You have a product that solves the problem of your users, but how do you take it from nice-to-have to a must-have? That is where a growth strategy formula comes in, would you choose the PLG (Product-Led Growth) strategy or the SLG (Sales-Led Growth) strategy.?

What is product-led growth?

PLG (product-led growth) strategy helps to design a product that will attract and keep customers through its characteristics and qualities. PLGs produce a viral product without any form of marketing.

PLG also places a high priority on customer loyalty and happiness by providing a product that is regularly updated and improved in response to feedback from users.

Key Features of Product-led Growth

1. Freemium Model or Free Trial: This offers a free version of the product with restricted functionality. It lowers the entrance barrier by allowing customers to evaluate the value of the product before making a financial commitment. 

2. User Self-Service: Features that enable customers to study and explore the product on their own include knowledge bases, in-app training, and personalized recommendations.

3. Frictionless onboarding: Converting new users into long-term customers requires an intuitive and user-friendly experience that minimizes confusion and frustration by guiding them through the product’s core functionalities.

4. Continuous Iteration: PLG emphasizes iteration and feedback from users and different companies seek customer feedback and use it to make continuous product discovery.

5. Viral Loops and Network Effect: Viral loops and network effects are powerful tools in the PLG model because they drive organic user growth by leveraging the power of users themselves. It can be through referral programs, social sharing features, or even invite-only access.

Cons of product-led growth

Product-led growth (PLG) strategies can lead to a product’s success and expand a company, but they can also have disadvantages and difficulties. The following are some disadvantages of a PLG strategy:

1. Limited market reach: PLG methods rely on word-of-mouth recommendations to build a user base but this can be effective only if the product is intended for a specific market.

2. Product-centric focus: PLG strategies are mainly product-focused which is a disadvantage if customer service and support are not prioritized. It can lead to low retention rates and unsatisfactory customer experiences.

3. Longer sales cycle: Since there are no sales attempts to move leads along the sales funnel, a PLG approach is always passive. Because it takes time for clients to truly appreciate the value that a product delivers to their lives, it may lead to longer sales cycles. 

4. Revenue uncertainty: PLG strategies use a free trial or freemium model to attract users and won’t generate revenue in the short term. This can be challenging for companies that need to show revenue growth to investors.

Examples of PLG companies

Using a PLG approach has proven to be a successful strategy for many. The following PLG companies value their product as the primary means of growth, engagement, and customer satisfaction.

1. Miro

Miro uses the PLG strategy by offering a free plan with core features that allow users to experience the value proposition firsthand before committing to a paid plan. This low barrier to entry makes it easy for teams to try out the platform.

2. Zoom

Without having to pay anything users can enjoy the video, crystal-clear audio, and screen-sharing features. In essence, the free plan serves as a demo that highlights the benefits and encourages premium subscriptions for longer meeting times, more attendees, or more good features.

3. Canva

Canva uses a PLG in its operation by making the onboarding process smooth and user-friendly. Tutorials and design prompts to guide new users through the interface, helping them create their first project quickly.

4. Slack

Slack’s user-friendly interface and freemium plan make team communication easy. The freemium model allows teams to experience these benefits first-hand and may often lead to paid subscriptions as they grow or require more advanced features.

5. Dropbox

Dropbox is changing the way we save our files with a freemium model that offers a generous amount of free storage. This allows users to experience the seamless file-sharing accessibility firsthand and upgrading to a paid plan becomes a natural progression as storage needs grow.

6. Asana

Asana uses the PLG strategy by prioritizing features that address common pain points in project management, such as to-do lists, communication tools, and progress tracking. This helps users experience the value proposition early on and streamline their workflows.

How to use the product-led approach to convert more users?

1. Craft an Exceptional First Impression

• Easy Onboarding: Create an easy onboarding process that walks new customers through the main features of the product. Make use of tooltips, interactive lessons, and strategically placed in-app messaging to highlight features and clear up any confusion.
• Sign-up without friction: Make the initial sign-up procedure as simple and quick as possible. 
• Tailored Experience: Customize Feature introductions and onboarding messaging depending on user interactions with the product or user data (such as location or industry).

2. Focus on Value Early and Often

• Quick Wins: Design the product to provide minor victories at the beginning of the user’s journey. Permit people to experience the main benefits of the product and how it can improve their duties or objectives. This encourages people to investigate more and realize the full potential of the product.
• Features Driven by Value: Features that directly address user problems and tangibly enhance workflows should be given priority. Use user testing, questionnaires, and in-app analytics to get feedback from users to identify pain spots and set feature development priorities.
• Emphasize the “Aha Moments”: Know when a user has an aha moment or notices a major benefit from using the product. Use success stories or product walkthroughs to highlight these instances to bolster the value proposition and motivate ongoing participation.

3. Empower User Self-Service

• Interface Design: Create a user interface (UI) that is simple to use and intuitive. Give logical information flow, consistent design elements, and unambiguous labeling top priority. This reduces the need for outside assistance by enabling users to investigate the product on their own.
• Detailed Knowledge Base: Create a comprehensive knowledge base that addresses frequent user inquiries and problems using articles, FAQs, and video lessons. Provide easy access to these materials within the product to promote learning and self-service troubleshooting.
• In-App Support: Include context-sensitive help menus and chatbots among other in-app support features. Without requiring consumers to exit the product environment, these solutions offer instant assistance.

4. Harness the Power of User Engagement

• Customized Product Experience: Adapt the product to the preferences and actions of the consumer. Make recommendations for features, information, or workflows in light of their usage of the platform. This encourages users to experiment with new features and keeps them interested.
• Use gamification components like leaderboards, badges, and points to encourage users and boost interaction. Acknowledge constructive user conduct and provide incentives to users who finish assignments or reach product goals.
• Community Building: Encourage the growth of a user base where members can interact, exchange stories, and gain knowledge from one another. This fosters a feeling of community and promotes sustained product use and advocacy.

5. Measure, Analyze, and Adapt

• Track User Behaviour: Make use of analytics tools to actively monitor user behavior. Track important indicators such as feature uptake, amount of time dedicated to particular tasks, and onboarding stage completion rates.
• Data-Informed Choices: Examine user behavior data to pinpoint areas in need of development. Make the most of this information to prioritize feature development that meets user needs, enhance the product experience, and personalize user journeys.
• A/B Evaluation: To compare several iterations of feature designs, messaging, or onboarding flows, use A/B testing. You can find the best strategies to captivate visitors and encourage conversions with the aid of this data-driven strategy.

What is sales-led growth?

Sales-led growth is a business strategy that focuses on generating income through sales and different marketing techniques. The sales team is the key driver of growth and the main goal is to increase income by getting new customers and maximizing sales from existing customers.

This strategy is often used in businesses with complex products that need a large investment from their customers, that is why the sales team is needed for educating customers on the product and addressing any objections or concerns they have.

Key Features of Sales-led Growth

1. Dedicated Sales Team: These are trained reps who become trusted advisors to customers. They will build relationships and tailor product presentations to directly address challenges. 

2. Focus on Customization & Integration: The SLG strategy is used for solving complex needs and many SLG products offer customization which allows the sales team to configure the product to perfectly align with the customer’s workflow.

3. Faster Time to Value: Once you have a dedicated sales rep guiding the way, new customers can achieve success with the product much quicker and sales reps become onboarding superheroes who provide personalized training and configuration support. 

4. Deep customer insights: The relationship between sales reps and customers will bring in valuable data collection.  Sales reps gain firsthand insights into customer needs and usage patterns and this information will be given to the product development team to fuel product iterations and enhancements that directly address customer demands.

5. High-Touch Customer Support: Like a VIP service, SLG has dedicated account managers who offer ongoing support to ensure customer satisfaction. 

Cons of sales-led growth

A sales-led growth plan has drawbacks of its own. Here are five that you should know:

1. High cost: Sales-led growth strategies can be expensive because you’ll need to invest in sales and marketing resources. This can be difficult for companies with limited budgets or those that need to be in profits.

2. Short-term focus: Sales-led growth strategies need short-term revenue growth over long-term customer value because most companies need sales quickly and sales-led growth will give them that.

3. Lack of product focus: A sales-led approach places less emphasis on the product, which will result in poor user experience and low customer retention rates over time.

4. Limited scalability: A sales-led growth strategy requires a high level of investment in sales and marketing activities which can limit growth potential over time.

5. Limited Reach: SLG finds it difficult to gain initial traction without proactive outreach and marketing efforts.

Examples of SLG companies

The following SLG companies invest in marketing and have sales teams as the primary means of growth.

1. Salesforce

Salesforce provides an adaptable Customer Relationship Management (CRM) platform. Their sales representatives are not just salespeople, they are CRM consultants. They look into a customer’s sales processes, data requirements, and integrations with other systems. 

Their expertise allows them to customize the Salesforce platform using comprehensive configuration choices and ensures that it aligns with the customer’s workflow.

2. Adobe Creative Cloud

Adobe’s Creative Cloud caters to different professionals, from individual graphic designers to large marketing agencies. They leverage SLG by offering customized subscription packages including specific applications and storage capacities tailored to each client’s unique needs.

3. Oracle

Oracle provides different complex enterprise software solutions like enterprise resource planning (ERP) and database management systems.

Oracle’s sales teams serve as trusted consultants who collaborate with customers to understand their challenges, optimize software performance, and manage the implementation process.

4. SAP

SAP is just like Oracle, it offers different types of enterprise software solutions like ERP, supply chain management, and human capital management (HCM) systems.

SAP’s SLG method includes dedicated sales and implementation teams; they collaborate with clients to design software functionalities, create workflows, and ensure a seamless connection with current systems.

5. IBM

IBM provides different technology solutions from cloud computing services to artificial intelligence (AI) platforms. Because of the complexity of these solutions and the diverse needs of enterprises, SLG is needed. IBM’s sales teams serve as technology consultants, thoroughly reviewing client’s technological plans and specific goals. 

How to apply the sales-led growth strategy in your business?

1. Building a Sales Powerhouse

• Create a Dream team by employing top performers who possess excellent persuasive, communication, and product knowledge skills. Give top priority to individuals who can pinpoint consumer trouble spots, and persuasively deliver solutions.
• Invest in Training and Development: Give your sales team the tools they need to succeed. This covers training on the product, workshops on sales methodologies (such as SPIN Selling and MEDDIC), strategies for resolving objections, and negotiation techniques.
• The Secret is Empowerment: Allow your sales representatives the freedom to customize their approach while staying true to your overall sales objectives and plans. Encourage open communication and give them continual coaching so they may keep getting better at what they do.

2. Know Your Ideal Customer Profile (ICP) Inside Out:

• Market research and industry analysis: Gather information about your target market, including their needs, challenges, and purchasing patterns. Examine industry trends and pinpoint possible growth opportunities. 
• Customer segmentation: Divide your target market into discrete groups according to demographics, firmographics (industry and company size), and purchasing patterns. This will help you craft your sales strategy and messaging to effectively appeal to each segment. 
• Develop Detailed ICPs: Craft a comprehensive profile of your ideal customer, including information about their size, industry, roles within the company, specific pain points, budget constraints, and decision-making processes. Knowing your ICP will help your sales team target the right people with the right messages.

3. Crafting a Compelling Sales Pitch:

• Put the Value Proposition Front and Center: Clearly state the unique value proposition (UVP) that your good or service provides. For which particular issues does it address your ideal client? How does it boost their profitability or operational efficiency?
• Feature-Benefit Coordination: Instead of just listing features, explain how they will help the client in concrete terms. Describe how each feature helps them reach their goals and solves their particular pain points.
• Persuasion Driven by Data: Provide real-world statistics and success stories to support your assertions. Industry reports, case studies, and client endorsements can give your product more legitimacy and show how well it has worked for companies that are comparable to yours.

4. The Sales Funnel: Streamlining the Conversion Process

• Lead Generation: Use different techniques to produce leads that are of the highest caliber. This could involve cold contacting, social media marketing, trade show attendance, and content marketing (blogs, ebooks, webinars).
• Lead Qualification: Not every lead has the same qualities. Determine a lead’s suitability for your ICP and degree of interest in your offering. This guarantees that the most promising opportunities are the focus of your sales team’s efforts.
• Lead nurturing: Create strategies aimed at educating and enticing qualified leads. Leads can be moved down the sales funnel with the aid of email marketing sequences, free trials, and recommendations for tailored content.
• Demos and Sales Presentations: Give your sales teams the tools they need to make presentations and deliver compelling product demos. Make sure every conversation is customized to the unique requirements and difficulties of the potential customers.

5. Building Trust and Long-Term Relationships:

• Active Listening and Needs Assessment: Put your attention on establishing a good rapport with your prospective client. Inquire to learn about their particular circumstance and the difficulties they encounter.
• Collaborative Solution Selling: Show yourself as a reliable advisor in addition to merely selling. Collaborate with the client to create solutions that meet their unique requirements and show them how your product may benefit their business.
• After-Sale Client Achievement: After the sale, your relationship with the customer continues. Continue to help customers, make sure the product is implemented successfully, and present chances for upselling or other services as needed

The difference between product-led and sales-led growth

Features	Product-led growth (PLG)	Sales-led growth (SLG)
Onboarding	Organic user discovery	Sales team outreach
Customer acquisition	Self-service with in-app guidance in most cases	Personalized with sales rep assistance
Pricing model	Free trial is often used	Paid plan with potential customization
Investment	High upfront investment in the product	High ongoing cost for the sales team and marketing
Ideal customer	Users who are comfortable with self-service.	Customers with complex needs require customization.

When to Use Each Strategy

Below is an analysis of when to use Product-Led Growth (PLG) and Sales-Led Growth (SLG) strategies for your product growth.

Product-Led Growth

Before using PLG you need to think about user empowerment and organic discovery. PLG shines when your product has these characteristics:

• Intuitive Interface & User Experience (UI/UX): Your product should be user-friendly so that exploration and value realization are seen naturally. Think of clear navigation and self-explanatory features.
• Freemium or Free Trial Model: Offer a taste of the core functions for free, allowing users to experience the product’s benefits before committing. This is your “try before you buy” strategy.
• Viral Loops & Network Effects: It must have design features that incentivize user sharing and collaboration. This can be through referral programs or social sharing buttons
• Self-Directed User Base: Your ideal customer is comfortable taking the reins. They’re happy to explore features on their own and discover the product’s value proposition organically.
• Limited Budget: While there’s an upfront investment in building an intuitive product, PLG can be cost-effective in the long run. Organic user acquisition through viral loops can reduce customer acquisition costs.

Sales-Led Growth (SLG)

You must be targeting salesmanship and white-glove service. You need an SLG  strategy when your product has these characteristics:

• Complex Products: A product that requires customization and personalized onboarding.
• High-Value Sales: When deals involve big revenue, investing in an experienced sales team to handle complex negotiations is a wise decision.
• Long Sales Cycles: Sales-led growth is good for products with long sales cycles. Sales reps can build relationships, address specific customer needs, and provide ongoing support throughout the decision-making process.
• Enterprise Customers: Large organizations that have special requirements and complex buying processes. 
• Limited Product Availability: If your product isn’t readily available through self-service channels, a sales-led growth strategy helps in targeted sales outreach with personalized consultations.

PLG vs SLG: which one is right for you?

Here’s a quick decision question for you to know which one best suits your product:

• Is your product easy to use and intuitive?  –> Yes (PLG) / No (SLG)
• Do you have a limited budget for a sales team? –> Yes (PLG) / No (consider SLG)
• Do your ideal customers prefer self-discovery? –> Yes (PLG) / No (consider SLG)
• Is a freemium model viable for your product? –> Yes (PLG) / No (consider SLG)

If your answers are PLG, your product and business might be well-suited for a Product-Led Growth strategy. 

If your answers are SLG, your product and business might benefit more from a Sales-Led Growth strategy. Build a high-performing team to target specific customers, provide personalized guidance, and close high-value deals. 

Here’s a detailed breakdown of when and how to use each strategy;

When to Use PLG:

1. User-Friendly Products: If your product has a strong user experience (UX), and a clear value proposition (e.g., project management tools, communication apps, basic design software), PLG is ideal. Users can easily understand the value of your product on their own,

2. Freemium Models: PLG thrives on freemium models where users can experience functionalities for free. This allows them to become advocates and convert others through word-of-mouth marketing.

3. Focus on Customer Acquisition Cost (CAC): If minimizing CAC is a top priority, PLG excels due to its reliance on organic user acquisition and self-service.

How to Implement PLG:

1. Prioritize User Experience (UX): Invest in a user-friendly design that guides users towards the product’s value proposition immediately.

2. Develop an Easy Onboarding Process: New users should be able to get started quickly and see immediate benefits.

3. Foster User Engagement: Integrate features that encourage active product use and discovery of hidden functions

4. Track User Behavior: Use analytics to understand user journeys and identify opportunities to improve the product and drive conversions.

When to Use SLG:

1. Complex Products: For software solutions requiring extensive customization, integration, or long learning curves (e.g., enterprise resource planning (ERP) systems, complex financial tools), SLG provides personalized attention to address customer concerns and offer solutions.

2. High-Value Deals: When your product has a high price point and generates significant revenue per customer, a dedicated sales team can accelerate deal closure and maximize value extraction.

3. Targeted Audience: If your target market requires hand-holding and a more consultative approach due to complex decision-making processes (e.g., large enterprises), SLG offers a direct line to understand and address specific needs.

How to Implement SLG:

1. Build a Skilled Sales Team: Invest in training and hiring a sales team that understands your product, and target market, and can effectively communicate its value.

2. Develop a Targeted Lead Generation Strategy: Create compelling marketing campaigns to generate qualified leads for the sales team to pursue.

3. Refine Your Sales Process: Establish a clear and efficient sales funnel that streamlines lead qualification, negotiation, and deal closure.

4. Focus on Customer Relationships: Build strong customer relationships to encourage long-term loyalty.

Product Led Sales: The Hybrid Solution For You

The hybrid product-led growth method uses elements of a product-led growth model and a sales-led model. It concentrates on a self-service model but when unique situations arise, a sales force is called in to assist with customer problems.

The combination of both has various benefits, which are:

• Focuses sales efforts: Reps target qualified leads who are already interested in the product and this improves conversion rates.
• Improves customer experience: Users are taken on a smooth path beginning with self-discovery through the product and ending with human involvement for complex needs.
• Data-driven decisions: Understanding product usage allows sales representatives to modify their approach and uncover upsell chances.

You should consider the hybrid model if:

• You have a trial or freemium version: Your product should provide value without a sales representative.
• Your target market has different needs: Some people prefer self-service, while others demand a consultative approach.
• Your sales cycle has a range of lengths: PLS supports both quick self-service sign-ups and complex enterprise deals.

Here’s how to apply the hybrid model:

• Refine Your Product for Self-Service Success: Ensure your product delivers immediate value and has a user-friendly onboarding process.
• Identify the high-value segments: Segment your user base based on prospective deal size and complexity.
• Align sales and marketing: Sales and marketing teams should work together to nurture leads and discover opportunities for rep interaction.
• Equip your sales team: Train reps to leverage product data and tailor pitches based on user behavior.
• Measure and iterate: Monitor key indicators such as activation rates, conversion rates, and deal size to constantly improve your strategy.

How You Can Merge Product-Led and Sales-Led Strategies?

1. Identify Ideal Customer Profiles (ICPs) and Segment Users

PLG Focus: Analyzes product usage data to identify your ideal customer profile. Determine which features consumers interact with and how they navigate the product, this helps in identifying users who are likely to value the content and become paying clients.

SLG Focus: Use your sales team’s skills to generate detailed ICPs based on market research and industry trends.

By combining these strategies, you can divide your user base into relevant groups and customize your strategy accordingly.

2. Prioritize the Product Experience:

• Whatever the plan, a user-friendly and valuable product is necessary. Make sure your product has a clear value proposition, and an intuitive user interface, and successfully addresses user pain points.
• Use in-app guides, tutorials, and tooltips to welcome new users and highlight important features.
• Collect user feedback via surveys, in-app chat, and user testing to continuously enhance the product.

3. Implement Product Qualification Measures (PQMs):

• Create a method to identify people who display behaviors that indicate they are ready to convert into paying customers. This could include achieving particular usage goals, utilizing premium features, or surpassing the free trial constraints.
• Track user engagement metrics to identify potential PLG leads. These may include daily or weekly active users, feature adoption rates, and time spent on the platform.

4. Leverage Sales for High-Value Opportunities:

• Once you’ve discovered PLG leads through product usage, your sales team can contact them through personalized outreach.
• Sales representatives can focus on developing connections, meeting specific customer needs, and upselling/cross-selling relevant products.

5. Seamless Integration of Product and Sales:

• To offer a consistent customer experience, provide your sales team with detailed product expertise and user data.
• Encourage them to use product demos, free trials, and customer success stories successfully while interacting with PLG leads.

FAQs

1. Are there industries where PLG is more effective than Sales-Led Growth?

PLG is effective in SaaS, tech startups, and industries with products that have straightforward,  and good use cases. An example is Trello, a project management tool. Trello’s interface and simple task management make it an ideal choice for PLG.

2. Why is a combined PLG and SLG approach most beneficial for growth? 

PLG is very effective in driving growth through product development and customer experience, without requiring customers to go through sales. SLG excels in driving growth through marketing campaigns and sales workflows.

The combined method covers all the lead generation bases: PLG generates new leads from existing customers and has a lower Customer Acquisition Cost (CAC) than SLG. In contrast, SLG will handle the key sales and marketing channels.

 3. Is one strategy better than the other?

No, the decision between PLG and Sales-Led Growth is based on the product’s nature, the target market, and the goals of the company. Aligning your strategy with your particular context and goals is the best course of action.

4. How can a company transition from a Sales-Led model to a PLG model?

There are various steps involved in transitioning from a Sales-Led to a PLG model. Businesses should measure their marketing, customer experience, and product offers. Adobe used to sell boxes, now it sells a cloud subscription, and users can serve themselves software and updates.

5. Can a company use both PLG and Sales-Led Growth?

Yes, some companies use a hybrid model which consists of both strategies to help various customer segments. HubSpot uses freemium tools for small customers and salespeople for big deals.