Can we be purely product-led or sales-led or are we misled?

If there was a sports category for inventing jargon and buzzwords, marketers from all around the world would probably win the Olympic medals for the top three spots without fail. That’s because no other department contributes to as many vocabularies—and in much faster frequencies—in the business lexicon as marketing.

In recent years, this trend has generously lent itself to the SaaS world—causing the birth of new jargons such as marketing-led, sales-led, product-led growth (PLG) and a lot more. 

While these jargons help more than harm our day-to-day communications, the rising level of such semantic noise can mislead us when they are misconstrued.

In this post, we try to dive into these nomenclatures—their importance, the true meaning of these terms, and the dangers of misusing them.

Is it really necessary to prefix a growth motion?

Terms like sales-led, marketing-led, and product-led growth imply the same meaning: a growth strategy driven by one function or channel carried out by different actors. Over the years, they have easily etched a place in our collective consciousness because these terms are self-explanatory and thus easy to process.

And it's not that somebody with a lot of free time in their hands sat at their desk and coined these terms out of thin air. 

These terms serve a very special purpose—SaaS enthusiasts worldwide use them as a bridge to link to a specific set of their semantic knowledge to make their communication more productive.

For example, OpenView Venture Partners (a Boston-based venture capital firm) coined the term product-led growth "to help define how companies have built their product's acquisition, retention and expansion strategies."

Other investors and founders followed suit and started differentiating startups driven by sales, marketing, or founders as sales-led, marketing-led, or founder-led.

Over time, some SaaS marketers started treating these terms as new software categories that they could rank their companies in, even if they were not using one dominant channel of growth. Now, we have reached a point where we are being misled about the actual meaning of these terms because they are widely misunderstood. 

The problem has gotten so worse that many of these terms risk losing their real meaning.

From a business point of view, understanding these terms correctly can help you build the right kind of product and develop the right go-to-market (GTM) strategies. 

Get it wrong and you will soon find yourself struggling to find the right growth lever for your company and unable to articulate your product’s benefits correctly on the slippery slope of market positioning.

We covered this topic at length in one of our recent Modern SaaS Podcast episodes.

Can you be led by one specific GTM motion alone?

The only problem with the use of these terms is that—we tend to over-anchor on some of these terms even when there are a lot of other variables that are at play behind the curtain.

We have already established the defining characteristics of these terms: anything-led growth implies that a specific business uses one primary channel to accelerate its growth.

If you break down a growth strategy further, every GTM motion it has two parts to it:

1. The acquisition motion i.e. how prospects discover your brand initially, flock to your website in droves, or sign up for a free trial.

2. The conversion motion i.e. how somebody from one of the acquisition channels converts into a paying, long-term customer.

Acquisition and conversion—two key growth pillars

Businesses often refer to their growth motion driven by just one channel—people tend to blur the lines between the acquisition and conversion side of things. And that's where a lot of confusion begins.

Here's an example of how common this is. Let's say there's a growing startup investing heavily in acquiring new customers. It starts to drive good traffic to the website through organic marketing channels or paid ads. 

To accelerate growth, they also set up an SDR (sales development reps) team whose job is to reach out to prospects mostly through cold calls and emails.

If you had context only about the company's acquisition drives, you would most likely assume that theirs is a marketing-led growth. But suppose the SDRs are doing a better job at bringing more prospects to sign up with your product. 

In that case, it's actually a sales-led growth because marketing is limited to acquiring new customers while sales are helping them engage with the product.

However, all of this can be a huge misattribution if you don't take stock of the product side of things. What if the startup has a product with built-in virality? 

In such a case, it's likely that the startup is growing because it offers a great trial experience or requires collaboration between two or more people to make full use of the product (e.g. Calendly, ClickUp, Notion).

At this point, you would probably call it a product-led startup because regardless of what's driving traffic to the website, it's the product that's getting the wheels to turn.

Turn this example on its head, and the message remains the same—we tend to over-anchor the "led" part only up to the acquisition part while not accounting for the conversion part. 

Therefore, while it might not be intentional, most companies misattribute their growth motion to being sales-led or product-led because they base their positioning on the strongest channel that drives their acquisition.

That's why we need to treat acquisition and conversions separately.

The reality about different growth motions

Growth motions are seldom black-and-white, meaning they don’t operate in extreme absolutes. For instance, very few companies have grown purely because of their product-led initiatives.

True PLG is when a company offers a truly self-service experience where the customers don’t talk to the sales team. For the most part, you discover the product through other customers and then buy it yourself.

For most other product-led SaaS businesses, their growth motion has a bit of everything blended into it. The prospects might discover their product through their professional network, book the demo with the sales, try the product for a few days, and—if all goes well—end up buying the software on their own. This is, in fact, a classic example of a product-led sales-assisted GTM motion.

Even if a product is the dominant channel of conversion for your brand, it’s unlikely for a customer to convert without some level of sales touch during the engagement phase. We can clear a lot of confusion around the driving force behind a company’s growth if we can properly attribute the role each channel plays.

Growth motions are phase-driven

Loom is a great example to understand the concept of applying different growth motions in phases.

Acquisition

Think about the first time you used Loom—somebody probably sent a link directly to you instead of finding their website or one of their social media posts. But once you are within Loom’s product experience, you probably find it a great app for creating video tutorials, in-app video tours, etc. Basically, Loom is what you would call a classic PLG brand.

But if you look at Loom’s history, it would be a myth to say that Loom didn’t require marketing to grow its brand. Loom banked heavily on marketing to initially get its name out, especially with its Product Hunt launch.

Conversion and expansion

The reality is that—once people started using Loom, the paid conversions started happening completely via a self-service experience (i.e., product-assisted). Over the years, as the product started gaining more popularity, Loom started investing in the core sharing functionality to make it more viral and easier for new users to sign up easily. That’s when the product layer of the acquisition came in and replaced marketing.

Like in Loom’s case, a lot depends on your product/company’s growth and maturity phase. Most companies start with one motion, then start adding another layer to it to support their growth.

Growth motions are like a layered cake

Most SaaS companies don’t have one dominant growth lever throughout their entire journey. They likely start with a marketing layer, introduce a product-led layer to it, and—over time—add a sales layer to match their growth.

Case in point, Loom now also has a sales team to cater to its high volume of acquisitions and high-touch clients who prefer 1:1 sales interactions. Slack—a poster child of a PLG company—is yet another example of how the brand has embraced different growth motions through the years.

Like every growing company, Slack and Loom realized that they needed to proactively sell their product—which is why they added a sales-led motion to the fold. Therefore, calling Loom and Slack a completely product-led company would be misleading.

Growth motions are like layers on a cake that you need to build over time to match your company’s growth and changing customer expectations. Unfortunately, investors and other external stakeholders might still reference your growth to the dominant acquisition channel (as is the case with Loom) long after you replace it with something more relevant to your current growth stage.

But that’s nothing in front of the mistake that many founders make in not investing any money in other growth opportunities required for their company to grow because they over-anchor on one growth motion.

For instance, just because your company grew to $10 m ARR mostly through a product-led channel doesn’t mean you should completely stop investing in inbound marketing channels or outbound sales campaigns.

Another interesting thing about understanding different growth motions is that the deeper you dig into them, the more confusing it gets. Going by the above argument of a layered cake, it might sound like we are suggesting that you would need to introduce a sales layer at the peak of your maturity curve.

That’s not true at all.

Growth motions are highly contextual

There's no fixed order to add different growth motions to your company's GTM strategy. In order words, the layers on the cake are dynamic based on several factors.

Take founder-led growth, for example. Founder-led growth is essentially an extension of marketing- or sales-led growth playbook—depending on the founder's role in the company's growth.

Many startups expand their organic footprint during the early days of their growth purely based on the founders' professional network and credibility as the face of the company. The founders' personal involvement at such a nascent stage overcompensates for the lack of product maturity and other shortcomings because customers are usually supportive of bootstrapped startups with promising products.

Later—when the startup begins to spend across other growth channels, and the product starts getting traction, or the marketing channels start gaining momentum—the founders can step back and let those growth motions take over.

It's safe to take a hands-off approach to growth when your product matures, and you identify other potential growth levers. By this time, you would now have a ton of in-app guides, video tutorials, guided tours, and a knowledge base that helps you defer your support traffic to these content assets and reduces the number of support tickets. This is an ideal setup for you to introduce a product-led GTM motion and downscale your founder-led initiatives.

In that sense, a high-touch sales-led growth motion is highly relevant to early-stage startups that are yet to achieve their product-market fit.

The takeaway is that although it's great to apply product-or marketing-or sales-led growth motion in a phase-wise sequence—it's highly contextual.

Having a free trial early on during your company's growth is good—even important if you are trying to acquire budget-conscious SMB clients. Small businesses prefer going through a self-service product experience since they usually don't have an appetite for sitting through long-winding sales processes.

But it would be a mistake to assume that PLG always comes before marketing- or sales-led growth motions. Whether to introduce sales-led motion when you are starting versus when you are ready to scale is not exclusively specific to your growth phase but the context in which you're applying it.

Applying a growth motion has several other nuances to it

Applying the right growth motion to a specific product at a particular time is more nuanced than it seems. Here’s a hypothetical example to understand this better.

Let’s say you are a SaaS company that sells contact center software. In most cases, PLG motion is perfect when you have a simple product that doesn’t need the management’s buy-in.

But a contact center software is almost always a top-down purchase because of the various compliance requirements, security regulations, and other approval hurdles that the buyers need to address from their company’s point of view.

Therefore a free trial or freemium pricing model is virtually useless because buying such a product is a complex process.

So applying the right kind of growth motion to your company depends on a lot of other factors and questions, such as:

• How complex is the software?
• Is your product a single-utility software?
• What industry does the software cater to?
• Who makes the ultimate purchase decision?

How to find your dominant growth channels?

First, it’s important to identify your strongest channels of customer acquisition. If you are like most SaaS businesses, multiple sources play a part in your company’s acquisition, such as:

• The marketing can create a top-of-mind brand awareness
• An outbound sales campaign can bring prospects to trial the product
• The product’s virality can drive new sign-ups and contribute to referral traffic

Similarly, the same three channels can work in tandem to improve the conversion aspect:

• The landing page built by the marketing can lead to at-scale conversions
• Sales demos can help you convert many prospects into paying customers
• The self-service product experience can drive up the lead-to-customer conversions

If you were to visualize this setup, it would look like a bow-tie model:

Both of the ends in the figure above are completely valid workflows in their own right—they are not mutually exclusive from each other. In fact, you will need to mix and match the strongest channels of acquisition and conversion to get optimum results.

For instance, once you visualize the sources of acquisition and conversion to your company's growth, you need to calculate the percentage of customers acquired and the percentage of customers converted from each channel. If customers are converting in hordes via product-led acquisition, ask yourself—is it the same channel that's also the biggest contributor to conversion?

Once you have that data, you'll have clarity on your most dominant channels, i.e., channels contributing the most to your company's growth. And that helps you position your GTM motion.

As an example, here are a few possibilities that can emerge out of this exercise:

• Product leads the acquisition, and the sales team assists the conversion = product-led sales-assisted motion
• Marketing is driving the majority of acquisitions, but conversions are happening purely through self-service = Marketing-led product assisted motion
• Product is the sole contributor to generating the majority of traffic and converting leads to customers = a pure-play product-led growth motion

Investing your resources and doubling down on the right kind of GTM motion becomes much easier once you have a data-based understanding of the two motions running parallel. It's a much more scientific approach to position your brand and grow your company rather than calling yourself product-led just because you aspire to be a PLG company.

Parting thought

Sometimes, it might not be clear what your strongest growth channels are. In such cases, it’s okay to not have all the answers—but you should at least try asking the right questions to avoid mislabeling your company’s growth motion.

As the representatives of your business, your job is to understand these terms correctly to articulate your product’s positioning well in the market before it’s too late. If you don’t, you will end up using these terms incorrectly to loosely define your growth motion and risk your company’s value proposition.