Product-led growth is all the rage now. But when we at Avoma were talking about PLG years ago and implemented it along a sales-driven growth motion, most companies believed that it was an either-or choice.
When we started raising capital for Avoma in 2018, almost all investors we talked to didn’t like our stand on adopting PLG and SLG at the same time. Many of them rejected us because they insisted we should pick one growth motion and run with it.
But we were firm in our belief—we didn’t take the investors’ advice not out of disrespect, but simply because they weren’t our ideal buyers. We knew for a fact that our buyers wanted to be in control of their customer experience and we did just that—offered them the choice between product-led, sales-driven experiences.
Thankfully, the myth that product-led and sales-led growth are mutually exclusive is changing. Fast forward to today, every investor is talking about how combining the two growth motions is the future and it’s what ambitious SaaS startups should do.
I recently sat down with Aseem Chandra, co-founder and CEO at Immersa, to talk about this topic in a webinar organized by RevGenius and we tried to clear a lot of misconceptions around it. You can watch the webinar recording here:
This blog post is a transcribed and reformatted version of the webinar which I hope will reach more people and help you understand how to consolidate product-led and sales-led growth motions to grow your SaaS.
Why use both PLG and SLG growth motions?
I like what Aseem said in a podcast interview with Rosalyn Santa Elena about the paradox in SaaS buying behavior:
SaaS is a fundamental shift from the traditional on-prem model. It has completely changed the way we build and distribute software. But when you think about it, it really hasn’t changed the way we sell software.
And this perfectly encapsulates the need for a new way for customers to buy software. Most companies today still force prospects to go through the standard option of buying their products which prevents them from purchasing the product right away—and on their own.
They ask prospects to book a discovery call, sit through the demo, and wait for the whole process to be over before they can buy the software licenses—which might easily take up to three weeks.
Think about this from a prospect’s point of view who might already be aware of the value that your product offers and just want to make the purchase.
We have had several instances when customers find new jobs and move to a new role in the new company. Since they used Avoma extensively in their previous company, they know exactly how the product works. They don’t need to go through the entire sales funnel just because we have it in place. They just want to buy the software and start using it.
When you force prospects to go through a frictional sales journey just because it’s there, it’s frustrating for them. Prospects would much rather have a product-led, self-service buying experience.
Here’s the thing though: one of the many myths about PLG assumes that businesses should apply the same growth motion across the entire stages of their growth cycle. Not true.
While offering a self-service customer experience is great, PLG is not really great at acquiring new customers. PLG essentially has two core components: acquisition and conversion. The acquisition is how people become aware of your product and how they discover it. And conversion is how they eventually become your paying customer.
No new company can acquire customers purely through product-led channels. During a company’s early-stage growth, for instance, the sales- or marketing-driven growth model works like a charm. It’s how brands like Loom and Calendly grew in the early years of their journey.
We have first-hand experience pulling this off at Avoma. When we were just starting out, one of the things that worked for us was the content that we published. We wrote relevant content for our audience and people started discovering us through organic search.
Later, we partnered with CRM platforms that listed Avoma in their marketplaces. That put us in the direct line of sight of their audience who discovered us in the wild and started using Avoma. We also ran outbound sales and discovery programs. I as the founder made several outbound sales calls and meetings in the beginning.
Avoma’s current growth rests strongly on the product-led channels, but it would be foolish for us to say this was the case from the beginning.
When you reach out to prospects who don’t know your product exists, the acquisition is always driven by marketing or sales. The PLG strategy came later in our journey and now we leverage both growth motions to facilitate customer conversions.
The point is that there are many upsides to using (and mixing) sales-led, marketing-led, or product-led at different stages of your company’s growth—especially because it helps your customers to choose their own experience. In that sense, building different growth motions simultaneously in your GTM strategy is a ‘customer-led’ approach. You can’t go wrong with it.
Systems you need to support multi-pronged growth motion
To streamline multiple growth motions in your SaaS, you essentially need three types of tools that can help you:
- Analyze product usage data
- Aggregate the product usage data
- Feed that data back into your CRM system
It’s not easy to integrate your product with tools that can facilitate this exchange of data. You either need to invest your internal engineering resources to pull and automate those data points or you can use third-party tools.
At Avoma, we work with the most common CRMs. Our sales reps knew about our customers’ product usage behavior because of these integrations. But this might not be easy for everyone since not every company integrates with every single CRM out there. In such situations, product and marketing leaders should adopt a tool like Immersa to simplify the experience for them.
Using your engineering team means you have to trouble them time and again whenever you need new data points. Immersa not only frees you up from using your engineering resources but also helps you understand new customer journeys by letting you add and track new data fields when you need them.
Instead of using four different tools, you can use Immersa to efficiently push product usage data into the CRM. This helps you find new opportunities in your product and customer data to drive more sales and account expansions.
Challenges of running multiple growth strategies together
While we had a strong point of view around running PLG and SLG together since the beginning of Avoma’s founding, we definitely faced several challenges when we applied multiple growth strategies together in Avoma’s early days of growth.
Besides the challenges that we face, there are other challenges that you might face in implementing two growth models at once. I was reminded of those real or perceived challenges and I shared my thoughts about overcoming them in the RevGenius webinar event.
1. Unlearning past habits
As a company wanting to experiment with a product-and-sales-led growth motion, there were a handful of learnings and past habits that we had to unlearn.
Here’s an example: we were in the same camp as other companies who thought that maybe product-led isn’t a fit for every SaaS company—like ours. Looking back, we doubted our capability to be a product-led brand because we didn’t have an inherently viral product like Loom, Dropbox, or Slack.
We also thought that we had to have a sales motion exclusively if we wanted to sell to enterprise or mid-market accounts with an average deal size of ~$10K and above. Turns out, the mindset of choosing a growth motion based on the type of customers that you want to sell to is flawed.
We know this because we have had VP-level customers discover Avoma completely through organic channels who try our plans for the 14-day trial period and eventually buy a subscription plan worth ~$20K—completely through product-led, self-service channels. Our sales barely had one conversation with those accounts.
Although still in the minority, there’s clearly a growing trend of enterprise buyers with bigger requirements who don’t want to book a demo or negotiate with sales when buying a product.
At the same time, we have also had prospects from SMB markets who—even when they had the choice of buying Avoma on their own—insisted on talking to our reps in order to make a purchase decision.
It was a contradiction to our preconceived notion that all SMBs want a self-service experience because they don’t have a lot of time to evaluate a bunch of tools or run their software evaluation through a buying committee.
Based on that learning—or unlearning—we stopped segmenting our customers separately into SMBs and enterprises. Instead, we offered a choice for all our customers to either opt for a self-service experience (i.e. 14-day free trial) or contact our sales (i.e. demo request).
2. Identifying the primary buyers and primary users
This was an especially tricky challenge for us to overcome because of the layers of complexity it presented. With PLG as the main growth engine, we had to figure out if we wanted to be a horizontal SaaS product, who our ideal buyers were, and who the ideal end users were.
Deciding between being a horizontal vs vertical SaaS
When I did customer research for Avoma during the early days of our launch, I spoke to over 100 people (mostly business leaders) and took furious notes about their pain points. The one thing that stood out during these conversations was that:
It’s much easier to build an AI-based product if you focus on solving your customers’ problems and pay attention to their specific use cases, rather than solving for a broad set of problems.
By design, meetings are a very horizontal use case—every team needs meetings to collaborate as much as the other function. When we rolled out, there were a couple of products (like Rev and Otter) already in this software space that were solving for a horizontal market. On the other hand, there were a few products (like Gong and Chorus) that were completely catering to sales-focused use cases.
We had to make a decision and ask ourselves: do we also go super horizontal or should we niche down? We also had another challenge in front of us: we had to figure out how willing were people to pay for our product.
We didn’t have to wait long before we found the answer. When I talked to engineering leaders, they inevitably compared our product to the likes of productivity tools that they were using.
When I asked them how much they were willing to spend on a tool like ours, they gave me a price point between $6–10 per user.
The sales and CS leaders I interviewed compared us with the likes of Salesforce. Surprisingly, they were willing to pay ~$100 per user for Avoma as long as it provided them value and fared cheaper than the Salesforce license.
Long story short, we had to pick the market that anchored more toward the kind of product that we were building. These insights gave us good clarity on which market we should zero in on, even though we knew that Avoma’s offerings were horizontal in nature.
Today, Avoma is a horizontal solution but with a narrow focus on business professionals in customer-facing roles like sales and CS professionals.
Identifying our ideal buyers
I have this framework for building a product and choosing the GTM strategy.
When you are building a tech product, it’s like a layered triangle with three major components—the engineering layer provides the foundation, the product layer is a bit more constrained in the middle, and the GTM layer is even more constrained but it’s razor-sharp and pointy.
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This framework helped us identify the buyers who were willing to pay the most and were willing to buy our solution immediately. We were (and still are) aware that eventually—maybe 5 or 10 years down the road—Avoma might evolve into a horizontal solution. From an engineering architecture point of view, that’s our north star vision for the next 10 years.
But when we launched Avoma, we scoped down our GTM strategy to filter out buyers that we didn’t want to sell to such as students, researchers, podcasters, or journalists. Instead, we went after buyers in sales and CS who favored us the most.
There was, however, a second-level challenge in this discovery—our buyer persona is not necessarily the user persona.
Identifying our ideal users
While our buyer persona were the sales and CS leaders, the actual end users were the reps and CSMs. That’s because the value that Avoma offers is mostly for people who want to use it for their note-taking use cases—i.e. the sales reps.
It was very clear to us that the reps and CSMs depended more heavily on the meeting workflows than anyone else we spoke with. For instance, it’s absolutely important for reps and CSMs to take rigorous notes during customer calls and meetings and enter the data in the CRM.
The chances of sales reps successfully closing a deal—or CSMs renewing an account—very much depends on how accurately they capture the meeting notes. It’s what dictates how well they understand the prospects’ pain points and how they can follow up with them contextually.
A few of our competitors had built solutions that solved for the leaders’ problems. When we spoke to the ‘leaders’ cohort during our market research, most agreed that we were solving interesting problems for the reps. When we poked further, they said that they would switch entirely to Avoma if we built features that also catered to their use cases (e.g. coaching, revenue insights, pipeline visibility).
That was a lightbulb moment for us because it made us realize the gap that was there in the market—and it was ripe for disruption. We already offered value to the end users closer to the sales workflows, we just needed to add more offerings to make Avoma useful for the buyer persona as well.
Prioritizing this on our product roadmap was definitely challenging, but at least we now understood the value that the buyer personas (i.e. the leaders) wanted to get maximum outcomes out of Avoma. And so we built capabilities in Avoma that serve both these customer personas.
As of today, no other product in the conversation intelligence space solves for both leaders and reps as holistically as Avoma does. We are able to win competitive deals because of the strong differentiator we built thanks to the customer feedback.
3. Lack of product usage data in sales
When we were setting up our sales processes, the sales team wasn’t equipped with product usage data from day one. They didn’t have visibility into how our prospects were using Avoma and what features were they using or not using.
Some of our reps reached out directly to our prospects during their trial phase to ask how their experience with Avoma was going. It made sense to us back then because we were trying to be proactive in our selling.
But in retrospect, I think we gave our prospects a bad experience because, in an ideal PLG world, you should know exactly how your prospects’ experience is going. If we could only look at our product usage data, we would have had all the answers at our fingertips.
Other reps were selling Avoma based on the PowerPoint method—the classic approach to pitch a product based on its salient features. Some of these reps were admittedly young and new to their sales career—they hadn’t even given a single product demo in their jobs.
The lack of product usage data in our sales process meant our reps didn’t know the right time—and the right approach—to engage with the prospects.
To fix these issues, we started hiring the right kind of salespeople who were comfortable playing around with the product, understanding the usage data, and using the data to make the sales conversations more buyer-friendly.
We also reconfigured HubSpot, the CRM we use at Avoma, in a way that allowed us to automate the data about every single person who signed up with us to be captured in the CRM. This allowed us to review all the prospects’ data about who they were, what’s their title, and their product usage behavior under one roof.
Frankly speaking, this configuration is still not great to our liking but at least it’s a start. Now when our reps reach out to a prospect, they know the subscription plan they are trialing, the set of functionalities that they are using most in Avoma, or the ones they haven’t used so far.
Our reps don’t send heavily templated follow-up messages like “Just bumping this to the top of your inbox in case you missed it.” Because they have the product usage data, they are thoughtful in their interactions with prospects and provide context for their follow-ups. They might say:
I see that you have only used these 3 features in Avoma but haven’t tried these other 4 features yet. Let’s chat sometime this week so that I can show you how to use it and the kind of value that you will get out of them.
Leveraging the product usage data in our sales interactions has helped us make those conversations more valuable and it has improved our email response rate and demo conversion rate.
As a side note, I believe that there’s an opportunity for someone to build a product-led SaaS-focused CRM. It would be a huge market. Most CRMs today don’t help businesses accelerate their PLG motion. Although HubSpot itself is a product-led sales organization, its CRM isn’t fully configured to support PLG motion.
What’s largely missing from these CRM systems is the product usage data—it’s the fundamental thing that sales teams typically don’t have access to. Businesses either build their internal systems—some kind of dashboard—and give access to that data to their sales teams.
However, you also have to make sure that the data is also fed back to the CRM. Most salespeople don’t want to use too many tools—they live in the CRM.
Tools like HubSpot have additional custom properties that allow you to push product usage data into the CRM. There are many ways businesses are solving this problem—some teams might be plumbing this data flow using 3–4 different tools. I’m happy that now sales teams have amazing tools like Immersa which solves this problem much more efficiently.
4. Dumping too much product usage data
As you can imagine, this is the opposite problem to have when you make the mistake of over-anchoring only the product usage data. I don’t recommend sales reps establish contact with prospects purely based on the usage data. You also need to factor in the persona of the user as well.
Rather than dumping your sales team with every single data about the users and their product usage, you should define an ideal customer journey and focus on specific data points that can speed up the time-to-value. An overload of product usage data creates unnecessary noise and distracts your sales reps.
The goal of offering product-led trial experience or onboarding shouldn't be to sell prospects every single thing. Instead, the goal should be to segment the prospects based on what they prefer (self-service or sales touch) and closely observe the “aha” moments—the point at which they realize the value of the solution.
I recommend dividing the trial period into two different phases:
- Activation
- Adoption
During the activation phase, you might only need to meet 1–2 use cases to demonstrate your product’s value to the new users. Avoma has a 14-day trial period, for instance. We try to keep track of the aha moments that customers go through and how quickly we can offer such moments to new users who activate the product.
Once they activate and experience the aha moment, the second phase is the adoption phase. Don’t over-optimize your product for maximum adoption—that’s not the goal. People are busy, they have plenty of other things going on in their lives that take priority. You will fail in achieving your goal if you set unrealistic expectations of having your prospects adopt all the 20 features during the trial period.
Instead, keep track of what features they adopt or come back to more frequently versus the ones that they don’t use and can benefit from. You don’t want to look at it only from the lens of product usage. If you go purely by data, you might wait for every prospect—even your ideal customer personas—to pass the threshold of the usage data that you have defined for all new customers. You need to be more thoughtful in such cases.
If a VP of Sales signs up with Avoma, we usually have one of our reps reach out to them immediately—even though their product usage data is there with us. That’s because we know that the VP of Sales is a hot ICP. They are exactly the persona that we want to acquire— more so if they are from a larger organization.
If an AE signs up with Avoma—we will let them use the product on their own and invest some time into using it. So while we have the product usage data, it’s contextual to a customer’s trial experience during the 14-day trial period that we offer.
5. Engaging with prospects at the right time
Out of the many experiments we do at Avoma, we reject thousands of users each day who sign up with the product using their Gmail or personal email accounts.
We deliberately add friction during the sign-up stage by design. Our philosophy is that, if people are not willing to invest a little bit of commitment from their end, we shouldn’t waste our resources on them.
Yes, that means we are losing a lot of new user sign-ups—and it stops me from boasting the bloated sign-up numbers in Avoma to our investors. But guess what? Qualifying the right kind of customers helps us research who they are because we have their domain information available to us.
We can research the company they belong to and make decisions on who to engage with, at what point in time, and so on. Look at the customer background (e.g. background, title, company) and combine it with the product usage data before you engage with a prospect.
There’s a catch though: the aha moments that you define for one segment of customers might not apply to all customer types. To engage with the right customer at the right time, your sales reps need to really understand the ideal customers, what makes them go “aha”, and focus on measuring only those metrics in the CRM.
6. Budgeting for different growth motions
By now, you might know that we have a lot of rich perspectives on how to leverage PLG and SLG together. Does that mean we have figured it all out? Hardly.
We still have a lot of things that we need to fix internally at Avoma. One of those areas is budgeting the different growth motions to maximum impact. Here’s how we think about budgeting for PLG as a GTM initiative.
Unlike conventional thinking, PLG is not necessarily the product team’s responsibility. It’s actually just the opposite—PLG is a true-blue cross-functional initiative that really starts with the CEO leading it as a collective GTM initiative.
We have doubled down on our PLG strategy by having all customer-facing teams—marketing, sales, customer success, and product—involved in implementing it together. We don’t budget for the product team separately for running the PLG and leave out others with their own departmental budgets.
Of course, that means marketing and product still get to keep their budgets allocated to them separately to meet their team goals. But when it comes to implementing PLG, it’s an all-hands-on-deck approach to budgeting and collaboration.
Here’s how we currently divide our time and resources into our PLG and SLG strategies.
We believe that in most sales-driven organizations, the sales team invariably owns 50% of the pipeline generation target. Within that target, we usually allocate SDRs and AEs to own 25% of the pipeline respectively—i.e., on top of the leads that they generate through self-sourced channels.
The marketing and product teams own the remaining 50% of the pipeline target. Out of that overall quota, marketing might have ~15% of the pipeline purely through self-service channels like free trials, inbound marketing, SEO-based pages, and so on. That’s marketing’s share for driving the PLG initiative.
In addition, marketing also owns 20% of the pipeline generation through non-PLG channels like demand gen, organic marketing, and other branding exercises.
The product team owns 15% of the pipeline share that they owe from self-service channels. That’s because we believe we need to invest in certain aspects of product development to create some kind of viral loop or to simplify our customers’ trial and onboarding experiences. The investments map to the goals that we set for our company’s growth.
To summarize, we ration the budgeting of the PLG initiative by starting broadly with topline revenue goals and defining which teams get what share of the ownership in contributing to those goals.
7. Making PLG accountable for new acquisitions
Earlier, we discussed that PLG has two core components—acquisition and conversions. In most cases, PLG can’t drive acquisitions on its own, at least not in the beginning. It needs some initial leg-up from marketing and sales to make prospects aware of your product’s existence.
Avoma is in its sixth year of operation and we have leveraged our sales and marketing prowess quite well over the years. Today, when we make critical product decisions and roadmapping at Avoma, we try to identify and build features that can drive acquisition.
Like I mentioned earlier: you might not have built-in virality in your product like Slack, Dropbox, or Loom. That’s fine. You can compensate for that by offering a completely self-service experience that people can experience on their own. The good thing is, you can still have a wonderful PLG motion on the conversion side if you play your cards right.
But if there are features in your product that you can leverage to drive awareness, virality, and acquisitions, you should leverage them.
In Avoma’s case, we realized that scheduling is one of the most common use cases among our ICPs. Before we built Avoma Scheduler, every Avoma customer used an external scheduling app like Calendly. These apps had a huge viral coefficient because there's a shareability component to them.
We initially discarded the idea of building a similar capability in Avoma because it was an overly-saturated market. We were happy to let other players solve the scheduling problem while we focused on streamlining other aspects of meeting management.
Once again, our customer feedback came to the rescue. A few of our existing customers started asking us for scheduling capabilities within Avoma. The more we thought about it, the more we realized: we could use this to optimize our lack of inherent virality. Anytime our customers scheduled a meeting—which Avoma was already recording and transcribing for them—they shared it with others in their network and helped us market our core offerings.
The decision to build Avoma Scheduler led us to another unplanned benefit—making the product team accountable for acquisitions. By making them responsible to develop a feature that can drive viral growth, the product team now had an equally important role to play in acquiring new customers and not just converting them.
Choose what’s best for your customers
The debate around PLG or SLG is a false dilemma. PLG is not an antonym to sales- or marketing-driven growth. Choosing the right kind of growth motion for your SaaS is less about what we wanted to be and more about what your customers want from you.
At the end of the day, whatever growth strategy you choose has to optimize customer experience and ease their buying journey. Because marketing, sales, and product can’t work in silos in the modern SaaS world, the growth motion you choose will inevitably layer on top of one another at some point.
Instead of thinking about what growth motion you favor, focus on how customers can discover you and how you can convert them. If that means employing different growth motions for acquisition vs conversion, why not?
