Data-Driven Sales & the Future of PLG
No matter where you are in your journey of exploring product-led growth (PLG), my former colleague Scotty Huhn and I are going to break down the fundamentals and talk about the future of data-driven sales. Scotty and I partnered together at Slack to build programs, processes, and products (like Midas) that accelerated our PLG engine and enabled product-led sales (PLS) at scale. We believe that PLS will define the next wave of SaaS growth and innovation.
Huge thanks to the many inspiring founders and operators we talked to within the space!
A trip down memory lane
Slack was one of the fastest enterprise SaaS companies to hit $1B+ in ARR. One of the reasons it hit this milestone so quickly is that it pioneered a new growth strategy: product-led growth (PLG). Slack’s hypothesis in those early days (and still to this day) was simple: give its product to its users for free, demonstrate early value, drive adoption, and monetize its most engaged users with paid offerings.
Fast forward a decade and we can now see that Slack was just the first of many companies (Box, Airtable, Calendly etc.) that embraced PLG to grow quicker and more efficiently.
But, PLG isn’t the whole story. PLG is highly effective at converting small teams and early adopters but it doesn’t naturally translate into enterprise sales where teams face longer deal cycles, more stakeholders, larger change management, and stricter security and procurement processes.
To overcome this challenge moving upmarket, the most successful PLG companies engineer a GTM function that plugs directly into their PLG engine. This is called product-led sales (PLS) and we believe it’s going to completely transform the way that Sales organizations prioritize their time and that it will create a massive new market opportunity for tools that can organize, orchestrate, and operationalize a PLG → PLS motion.
PLS overview + today’s challenges
Product-led sales (PLS) is fundamentally a different sales motion compared to traditional enterprise sales. PLS centers around the product — it drives lead generation, adoption, new revenue, new customers, and expansion. Contrast this with traditional B2B sales where GTM teams drive the ship with marketing-generated leads, outbound tactics, purchasing through sales teams, and annual contracts.
With PLS, companies are driving bottoms-up adoption through a mixture of freemium or free trial methods. Champions join new companies, teams experience the product and value, GTM and product teams help ensure they’re set up for success, and adoption grows. With PLS, we reframe enterprise GTM teams around data — product data, billing data, and traditional sales intelligence.
Essentially product-led sales is just data-driven sales centered around product-led growth. For businesses spanning from new-age self-serve to traditional outbound sales, data is at the heart of getting better. In most GTM functions, there are 3 potential paths:
Self-Serve: From evaluation to purchase to adoption, the prospect and customer journey has no interaction with the sales team. There’s some potential for limited customer product support interactions.
- Roles like Growth, Product, BizOps
Sales Assist: Typically low-touch and inbound. Optimizing for high sales velocity.
- Roles like Emerging Small Business Sales / Real Time Sales, Scale CSMs
Enterprise Sales: High-touch and outbound. This is your traditional sales model with AEs and outbound SDRs with sales cycle lengths 30+ days.
- Roles like SDRs, AEs, Solution Engineers, High-Touch CSMs, Renewal Managers, Global Account Managers
Companies can leverage one or more of these approaches and often find prospects that start in one funnel and end up in another. Imagine the Fortune 100 Engineering Manager seeing a tool they want to leverage for their team and then downloading a free trial. Your sales assist team might help them set up and implement their trial. And then when they’ve invited their team and have 3+ active users, your internal systems route their contact information to your sales team.
How can PLS accelerate each of these paths? Here are a few examples:
Self-Serve: Tailored product experiences based on user data.
- Data indicates they are Director+ in Finance; you label them as type = “Sophisticated Buyer”
- Serve them a specific product comparison landing page and pricing page
- If they trial, give them a tailored product overview guide
Sales Assist: Based on internal and external data, you’re serving up recommendations and insights to your low-touch sales team
- Pop-up a chat with any visitors, prioritize Director+
- Drop them in a specific drip campaign based on their role
- Give them a specific self-serve experience
Enterprise Sales: accelerate existing outbound approaches with BI that drives prioritization
- Share the top potential prospects for your sales team to connect with and the top power users for your customer success team; put them all in an account planning tool to drive alignment between sales & success
- Suggest relevant news or insights your team should share with those prospects
- One-click generate a tailored slide deck for the AE based on the company and contact before their first meeting
- Send them specific gifts that match their interests and ask for an opportunity to chat
Successfully adopting PLS expands your top of funnel, leads to lower customer acquisition costs, and improves conversion. And being product and customer focused drives product innovation, helping you build the right features for the right customers, and making it easier to retain them in the long run. If you’re a VP of Sales, PLS needs to be top of mind.
Sounds like a dream right? Sign me up! But companies looking to make this shift face a number of challenges.
- How do you stitch together enterprise data silos across product, billing, and traditional sales data? Companies are each on their own journey towards digital transformation and putting in place data platforms.
- Once we have that data, how can we get actionable insights? Are we going to overwhelm our teams with too much data and too many notifications? PLS requires a data intelligence layer; it can’t just be a fire house.
- How can we share this information with our GTM teams so they can use it in their workflows? Can we trigger notifications in Salesforce, Slack, or other tools? And we can drive coordination across account teams?
- Even better, can we allow them to 1-click initiate actions in other tools like dropping a contact into a cadence in SalesLoft or Outreach?
A look towards the future
The challenges on the way towards the PLS dream leave us a few unique opportunities.
Opportunity 1: A next-generation PLG/PLS database with the right schema
As part of this digital transformation, companies need to stitch together all that data in a schema that they can effectively leverage across a range of processes and systems. This will span product analytics, marketing analytics, the existing data warehouse, any certified data pipelines that’ve been built, the CRM, any helpdesk systems, billing and subscription data, and any external data you’ve collected (think 3rd party trend insights, techcrunch news, etc.). And the more real-time, the better!
Opportunity 2: The orchestration, analyzation, and workflow layer.
Once you’ve got that PLG/PLS database, you’ll need to leverage a variety of tools — some better and more customizable than others — to do a combination of analyzing the data (e.g. calculating that product-qualified lead/PQL score) and trigger notifications and actions in other systems. We call this the orchestration layer and it’s the natural evolution where we move from tools with pre-baked recipes to more customizable and integration solutions like Momentum and Correlated.
Opportunity 3: The PLS operating system.
Why send insights or trigger actions in tools that weren’t specifically built to handle them? There’s an opportunity here to design a PLS CRM (and likewise for Growth and Operations teams) that’s purpose built for the PLS motion. Today, companies are creating a whole new set of Salesforce custom objects and embedding Looker dashboards into a variety of tools. That leaves a lot to be desired when it comes to UX/UI for Sales and Success. We should be building a new OS that delivers intelligence to GTM teams and allows account teams to jointly plan their outreach.
Salesforce was built on a notion of accounts, opportunities, and contacts and it’s hard to retrofit that to include product workspaces, usage data, and billing information. That leaves room for the PLS CRM of tomorrow that is purpose built for this new data schema and object architecture to become the system of record. Not to mention something that is actually easy to use and collaborate within!
Opportunity 4: The analytical layer on top of all of this.
Finally, with a new set of data categories, new GTM strategies, and new day to day workflows, there’s an opportunity to build analytical solutions for these use cases. Sales leaders generally use the same framework within B2B SaaS. We look at both pipeline and actuals across a set of dimensions, and we compare them period over period to understand the trends and drivers.
- What’s your pipeline for next quarter? What are the drivers for the change since you looked last week?
- What’s the conversion and fallout at each stage of your pipeline?
- What’s the split between new and expansion revenue? What are the drivers compared to last quarter?
None of the CRM tools of today easily allow for this as they’re not built to be used as trending databases. And tools like Looker don’t have any of this sales context because they’re built for general use and they don’t sit within the sales team’s workflows.
Opportunity 5: Bring PLS and PLG motions together to achieve a new level of Sales Plays execution and outreach.
PLS helps sellers understand and capitalize on the value that users are deriving from their product. PLG enables users to discover the value of products themselves. New tools like Switchboard open up the possibility of driving personalized product onboarding experiences that align with specific sales playbooks and execution. Imagine a world where an AE can execute a playbook in their PLS OS that delivers both unique product experiences and the right messaging at the right time across traditional channels.
Predictions
Given this, these are our predictions for the future of data-driven and product-led sales.
The data schema opportunity is already commoditized & will see consolidation.
The last 10 years there’s been a proliferation of ETL/ELT tools that make it easier to transform and deliver your data in the right places (Matillion, dbt, Airflow, FiveTran etc.). The good news is that the increasing maturity and efficiency of these solutions will enable PLS tools to largely outsource the core data transformation and modeling challenges. Teams just need a playbook of best practices for how to structure and stitch together this data and we could even see tools like dbt or their open-source community creating templates for this. The best PLS tools will develop out of the box integrations with these data extraction & manipulation tools and will focus their efforts on the orchestration, intelligence, and actions layers.
The first wave of PLS tooling will focus on observability & orchestration.
Observability will enable PLG teams to plug in their data and quickly present a single pane of glass to their sales teams that includes product, business systems, and third party data. Orchestration will enable Revenue teams to configure the logic on top of their product data that triggers actions (like notifications in Slack) and visibility to end users. Tools that deliver observability & orchestration together will be more successful, and solutions are just a small leap from many of the tools we use today like Troops and Zapier. But too many “insights” and notifications can overwhelm teams and be this opportunity’s downfall.
PLG without intelligence will fail; quality over quantity.
We quickly learned at Slack that if you turn on a feed of product data to your GTM teams without a sufficient understanding of the velocity and actionability of that data, you risk overwhelming your teams with a fire hose. PLS tools will need to leverage smart business logic and intelligent systems to curate the product data insights that GTM teams interact with. It’s one thing developing this kind of curation for a specific company; it’s another entirely to develop a system that can curate insights at scale across any business or data domain. The intelligence layer is critical to a successful PLS strategy and system.
There will be an explosion of B2B SaaS products & packaging that include either a free trial or a freemium SKU as companies explore PLG/PLS.
These days, even relatively more technical products are finding ways to develop a PLG funnel. Venture-backed businesses can often feel the pressure to accelerate growth. They’re constantly looking for ways to increase their top of funnel and their conversion rates. So many businesses are hearing about the PLS revolution and trying to adopt this, even though they might not be a fit. Free trials and freemium SKUs are not good approaches for highly technical products that require hand holding to see and realize value.
Established non-PLG SaaS companies will struggle to adopt PLG.
Just like the shift from on-premise to cloud, PLG has the potential to revolutionize the world of B2B. And just like the on-prem companies of that generation, many non-PLG companies will struggle to adapt or adopt. Introducing PLG presents risks for these companies and can cannibalize their existing successful enterprise segments. The entirely new sales, marketing, and product strategy requires a significant internal transformation.
Salesforce acquired Slack to defend its CRM moat against a future PLS CRM.
Salesforce recognizes that Sales organizations today look very different than those of a decade ago. As PLS & data-driven sales become more mainstream, Salesforce is investing in ways to adapt its decade old product to an entirely new way of selling. It’s an incredibly daunting challenge for any company of its size to match the speed of transformation happening in the industry right now. Salesforce has prioritized M&A (Tableau, Mulesoft, & Slack) to shortcut its path to enabling the future of sales. But as its focus shifts to stitching together these technologies into a coherent experience and their appetite for future M&A is limited, there is an opening in the market. Perhaps now is the golden opportunity for new entrants to invent the next-generation CRM… I hope so :)
If you’re building in this space, I’d love to talk with you!
