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According to one of the LinkedIn surveys, the respondents provided their views on connecting PLG with the new GTM approach. 80% of tech leaders believe AI can improve PLG strategies. AI-powered chatbots and virtual assistants are used by 67% of PLG companies to enhance user onboarding and support. Product-Led Growth (PLG) is not new but has gained its presence in the tech space. According to OpenView’s 2022 Product Benchmarks Report, the adoption of PLG has increased by 20% over the last three years.
Since nearly 80% of customers expect a unique and personalized approach from their vendors and service providers, the demand for immediate value creation will remain rising. Unlike the PLG process, the existing sales-led approach won't easily overcome that. Allowing users to experience firsthand benefits before purchasing will dominate the market going forward as many of the GTM categories are crowded, struggling to prove their value. This is a contrarian trend that many players have practiced for years. PLG approach builds trust and confidence by offering something before committing, leading to higher conversion rates and customer satisfaction. Although the setup is harder to build in the long run, the GTM functions will accelerate their onboarding process and likely achieve a more engaged user base with a higher adoption rate.
Another value will come through enabling more efficient scaling. As the product gains traction, helping set new hypotheses around the use case, adoption, and user acquisition costs decrease, allowing for rapid expansion without proportional sales and marketing expenses increases. In this case, sales and marketing must pay attention to their productivity, focusing on free trial and freemium conversion. In contrast, their product marketing and product team must work very closely with the sales team to understand the customer feedback and enable them as the product gets more complex. The complexity of the product might be a single growth killer, so this part is extremely important.
Your PQL is a new friend on the metrics scorecard; therefore, your traditional sales acquisition and post-sales teams division line with clear vertical-oriented leadership will need to be augmented. Each sales team must start digging deeper into the product use case, shifting their skills toward customer success. It's not exactly that, but it's close. Suppose you start paying attention to how the product is used, reading valuable user behavior data, and enabling sales and marketing teams to identify and prioritize product-qualified leads. In that case, you are moving away from the sales-led process. This means you must be fluent in converting the specific actions based on the analytical readout of your prospected or targeted account list. This targeted approach increases conversion rates and sales efficiency. In other terms, your outreach is not randomized but strictly related to the use of the product. GTM functions benefit from these insights, helping with conversations, cross-selling, and fundamentally important customer retention. Refining their strategies based on real user data leads to more effective campaigns and outreach efforts.
In the LinkedIn survey above, 80% of tech leaders believe AI can improve PLG strategies. That's a main theme rarely connected with AI-powered chatbots and virtual assistants, and roughly 67% of companies declare they want to invest in enhancing user onboarding and support, reducing CAC. By focusing on product value and user experience, PLG reduces the need for expensive outbound sales efforts, allowing startups to allocate resources more efficiently.
The culture shift is the biggest inhibitor of transitioning from a traditional sales-led approach to a PLG GTM strategy. Since this animal is fairly new as a concept, there is not much playbook on how to transition from one to another. Many organizations do it through their imagination regarding how this should work. This might lead to lower confidence that this works or a much slower adoption of the new way of executing their GTM strategy. By default, these two strategies do not have the same timeline. One is short- or mid-term oriented, with a high intensity of capital allocation for sales and marketing. The second is a mid-term or long-term slow build-up process that might convert to a large enterprise (e.g., Atlassian).
Implementing a PLG strategy in GTM teams often requires reallocating resources from sales to product development and user experience. It's hard to imagine that a CRO or Head of Sales is voluntarily giving away resources. The same would apply to other functions like marketing and customer success. Even the CFOs might have reservations about that approach, risking some of the existing plans committed to their board not being executed as the organization pivots to something new.
Measurement challenges require a new approach, too. PLG strategies often rely on metrics that are different from traditional sales approaches. Companies may struggle to accurately measure and interpret new key performance indicators (KPIs) relevant to PLG. Your sales and marketing experience might still dominate the setting direction, while the PLG metrics might be ignored, missing the opportunity to gain advantages against competitors. Combining the approaches is critical to making the best possible decisions from a larger spectrum of options.
Long-term focus versus short-term results. This is probably the hardest change or issue while pivoting. The PLG strategies are not a fast game that suddenly generates hundreds of new leads without proper investment or multiple or constant adjustments. The massaging process might take longer, and investors must know that. This can be challenging for companies under pressure to show immediate results or those with short-term financial goals, including those that require financing.
Another obstacle is product complexity. Some products may be too complex for a pure PLG approach, requiring more hands-on sales and support. Anything non-transactional in nature will be a hybrid approach. Drawing the line in the process is a challenge and requires serious decisions. Balancing self-service with necessary human touchpoints can be difficult.
Pricing is often driven by freemium or trial-based models, which can be challenging to implement for companies used to traditional pricing structures, which create larger sales incentive plans. The nature of that can be tough to embrace, deciding which features or volumes should drive the conversion and offering fewer commissions to the sales teams. Another complexity in pricing can be data privacy and security if you think about personalization and user data.
Conclusions:
Combining PLG and AI with targeted sales efforts creates a powerful growth engine. It's not a question of if but when most businesses incorporate that model along the existing sales led. It is just another tool in the toolbox that companies must use to compete. The emergence of AI enhances the PLG, simplifying many consolidations, data readouts, and personalized approaches to customers' use cases; conversations can happen much faster, and tasks can be operationalized much more efficiently. The key is to crack the balance between the art and science in this blended, hybrid approach built around the product and value proposition. The notion that sales teams can focus on high-value opportunities and enterprise clients while the product drives broader market adoption is the dominant notion in this approach. However, the real deal is creating product development incorporating more real-time marketing and sales data that supports lower dollar value transactions but also helps expedite the existing sales-led process for larger entities. Keep in mind that the game is not about scaling your number of sales or marketing personnel. It's about creating asset value in the form of your company. Whether this is based on the know-how, contract, or both, it's still your goal. So, the only way to scale your sales and marketing is a cost-effective approach that accelerates future returns. This is a similar approach to the compounding effect of your 401K that builds up over time. Yes, companies have a shorter time to prove their value, and their product must work and deliver faster. However, regardless of the time horizon, if you start building your PLG/ Sales Led hybrid approach earlier, each year starts carrying the compounding effect with the number of freemium users, build habits, usage, and data that the AI can help you translate to your new feature considerations. Missing the boat today will cost you greatly in the future. Here are a few ideas you can focus on while creating your new approach to GTM.
Product features investment: First things first. Your product must leverage user engagement and education strategies to enhance the customer journey. Walkthroughs guide users through step-by-step instructions, showcasing feature value, and interconnections while promoting learning through action. Tooltips offer concise explanations for complex features, improving user comprehension quickly. Help your team to leverage that data. Whether implementing the new feature or fixing a bug, ensure that sales and marketing teams can address that. It's another opportunity to interact with your customer or prospect base.
Pricing: Building an effective pricing strategy for PLG products involves understanding and leveraging the value delivered to users, offering price elasticity models, and continuously optimizing based on data and feedback. The problem is that many founders or companies perceive the solution's higher value than the buyers. That is not always the best approach. Your volume of transactions is a basis for future paying customers. This means that prices must be encouraging enough to sign up and eventually be willing to pay for a premium. Don't overestimate the value until you don't have a clear indication that your customers see great value in your product.
Onboarding: Onboarding is a critical aspect of your hybrid approach strategy, as it sets the foundation for user engagement, activation, and long-term retention. So, your customers need to be efficiently guided through your product during that time, helping to ensure they can operate independently with limited support.
Freemium and a free trial: I suggest emphasizing the value and benefits of upgrading during sales interactions. Clear steps in the process must drive the value validation based on customer interactions. Use case studies, testimonials, and data to illustrate how the premium features can solve specific user problems and guide how to operate in the long run. Don't tell your customers there are some magical solutions, as this will fizzle out quickly.
Metrics: A hybrid approach combining Product-Led Growth (PLG) and Sales-Led strategies requires a comprehensive set of metrics to evaluate its effectiveness. Key metrics should encompass product adoption, conversion rates, sales performance, customer acquisition costs, lifetime value, expansion metrics, and user behavior patterns. Tracking these metrics must have a strong definition and purpose to avoid overlapping in the areas where you track separately PLG vs. Sales Led or sequentially where these two feed each other or convert one to another. Regardless of how you cut it, you will be a much more data-driven organization after implementing the hybrid approach.
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