Modern SaaS companies are combining product-led adoption with top-down sales into a motion called product-led sales. Users choose a type of free plan, try the product, and then engage in user-centric sales conversations. The benefits of this hybrid approach are clear. Companies get lower CAC from the product-led motion, plus the higher LTV from the sales motion.
Sounds great, right? That said, product-led sales comes with its own set of challenges. It requires navigating through lots of organizational change management—and data.
Below are three common mistakes made in product-led sales, and critical takeaways from each. Understanding these pitfalls can ensure you get maximum benefit from your product-led sales motion.
Mistake #1: Prematurely applying traditional selling methods
Product-led sales promises that today's free gmail user can be tomorrow's enterprise tier. But exactly when does that happen?
Pushing self-service users into a large commitment too fast will hurt your deal outcome and customer experience. For sales leaders used to the traditional top-down approach, this can be an easy trap to fall into.
Here are telltale signs you are applying a top-down sale motion prematurely:
The user doesn’t have a budget. If the user doesn’t control a departmental budget, selling an enterprise plan is the wrong way to go. It’s better to focus on user success and product adoption. With enough happy users, you’ll eventually be able to convince the head of a department to purchase the tool.
The user isn’t the buyer. Just like the budget problem, it’s important to have a clearly defined Ideal Customer Profile. Seek introductions when necessary. If the user isn’t the buyer, talking about ROI and high-level business cases is less appealing.
The user is happy on the current tier. If the user is satisfied on billing month-to-month, don’t hard sell an annual contract. An early-stage startup for example might not need extensive custom admin controls. By understanding the user’s needs, you’ll have empathy for what the right plan is for that customer.
Sales teams often fall into this trap because they are accustomed to getting that large upfront commitment, instead of playing the long game and growing usage overtime. It’s a mistake to use traditional metrics to measure a new bottom-up sales motion.
Product-led deal sizes start off small. But it’s these early deals that garner user loyalty, which pays dividends for the long run.
Takeaway—Reach out users with the proper product context. Use customer data to identify and prioritize PQLs to know when a user is sales-ready. Outside of being data-driven, listen in your conversations for excited users who want to champion the product. If the excitement is real and reflected in usage data, you’re ready to take the next step.
Mistake #2: Not differentiating self-serve and enterprise offerings
Once a user is truly sales-ready, most sales teams progress to a top-down approach. You need to show why an organizational rollout is needed.
This may seem like an obvious point, but users are not willing to upgrade unless they see substantial value gains from doing so. If the difference between self-serve and enterprise plans is incremental, there’s no incentive to change the status quo.
The enterprise plan needs clear advantages. For example, Airtable’s Growth AEs emphasize the power of collaboration across departments. There are inherent network effects for each teammate you invite to the platform. Then as usage grows, you’ll also need enterprise-grade security for the databases.
Think of the biggest reasons for the switch to enterprise. Is it cloud storage, security & governance, consolidated billing, or volume discounts? Make a strong case for why it is strategic and necessary to move up a plan.
Takeaway—While self-serve gets users through the door, you cannot assume the original use case is sufficient to move upmarket. Larger deals are complex and more sophisticated. They require crafting a strategic business case that shows ROI. Highlight features around security, support, and scale.
Mistake #3: Treating all PQLs the same
Mistake #1 warns against being too used to top-down. Mistake #2 happens if people are too used to self-serve. Assuming you’ve got past those hurdles, we’re now in the nitty gritty of product-led sales!
The third mistake is to assume all PQLs deserve the same type of sales touch. In traditional top-down sales, new prospects go through more or less the same funnel: discovery calls, demos, POCs, vendor evaluations, contract negotiations, etc.
In the product-led world, however, each user journey is unique. People sign up for different reasons, use different features, and have different friction points. The follow up must be tailored according to where they are in the product adoption journey (what we call journey view).
Takeaway—Create multiple PQLs segmented by customer profile and product context. Users have specific goals and may prefer certain selling motions. Make sure follow up aligns with their most recent activities and needs.
Aligning product-led sales incentives
Maybe you’ve tried all these tips before, and these mistakes continue to persist in your organization. One underlying factor could be faulty incentives. In a fast-moving sales environment, it’s easy to get caught up in the day-to-day of hitting quotas. But are you chasing after the right metrics?
For example if your company only rewards new logos with little regard to expansion deals, sales reps will always be pushing for that large upfront commitment. They won’t care about deepening product usage overtime.
Hard selling annual commitments is a legacy from the on-prem days—back when there were no SaaS cloud solutions and no usage-based billing. That sales technique may have worked for the on-prem world, but wrong incentives can kill a product-led motion.
OpenView created a handy resource for sales compensation based on usage-based pricing. With the right incentives in place, sales reps can offer value-added conversations. Ultimately, these conversations are how salespeople drive revenue at product-led companies.