Why Every Product-Led Growth Company Eventually Needs Sales

The Dock Team
August 21, 2022
TABLE OF CONTENT
TABLE OF CONTENT

Remember the days when it took months or even years to buy new software? Tech executives would talk to field sales reps, rally troops to sit in on demos, and dedicate entire teams to establishing KPIs and estimating ROI. Enter the end-user era, where buyers self-educate and expect value before investing their time or money on products.

Companies like Slack, Zoom, and Dropbox embraced this new reality by replacing the traditional marketing funnel with a product-led growth (PLG) flywheel. Put simply, PLG is when a user can use the product before buying through a free trial or freemium model.

A common misconception is that product-led growth means no sales team. But the reality is that every PLG company - Slack, Twilio, Dropbox, etc. - eventually adds a sales team to accelerate growth and move upmarket. Let’s explore how account executives (AEs) can play a key role in converting users into paying customers and driving revenue through expansion and retention.

Why is everyone talking about product-led growth?

Major shifts in demand and supply have contributed to the rise of product-led growth:

  1. Purchasing decisions are based on end-user adoption, not executives. The way people buy products, especially software, has changed. Instead of top-down implementation driven by VPs and IT, software usage starts with the end user. As adoption spreads within an organization, the exec team starts to take notice and ultimately makes a company-wide purchase based on end-user adoption. 
  1. Buyers want proof before a pitch–free trials over free lunches. In a remote world, customers find solutions to problems online faster than at a steak dinner or golf course. Instead of filling out a form or taking a cold call, people want to try the product before talking to a rep. Once it’s time to buy, we expect immediate results. Not pitch decks or nurturing campaigns.
  1. Increasing competition makes user experience the key driver of differentiation. Globalization, lower barriers to entry, and access to capital has led to increasing competition. Acquiring customers through traditional marketing and sales funnels has gotten more expensive and less effective. As Melanson points out, “the cost of running ads on Facebook or Google has doubled every year since 2017”. Outbound still has its place, but it takes a “spray and pray” approach to find the right person at the right time.


PLG was born out of the need to match evolving customer expectations and drive sales process efficiencies. Although it may have started with startups offering free trials and freemium products, the movement is snowballing into so much more. 

When implemented, the product becomes the main growth lever for acquiring, converting, expanding, and retaining customers.



The traditional top-down motion involved sales teams building relationships with executives to introduce and distribute products across an organization. Buying processes were long, adoption was slow, and the customer experience was managed almost exclusively by marketing and sales. Think of companies like Workday and Oracle.

On the other hand, a bottom-up approach focuses on end-user adoption through consumer-grade products that are easy to use. Every function is involved in reducing time to value (TTV) and growing lifetime value (LTV).

  • Instead of chasing leads, marketing generates demand by helping people realize their problems and positioning their product as a solution.
  • Instead of hand-holding, customer success embeds onboarding and training in-app to scale contributions and begin earlier in the customer lifecycle. High touches are reserved for key moments when they’re most needed and effective.
  • Instead of closing deals, sales helps buyers get “unstuck” by clearing obstacles and recommending opportunities for expansion.
“Product Management’s main job is to make it easy for the user to say yes. Product marketing’s main job is to make it difficult for the buyer to say no. Sales’ main job is to monetize by overcoming customer inertia.”
- Shreyas Doshi, Startup Advisor


What is product-led sales?

Product-led sales is a customer-centric way of reducing friction in the sales cycle. Since the product is the primary source for acquiring customers, you get to focus on selling to companies that are already using your product. The customer journey shifts from…

Lead > Buyer > User

to

User > Lead > Buyer


This allows companies to create a modern buying experience based on how customers want to buy, not just how they want to sell. Users decide to sign up for a free trial or freemium product because they heard good things and believe it can solve their problem. However, they are often still evaluating other alternatives or just beginning to realize the value of your solution. At this stage, the relationship is mostly transactional–it’s like speed dating.

Products that make peoples’ jobs easier get customer love, turning users into brand ambassadors that share their experiences with friends or colleagues. Word of mouth is a critical component of PLG, but it’s earned through network effects and viral loops. If you save time by booking meetings through Calendly, you want to convince others to use it so you can save even more time on the receiving end.

In that sense, sales becomes less about getting people to use your product and more to do with increasing adoption.

The benefits and importance of product-led sales

The reality is that some users will eventually get stuck in their journey and need help solving their problems. 40-60% of people who sign up for a free software trial use it once and never come back. Sales-assist teams can anticipate needs and become a catalyst for activation, expansion, and retention. In fact, Redpoint’s free trial survey found that salespeople increase free to paid conversion by 3.5x.

When a user has questions about paid features or is getting ready to champion your product internally, they want to talk to a real person. Self-service doesn’t cut it anymore. The stakes are suddenly higher. Mid-market and enterprise users are particularly hesitant to implement a product into their operating workflows without conversations and support.

At this point, it becomes important to present a friendly face. And no one demonstrates the value of your product better than your sales team. That’s why the average PLG business in 2017 had 25% of its employee headcount in sales, a percentage that is only increasing over time. By combining product-led acquisitions with well-executed sales touchpoints, companies can convert bottom-up demand into top-down growth. Slack lays this out eloquently in their S-1:

“To acquire new paid customers and increase adoption within larger organizations, we utilize a direct sales organization that complements our self-service approach. Our direct sales force leverages Slack champions and proofs of concept developed through self-service adoption. We combine this bottoms-up demand with direct sales efforts targeted at C-suite executives and business unit leaders.”

The end result?

Average revenue per user (ARPU) increases.

Customer acquisition costs decrease.

Revenue per employee increases.

Sales cycles decrease.

Lifetime value increases.

Churn decreases.

PLS can be the difference between linear and exponential growth. A sales team accelerates expansion and renewal revenue, selling higher and wider into enterprises than self-serve can do on its own. They convert demand into dollars by turning users into paying customers. All the while, buyers and sellers are happy to bypass the typical hoops of qualification, evaluation, and negotiation. Of course, this only works when your product’s price point commands a high enough LTV/CAC ratio to justify a sales team. The juice needs to be worth the squeeze.

GitHub, Twilio, and SendGrid all began investing in top-down sales teams after reaching the $20-30M ARR mark. Selling a complex product at a high price point to mid-market and enterprise customers calls for a different approach. Sales and customer success tie value metrics to customer needs, closing the gap between usage and willingness to pay. They’re also irreplaceable in navigating procurement and security reviews, pushing past corporate hurdles, and relaying product feedback back to internal teams.

What makes product-led sales different from traditional B2B sales

The traditional sales model is dying. The role of account executives is evolving. Yet the foundations for selling still remain the same.

A typical buying committee now includes anywhere from 6 to 10 decision-makers, all with different needs, perspectives, and goals in mind. This makes the rep’s job more complex, but also offers the opportunity to win more deals once prospects enter the pipeline.

Here’s how Sales Hacker captures this new paradigm:



The same steps in the buyer journey hold true, but they revolve around generating context. Running discovery is about understanding the end-user’s pain. Crafting the right narrative consists of mapping out specific use cases by persona, not just sharing generic case studies. User behavior is dictated by how buyers already use the product, not prescriptive KPIs. And penetrating an account requires deep insight into the makeup of an organization.

In summary, product-led sales takes us from pitching to consultative selling. Sales conversations focus on the customer’s needs rather than the product. Reps listen more than they talk. Closing deals comes down to delivering value before capturing it, and knowing the prospect’s problem inside and out.

What better way to do this than showcasing the value that a prospect’s free users are already getting? Dock’s product-led sales template gives you a single destination to share current product adoption, recommend relevant use cases, and track engagement. Instead of drowning in email chains and sporadic documentation, reps can create collaborative workspaces and customizable templates.

It’s a win-win scenario for everyone:

  1. Buyers feel heard and seen, cultivating 1:1 relationships with all parties involved in the decision-making process.
  2. AEs don’t have to reinvent the wheel when personalizing proposals for each account. They can keep optimizing what works and replicate it across the business.

We’ll stop here at the risk of getting too meta.

What is a product qualified lead or product qualified account?

A new lead shows up in your CRM. Who gets credit for it? It used to be a tug-of-war between marketing and sales. Now there’s a new way of sourcing and qualifying leads–the product itself.

Product qualified leads (PQLs) are leads that have already experienced your product’s value. Their close cousins are product qualified accounts (PQAs), which are organizations that fit your ideal customer profile (ICP). Both help turn the vision of product-led sales into a reality.

Companies sit on treasure troves of data filled with insights on product usage and customer behavior, but don’t always know where to mine. By understanding what indicators signal that an account is qualified for sales or expansion, you can integrate reps into the user experience at the right time.



Establishing PQLs is a blend of art and science. Reps have a certain intuition about which types of users are likely to convert, while data and operations teams know how to test hypotheses. Through collaboration, they uncover targeting criteria and identify key actions taken in the product where a rep should enter the conversation. The goal is to find intervention points when users are getting blocked, and need a nudge to move further along their mission.

PQLs are quickly replacing or augmenting marketing qualified leads, with recent data suggesting that PQLs convert 5x higher than MQLs. As shown in this Venn diagram from HeadsUp, that’s because PQLs go beyond intent and fit. They help us determine if a prospect acts the part of a future customer by extracting meaningful value from the product.



For example…

Hubspot uses two simple hand raising signals that drive PQLs:

  • Free users request to speak with sales through the app
  • Free users start in-app trials of premium features

SavvyCal knows that retention skyrockets when users book 3 meetings, invite a colleague, or integrate with their CRM. That’s when they notify sales.

Dropbox and Loom look for pockets of free and viral users within enterprise accounts to introduce a top-down sales motion. Once 3-10% of employees are using the product, they qualify the account as a PQA and reach out to sell to the whole organization.

Sales teams hold the key to operationalizing PQLs

As you can see, finding the diamonds in the rough is a creative, data-driven process. And it’s still early days. According to OpenView Partners, only 25% of PLG companies measured PQLs in 2021. Why? Well, because it quickly gets complex and overwhelming to actually put into play.

Sales teams are instrumental in making PQLs actionable through a simple, iterative approach. By bringing sales operations into the mix, they help clarify the 3 W’s.

  1. Who: Segmentation is a key ingredient in driving efficiencies for sales teams. It helps prioritize high converting accounts for sales, and reserves low touches and automated workflows for others. You can figure out what users and accounts match your ICP closely through product usage, demographics/firmographics, and buying intent.
  1. What: Bliinx surveyed hundreds of SDRs and AEs to understand their biggest pain points. Unsurprisingly, the #2 response was getting someone’s attention. By framing product adoption data as a reason to reach out, cold outreach transforms into relevant insight. For example, Clockwise arms their sales team with data on how an account’s meeting culture impacts productivity to facilitate informed conversations.

Messaging informed by PQLs gives AEs a way to speak the same language as prospects and incorporate the Sandler Selling System.

  1. When: Triggers are key actions taken across the product or overall marketing/sales ecosystem that correlate with buying or expansion intent. These can range from invites sent or key milestones completed, to meeting a lead scoring requirement or visiting the pricing page.

At the end of the day, product tours and tooltips can only do so much to create urgency, get attention, and deliver context. Salespeople do this best! Equipping your team with the right data positions them as consultants that can answer why prospects should use the product and upgrade in the first place.


“My overall take on PLG is that it's a powerful tool that helps us do fewer, higher quality things in the right order and at the right time. Pre-PLG, I had a list of 100 target prospects. With PLG, I have a similar list, but I know that today I need to reach out to these three of them and when I do I know exactly what to say and to whom I need to say it to.”
 - Jonathan Krangel, Sales Strategy and Ops at Retool


There are a number of new startups like Pocus, Endgame, and Headsup that help companies operationalize PQLs.

Dock’s product-led sales playbook for account executives

Similar to account-based marketing (ABM), PLG is another three-letter acronym that is spawning an industry of its own. From sales-assist teams to hybrid sales/CS roles, there are entirely new roles and functions popping up to meet organizational needs.

It would be a mistake to diminish how AEs fit into this space. They know how to build relationships, diagnose pain points, and route feedback to product and marketing teams. When we look across the PLG flywheel, AEs can play an integral role in influencing metrics throughout the customer journey.

  • Acquisition - converting more product signups into paying customers
  • Activation - getting users “unstuck” through guidance and support
  • Revenue - increasing average contract value (ACV) by pulling expansion forward
  • Retention - keeping customers engaged to increase net dollar retention (NDR)
  • Referral - facilitating new introductions and onboarding referrals

If your company is taking on a PLG motion, below are just a few plays you can run. You’ll notice that we purposely avoid the “dead zone” of free trial accounts with 1-50 employees, who are likely not ready to buy or have trouble extracting justifiable value from your product.

1. Converting freemium/free trial leads

When people think of product-led sales, this is the first touchpoint that comes to mind. How can AEs help land high value logos from self-service signups? Collaborate with self-serve teams.

Start by surfacing sales-ready accounts based on high intent signals from end-user activity. Then, map out champions and influencers by enriching leads through something like Clearbit and cross-referencing roles.

Share content with power users in a Dock template that includes videos and documentation on relevant features and specific use cases. 

2. Growing self-serve paid accounts

Once users type in their credit card information and become self-serve customers, they’ve reached an “aha” moment. There’s a significant opportunity to convert these buyers to larger plans, move them from monthly to annual billing, and upgrade to the enterprise.

To convert pro users into enterprise accounts, leverage NPS metrics and positive reviews as a conversation driver with buyers and champions. Users already love the product, now you can help them apply it to its full potential. Case studies of competitors or similar companies also helps decision-makers see the broader benefit of upgrading. Packaging all of this into a single mutual action plan helps inexperienced buyers feel comfortable in navigating the deal cycle and championing the solution.

Many times, enterprise organizations will have pockets of individual users with multiple workspaces, apps, or accounts. A single Fortune 500 customer can have 250 unique teams using a product without even being aware of the others. You can close these gaps by creating a comprehensive view of usage and recommending consolidation. This becomes the perfect time to upsell IT buyers on compliance and security capabilities, resulting in higher commissions and ACV. You’ll also become a fan favorite with the product team, which can now roll up the workspaces to a single account.

On-base customers are always looking for new ways to extract value from your product. Experimenting with different offers, from premium features and support to annual pricing discounts and multi-year incentives, helps customers gain buy-in from leadership and increase adoption.

3. Penetrating enterprises

Growing enterprise accounts through upsell and expansion opportunities is a game of rapport-building and community management.

Before contracts come up for renewal, proactively identify accounts with low penetration. If a company has over 1,000 employees but only 20 active users, you can contact champions to boost referrals and introduce partners that make a use case more compelling.

Other strategies include:

  • Looking for low usage of certain features and scheduling a quick demo
  • Selling additional capabilities or add-ons

4. Activating low usage opportunities

Some PQLs may be a great ICP fit, but just aren’t ready to use your product or haven’t received enough value yet. The goal here is to devise low-touch ways to convert these PQLs into SQLs through a strong handoff process.

You can work with CS to recommend templated implementation plans, with documentation and best practices that can be shared in Outreach or Salesloft campaigns. Giving access to videos with examples of how to use specific features, as well as scheduling links for demos with newer sales reps, demonstrates that you’re invested in growing the relationship without significant overhead.

Marketing can also help enrich these leads by factoring in funding rounds and team sizes through a tool like Clearbit. Once a certain threshold is met, an automated sequence can help nurture low usage accounts into expansion opportunities. 

Conclusion

Although product-led sales looks a lot different from traditional B2B selling, it’s still sales. Relationships drive revenue.

If you’re wondering if PLG will replace your job, it’s actually quite the opposite. Freemium products and free trials help you acquire better-qualified leads, while product adoption data paints a clearer picture for expansion. As we start to embrace this new paradigm, there are plenty of opportunities for AEs to act as strategic partners in the GTM motion. Through collaboration, consultative selling, and creativity, we can continue to elevate the role of sales and optimize the buyer journey.