Product-led growth (PLG) is fantastic for expanding your customer base, but sales-led growth (SLG) focuses on the value of a customer. The burning question: what happens if and when you combine the two?
A hybrid approach is rapidly becoming more popular among software firms worldwide that have achieved early success through a product-led strategy and want to scale up and enter new industries. It’s also attracting the attention of sales-led organizations, which have seen the success of product-led businesses and want to capitalize on it.
Let’s take a closer look at all of the PLG and SLG components and how they can all work together to create a winning SaaS recipe.
What exactly are the PLG and SLG hybrid models?
The hybrid method is a marketing, growth, or customer acquisition strategy that incorporates sales-led and product-led growth characteristics.
What is the goal? To achieve maximum business growth, cover as much territory as possible in terms of your audience, concentrating on their business goals and user preferences.
A hybrid business model could look like this:
- Downsizing: Sales-led with a product-led overlay
- Go-to-market: A startup that combines both sales and customer acquisition processes from the start.
- Moving upmarket: Product-driven with a sales component
The latter approach of applying a sales overlay over a PLG approach is gaining traction, with well-known Product Led Growth (PLG) SaaS companies such as Slack, Zoom, and Figma leading the way. It’s an example of ‘bottom-up’ growth: you start by focusing on product value, usability, and reach, then work your way up from single customers to larger teams. This is where your sales team can help.
A downmarket motion requires you to launch a version of your product and supporting infrastructure that attracts converts and onboards smaller clients without undervaluing your original offering. More on this to come.
The hybrid sales motion has four advantages:
So, let’s look at the advantages of becoming a hybrid.
1) Combined advantages:
Both PLG and SLG have several advantages that come into play in hybrid motion. By integrating both, the disadvantages of each of their limits are eliminated. Clever.
Here are a few of the notable advantages that a hybrid model enjoys:
- Lowering costs (CAC, internal headcount)
- Enlarges the funnel’s top (esp. with self-serve)
- Allows you to scale faster without incurring additional fees.
- Improved product feedback loops
- A pleasant customer experience.
- Concentrate on specialty clients and their requirements.
- Boost your ACV
- Sales representatives can easily demonstrate value.
- Identify upsell and cross-sell opportunities
- Maintain a tight relationship with your customers.
2) Cost-effective for a comprehensive growth approach
Going hybrid is the least expensive way to maximize growth. This is especially true if you’ve chosen a ‘bottom up’ growth strategy, with a sales-led approach layered on top of your product-led growth.
You may be wondering how that works. Product-led growth, on the other hand, is when your user acquisition, conversion, retention, and expansion depend on your product. This can take the form of free trials, freemium, self-serve options, or simply excellent customer service and support with relevant documentation so consumers can learn independently.
Because clients do it for themselves, you save a lot of money on things like personnel in sales and support and customer acquisition expenditures.
But it does not end there. You may quickly define your target market or customers for your sales team by overlaying SLG to ensure they’re right for your business and you’re right for them.
3) Gain access to a massive total addressable market (TAM)
Using both self-service and sales-assisted methods ensures that you cover both bases: posh and downmarket.
That means consumers on a tight budget, whether SMBs or individual users, can reap some of your product’s benefits while still supporting your brand and business by sheer volume. Meanwhile, at the strategic or enterprise account level, your sales staff may nurture and analyze the demand of certain high-value customers.
4) Maximize the potential of your product.
Both PLG and SLG encourage user collaboration, although in distinct ways.
Product-led growth depends on the product generating its own revenue, which implies that it must be a fantastic product with strong documentation and support. That means there will be plenty of customer data to collect and use to improve your product and service.
With sales-led growth, the sales team learns what specific firms seek in terms of a solution. They can not only modify their sales pitch to focus on the most important ideas but also use this information to inform new additions to or priorities in the product roadmap.
And by doing so, you will maximize your growth opportunities.
There is no shortage of effort to be done to make a hybrid strategy a success, whether you tackle the task from a sales-led or a product-led standpoint. There are platforms available that can give you the infrastructure and knowledge needed to solve major pieces of the problem outlined above and get you off to a flying start. Oh, and it will also help you grow faster and more efficiently.