Everything You Need to Know About Product Led Sales

Everything You Need to Know About Product Led Sales

Nalin Pradeep
April 14, 2022
5
min read

It is a truth universally acknowledged that even the best sales strategy in the world can’t help SaaS businesses if the customers just don’t understand the product or find it useful.   

In fact, 70% of businesses end up failing because of suboptimal usability. End users don’t want long meetings or demo calls that follow the ‘show and don’t tell’ approach. They want to be able to understand the product before they decide to purchase it. 

As a result, SaaS B2B companies are now moving towards product-led sales strategy. 

But what does it really mean, and how is it different from a sales-led strategy? Let’s find out:

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What is product-led sales?

A product-led sales moves prospects further into the sales funnel by putting the actual product at the front and center. In other words, it's a self-onboarding process for customers where they can try the product before buying the product. 

As a bottom up model, it creates instant value for the end users. Instead of the prospects filling up a long-form just to book a demo with a sales representative, the product-led sales model focuses on a freemium plan or a free trial to show the value of the product to the prospects in real-time. 

Some of the companies that follow the product-led sales model include Zoom, Slack, and Dropbox.

Here are the main benefits of product-led sales:

  • Ideal for self-service SaaS products
  • A wider top of the funnel 
  • A value metric-based pricing model which gives your customers the right incentive in order to keep using the product
  • A considerably lower customer acquisition cost (CAC) 

What is the difference between product-led and sales-led strategy?

A sales-led strategy is one where your sales process takes center stage, instead of the product itself. So, your company’s revenue and success depend on how well your sales team performs. 

Ideally, your sales team will be responsible for generating leads through outbound and inbound effort , qualifying leads, and converting them through online product demos. 

As a result, the sales-led strategy is often preferred for companies that are trying to build a new category of products and they need to educate their customers about the value their products can offer.  

 Some of the primary characteristics of a sales-led model include: 

  • It works well in considerably smaller total addressable markets
  • When your product is not completely formed, talking directly to the customers and understanding their needs can in turn help you tweak your product  
  • High touch customer engagement means you ensure your customers understand your product well along with all its features
  • High CAC as the strategy is high touch, and there will in turn, be high LTV as well as ACV
  • Comparatively low conversion rates 
  • Since customers don’t always have the ability to opt for a free trial with this model, it might lead to misaligned expectations
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How B2B SaaS can become product-led

1- Define PQLs

The first step to adopt the product-led growth strategy is to define your business’s PQLs. 

A product qualified lead is a lead that experiences the value of your product through a free trial or a freemium model. A PQL is somewhere between a sales qualified lead and a marketing qualified lead.

In order to identify PQLs, you need to first define the main value metrics for your business and other factors that help you decide which one of the leads are product qualified. 

2- Identify trigger events that convince prospects to make a purchase

A trigger event is defined as the moment when a prospect goes from being completely uninterested to being interested in your product and eventually buying it. In order to identify trigger events, you need to look into the buying behavior of your target audience. For instance, you can look into the main triggers that make customers sign up for a free trial of your product or upgrade their plan.

3- Get your product, sales, and marketing teams on the same page

When following a product-led sales strategy, it's important to break down silos within your organization and build effective cross-functional teams that can work together seamlessly. Ideally, your product, sales, and marketing team should work together towards the common goal of converting prospects through effective cross team collaboration, even if they follow their own metrics. 

For instance, here are the different metrics that each team may focus on;

Product: A prospect signing up as PQL; converting PQL into a customer

Sales: Average CLTV for every account; average PQL to customer conversion rate

Marketing: A visitor signing up on the website 

4- Prioritize your customer

The best product-led sales strategies are the ones that focus on the customers. You actively listen to your customers, review how they interact with your product, and make adjustments along the way. After all, your product is the main reason behind acquisition and retention of customers. 

When you focus on customer satisfaction more than anything else, it leads to an automated onboarding and nurturing process.

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5- Build an interactive product demo

The biggest benefit of a product-led sales strategy is that it is self-serve. You build a streamlined process that allows interested prospects to sign up for a free trial directly or to access a freemium version of the tool. 

But how do you make prospects interested in your product enough to sign up for a free trial or freemium tool without any interaction with the sales team? 

An interactive product demo can help with exactly that. By embedding an interactive product demo on your website or sharing it directly with your prospects, you allow them to play around with your SaaS product and understand its features in a better way. This can not only lead to more conversions but can also help you acquire more qualified leads. 

Interested in showing your product demo? Sign up here to try it or talk to us to understand how we can help fuel your product-led growth.

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