Product-Led Growth Won’t Replace Sales

But it will require a more holistic approach to selling.
Mae Rice
June 9, 2020
Mae Rice
June 9, 2020

Like most VCs, Blake Bartlett once believed that for B2B technology startups, growth and profitability were like night and day: an either-or proposition. It was conventional wisdom. To grow, he explained, “you had to raise a ton of capital and then burn a ton of capital.” Or, more precisely, you had to raise a ton of capital, and hire a ton of salespeople. They burned it.

Salespeople were growth, and they were also money pits.

“They aren’t productive on day one,” Bartlett explained. “They have to build their pipelines and those pipelines have to mature.”

That takes four to six months, optimistically — and during that whole onboarding period, a sales rep gets paid a handsome salary.

It doesn’t always end in success, either. “There’s a really good chance that at least 25 percent of [salespeople] aren’t going to work out,” Bartlett said.

That means a company should hire more sales reps than it needs to meet its goals, just to be safe. Twelve, or maybe 15, if it needs 10.

It all adds up, if a tech product can only be sold by a sales rep.

Bartlett, a partner at OpenView in Boston, coined the term “product-led growth” in 2016 — so obviously, at this point, he knows there’s another way. A great product, like Slack or Zoom, sells itself; it barely requires sales reps at all.

Note the “barely,” though. As the term “product-led growth” has matured, along with the companies that pioneered it, it’s become clear that product-led growth and sales teams aren’t mutually exclusive, any more than growth and profit were.

Read More About Product-Led GrowthThe CPO of Eventbrite’s Career Proves that ‘Growth’ Contains Multitudes

 

new way to grow product led growth and sales
Image: ShutterStock

A New Way to Grow

Before anyone had language for “product-led growth,” Bartlett and his fellow investors at OpenView began noticing the trend and investing in a crop of mysterious companies. These included Calendly, which makes scheduling software; Datadog, a cloud monitoring platform; and Expensify, whose software digitizes expense reporting.

All three had managed to combine growth and capital efficiency. Calendly, for instance, has been “wildly profitable since day one,” Bartlett said.

This was roughly as unusual as meeting someone who could fly. Bartlett and his colleagues investigated. How were these companies pulling this off?

They found that, “at the fundamental, DNA level,” as Bartlett put it, these companies had different priorities than traditional software companies. The effort that would typically go toward hiring and training salespeople had been redirected toward “making a self-service product that you or me could find and start adopting for free and get value out of.”

In other words, though they made B2B software, they focused on winning over their end users, just like B2C companies.

A decade earlier, this wouldn’t have worked. In his primer on product-led growth, Bartlett terms the 2000s “the exec era” of B2B software. During this period, non-technical executives decided which software belonged in their companies’ tech stacks. Selling business software, then, meant selling to them, through a cocktail of cold calls from sales, data on ROI, and product demos at trade shows.

The mysterious new crop of companies like Calendly, though — which Bartlett estimates began emerging in the 2010s — had a different go-to-market strategy. They made intuitive business software, and offered it as a free or cheap self-service experience. Rather than selling to executives, they sold to employees.

This was product-led growth, and it worked. For software that legitimately solves end-user problems, “there’s this virality that naturally happens,” Bartlett said. Executives began discovering software not through salespeople, but through grassroots movements in their own workforces.

Employees might adopt Calendly, for example, en masse, until it just became inconvenient for their employers not to buy the enterprise version.

The success of the first wave of mysteriously fast-growing, yet profitable, companies, which also included players like Slack and Atlassian, triggered a cultural shift in the whole B2B software marketplace — ushering in what Bartlett terms “the end-user era.”

Today, software in the workplace doesn’t look so different from consumer software like Spotify or Netflix. It doesn’t need a salesperson to explain it; that would be sales-led growth. But salespeople have a role to play in product-led growth too. Just not right away.

 

entering the awkward stage product led growth and sales
Image: ShutterStock

Entering the Awkward Stage

When software companies pursue product-led growth strategies, they release their products long before they hire sales teams. At first, the product’s advocates are its users, who evangelize for it in their offices. This works until it doesn’t.

“Your customers tell you when it’s time to hire sales,” Bartlett said.

Specifically, they tell your customer success team. The nature of support tickets, Bartlett explained, starts to shift. The product achieves critical mass within companies, and leadership teams start wanting to open company accounts. Their questions no longer sound like an individual user with a login issue — they’re asking about setting up invoicing, or integrating the product into a larger corporate tech stack.

“Your customers tell you when it’s time to hire sales.”

“It starts to sound like, you know what, this person needs some attention,” Bartlett said.  “This sounds like a conversation that a salesperson could have.”

When a company doesn’t have a sales team, though, these meaty questions can fall to customer success teams. At first glance, this seems OK — better than those questions falling to a chatbot. But on a pragmatic level, it means the customer success team has to do the work of two departments, which creates bandwidth issues.

Meanwhile, on a more holistic level, it makes the customer experience less comfortable.

Normally, Bartlett explained, a customer success person functions as a customer’s internal ally. “You don’t have to worry about this relationship turning ... transactional.” But when customer service managers start dabbling in sales, it muddies their relationship with the customer. Sometimes, they present as a friend, “but then the next conversation it’s like, ‘Hey, so how about that hundred-thousand-dollar deal?’” Bartlett said. “It’s a weird dynamic.”

Better to split those different roles between two departments — especially because they tend to attract different personalities in the first place.

“A lot of times, a CSM person doesn’t have any desire to do a sales-type role,” Bartlett said. “They’re just wired differently.”

Read More About Sales7 Ways to Make Sales Follow-Up Emails More Effective

 

leaner more empathetic sales team product led growth and sales
Image: ShutterStock

A Leaner, More Empathetic Sales Team

The stereotypical salesperson is wired in a very specific way. They’re “that ex-college athlete,” Bartlett said, “who’s just got the fire in their belly and wants to win and is excited to be in that sales pod with the music pounding, dialing for dollars.”

(Also: hitting the sales gong.)

But a company relying on product-led growth doesn’t need a natural leader and competitor as a sales rep. It already has its growth leaders, and they’re in product and engineering.

It requires a more collaborative, empathetic, intellectually curious salesperson, Bartlett said. Not so much “a bull in a china shop.”

“Sales comes in after the adoption has happened,” he explained, so “they really drive more of an upgrade or an expansion sell.” They’re selling the convenience of premium features, not the product itself.

That means the salesperson needs to know the product inside and out on a technical level. Ideally, “[t]hey aren’t just hungry for the sale,” writes investor Brianne Kimmel. “[T]hey want to understand the product in a deep and meaningful way.”

More broadly, it means that sales doesn’t work with every client, or bring in all the company’s revenue.

Before product-led growth, this was rare. The perceived choice between sales-led growth and profitability forced B2B software companies to choose between client profiles too. They tended to either invest in sales and focus on major, enterprise clients, because “a salesperson’s time is too costly to convert that really low-dollar-value customer,” Bartlett said — or they’d focus on smaller clients and quick profitability, with a minimal sales presence.

“There is a wrong way to do sales and a product-led model. But here’s the tricky thing: It can look right.”

“In the old world, you would have had to pick a lane,” Bartlett said.

Not so in the new world of product-led growth. The strategy allowed B2B software companies to work with clients large and small, because it made growth a scalable, self-service project. Rather than leading the whole effort, salespeople have a specialized role within it, working on high-ROI deals that need a personal touch.

Growth and profitability. Big and small customers. Product-led, sales-supported growth is the best of all worlds, right?

Not always.

“There is a wrong way to do sales and a product-led model,” Bartlett said. “But here’s the tricky thing: It can look right.”

 

sales quotas arent enough product led growth and sales
Image: SHutterStock

Sales Quotas Aren’t Enough

How do you evaluate a sales team? With a sales-led growth strategy, it might make sense to assess the team based on individual and department-wide quotas. Crush those numbers, and the business thrives.

It’s not that simple with a product-led growth strategy, though. A sales department might hit all its quotas without actually benefiting the business, by adding needless friction to the self-service pipeline.

Imagine, for instance, that Amazon required customers to talk to a sales rep before “buying that 24-pack of toilet paper we all need right now,” Bartlett said. “You would probably do it, because where the hell else are you going to buy toilet paper? But you would have bought it anyway.”

Not only that — this hypothetical Amazon policy would actually make it more difficult and annoying to buy toilet paper.

“It really is just expensive humans taking credit for something that an inexpensive, scalable product would have done on its own,” Bartlett said.

It’s an avoidable problem, though. The key is keeping an eye not only on quotas, but on the company’s overall revenue. As the sales team ramps up, revenue should too.

In other words, sales in a product-led company can’t get quota tunnel vision. The team has to keep half an eye on bigger-picture metrics, which reflect how their efforts gel with other departments’. The ethos should be less “whatever I have to do to hit my numbers,” Bartlett said, and more “I want to do this the right way.”

Otherwise, sales just becomes a cost-center — exactly what product-led growth proved it doesn’t have to be.

Great Companies Need Great People. That's Where We Come In.

Recruit With Us