Product-Led Growth vs. Sales-Led Growth: 5 Common Misconceptions
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Many companies are obsessed with Product-Led Growth, but few really understand what it means. Companies that have grown through traditional sales often wonder how they can leverage a product-led approach, without overhauling their entire organization.
In this post, I’ll attempt to break down some of the common misconceptions around the Product-Led Growth vs. Sales-Led Growth approach, and highlight a few implications for your marketing strategy.
#1 - Any Product + Free Trial = Product-Led Growth
The first and most common misconception about Product-Led Growth is that simply turning on a free trial or freemium offering for your product will immediately lead to runaway growth. But Product-Led Growth is not a growth hack; it's a powerful framework that explains how the most user-focused SaaS businesses have grown by optimizing for adoption, time-to-value, and referrals instead of chasing bigger license fees, higher ACV, and impressive logos.
Product-Led Growth is not a growth hack; it's a powerful framework that explains how the most user-focused SaaS businesses have grown by optimizing for adoption, time-to-value, and referrals instead of chasing bigger license fees, higher ACV, and impressive logos.
#2 - Sales-Led Growth is Bad
While Sales-Led is quickly being replaced as the dominant strategy for SaaS, it isn’t an inherently bad approach. In some situations, being Sales-Led can give you more flexibility to develop your product offering, a longer runway for businesses that prefer not to raise external funding, and an opportunity to build deeper relationships with your target buyer.
This is a common approach in founder-led businesses—but when founders start to think about scaling their impact, the transition can be painful. This leads to our next misconception…
#3 - You Can’t Have it Both Ways
PLG vs. SLG is a false binary—many companies have found success with a hybrid approach. If you are currently running a Sales-Led organization, but you’re interested in the Product-Led approach, there are ways to move toward a more Product-Assisted approach without overhauling your entire organization.
To introduce a Product-Assisted approach in your Sales-led organization, you need to introduce the value of your product earlier in the sales cycle. In other words, you need a faster Time-to-Value (TTV). To achieve this, try:
- Using engineering as marketing as lead gen to create calculators, widgets, or micro-products that create value for your target market
- Creating more interactive demo experiences, with attendees from different buyer roles in the organization
- Unlocking a part of your product as a free trial or freemium offering
- Capture feedback from sales prospects - even if they never converted
In addition to increasing time-to-value, being product-assisted requires better alignment between marketing, sales, and product teams. This means:
- A clear definition of product-qualified leads
- A clear rubric for evaluating custom builds
- Introducing product discipline into the sales process
- Updated account health metrics (i.e. product metrics + revenue)
See more great examples on how to execute a Hybrid model from Wes Bush here.
#4 - Sales isn’t Important for Product-Led Companies
While sales plays a different role in PLG companies, it is still hugely important to overall growth. In Sales-led orgs, the salesperson has a high degree of autonomy over the scope. When unchecked, this can cause organizational misalignment that derails your growth goals.
In Product-led orgs, there is a layer of product discipline within the sales process. Sales plays the role of product specialist: coaching and educating buyers on how to get the most value out of the product.
#5 - Services Businesses have to be Sales-Led
While Product-Led Growth is mainly present in SaaS, there are more and more examples of services businesses leveraging product-led strategies. See:
- Productization and productized deliverables
- Transparent pricing
- Downmarket offerings/revenue streams
- Community building and networks
Product-led isn’t going anywhere. For the SaaS products end-users love, that's great news. What are the implications of this trend for the future of work? Where does your organization fit in? Any common misconceptions that I missed?
I'd love to hear from you. Email me at firstname.lastname@example.org
If you need help thinking through the transition from Sales-Led to Product-Led, or want to leverage a Product-Assisted Growth approach, let's connect. Book some time here.