustainably. If you have no recurring impact, customers aren't going to stay or want to buy more. Word of mouth is going to make the line outside your food truck a lot shorter very quickly.

On the other hand, if you do a fantastic job of delivering impact one user at a time you're going to see more and more people finding their way to you. And over time, your customers will realize that this isn’t a good solution for just one person, but it is a great solution for their team and company. And, you’ll expand within the enterprise.

That means somebody different is deciding whether or not you have an impact. Multiple people will decide whether or not you have an impact as you grow. So you need to anticipate how best to engage and sell to all of the different kinds of buyers that you have, while still maintaining the fantastic impact and experience of delivering with your product all along.

That's why really as product-led growth companies mature, grow, and get more customers, a situation arises, where you need to start thinking about adding an account-based strategy.

Understanding The Framework

Megan presented a framework of the go-to-market model from Winning By Design which shows the evolution of GTM as the business grows. The framework shows several deals per year mapped against the annual contract value. As your deal size goes up, you have more buyers involved, it takes longer, and it gets more complicated. You will be evaluated on a bunch of different factors.

Figure 2: The GTM Framework (Source: Winning By Design)

For many companies, there are low-value but high-volume deals in the beginning. As the business grows, they start seeing reduced numbers but higher value deals. In a PLG company, you could have both- high number low value and less number of higher value deals with a more complex buying cycle at the same time.

So you really want to think - how do you maximize your ability to support both of those?

From No-Touch to High-Touch Sales

Essentially, your business evolved from a no-touch model - people finding you and signing up using your product without having to interact with another human, all the way to highly complex one-to-one enterprise sales. You can get there in different ways and Megan compares it again with, you guessed it, the food truck model!

When we start out with a product-led model, the product does its own best marketing through word of mouth - the food truck model works. But when you start to get up to high-end complex enterprise selling, you've got more people involved from your team, as well as more people involved from the customer side of the team.

So, the essentials to being successful in that selling process are different from the things that made you successful in product-led growth.

Figure 3: Most Common Sales GTM (Source: Winning By Design)

Now, why is this such an opportunity, though? Well, many things can go wrong in high-end enterprise selling. Say, you've got a company that starts with an account-based model targeting really large enterprises. They may or may not be in a position to build the kinds of relationships or have the kinds of resources that will make them successful early on in their evolution as a business. But even more importantly, they may not even have their product ready.

A great salesperson can talk their way into a successful selling with great tactics and marketing with so many different things in their favor. But, if in the end, the product they're selling is really complicated and doesn't deliver impact quickly, the client is not going to stay for very long.

But, if they're starting off with a product that's been road-tested and proven again and again, through a product-led growth model, by making sure that every single person who gets access to that product can be successful, quickly.

Experienced successful sellers and a great high-impact product - that would be a powerful combination! That's going to be a recipe for success.

From PLG to Enterprise

PLG companies have products that essentially sell themselves when they impact end users. An account-based organization on the other hand is good with relationships, has the resources, and the support that can help customers be successful in a more complex enterprise environment. It may feel like there’s a pretty big gap between the strategies. So how do you get the best of both worlds to grow?

Figure 4: Map a Path from PLG to Enterprise (Source: Winning By Design)

Megan fits the pieces together for us, “On the evolutionary path as a business, we need to ask ourselves - what are the different stages that we're going to need to go through as our customer acquisition cost(CAC) and customer lifetime value (LTV) go up; and what do we invest in to hold on to those larger (read, complex) customers.” With the answers to these questions, you’ll be able to map out what your go-to-market strategy looks like over time.

Megan further adds,” It's not just about sales, it’s important to start anticipating GTM strategy shifts early on. Stay with a product-led growth model, make it your mantra! But start thinking about what you might need in terms of  achieving customer success and maintaining it, who else in that organization you have to engage to deliver value.”

Customer Success and Marketing GTM

You might have to go from community-based or online resources all the way up to potentially having a complex, multi-person account team supporting senior executives in an organization with one-to-one resources that your end-users need.

Figure 5: Customer Success and Marketing GTM (Source: Winning By Design)


You go through different stages from the initial one-to-very many, then one-to-many, one-to-few, and ultimately, one-to-one as you get into complex enterprise selling. All these different types of models need different people, skills, different styles of marketing, support, and data. Anticipating all those along the way really helps you make that transition much, much easier.

Megan paints a picture, “As we track customer success, we've got a community style of engagement where people sort of help themselves to what they need when they need it in the early stage. But over time, you may notice that customer requirements get more complicated and they need to talk to a person. That's when you start to add a help desk and dedicated customer success managers grouped say, for a particular segment or timezone.”

Over time, your customer success and account management teams who intimately know your customer’s requirements and needs become the way you engage and deliver value to the decision-makers, end users, and everyone in between.

Conclusion

Megan neatly wraps it up for us with an example of the food trucks from New Haven, Connecticut - where Meg lives. “The food trucks have gone from being a line of trucks off the highway to now opening up a dedicated Gastro Park; where people can really count on a much more curated experience and not just a random happenstance. That's what you're going for with the evolution of your product-led growth company.”

Organizations need to evolve to grow. You really need to understand details like how much time it takes to support, engage, and deliver impact to these customers over time. You also need to add teams with the skills that are needed to understand and deliver customer success.

If you and your team can successfully anticipate those requirements,  not only do we have customers, they will continue to experience the impact they wanted.