Product-led growth (PLG) has rapidly become a dominant business model for SaaS organizations. Simply put, PLG means the product itself is the primary vehicle for acquiring, activating, and retaining customers.
Three shifts help explain the rise of this disruptive business model:
The demand for a human-free customer experience marks a generational seachange. But if product-led growth is a shift from traditional sales-and-marketing-led growth, then why should leaders care about investing in go-to-market teams, messaging, or sales execution? The reason is that the categories aren’t cut and dry, and today’s highest-performing SaaS companies use aspects of both models.
Think of PLG as a continuum where most companies have characteristics from both ends of the spectrum. On one end is pure PLG: software that provides such significant improvement over the status quo that it catches fire, goes viral, and the customer journey is self-service with minimal human interaction.
On the other end of the spectrum is the traditional business model where new customers are acquired through sales and marketing efforts. However, PLG market disruption means traditional software businesses must migrate toward the continuum’s center to stay competitive. Buyers have different expectations in this new playing field, and traditional organizations are adopting PLG strategies just to keep up. They become hybrids, taking on aspects of the PLG model: free trials, open-source, self-service, and low customer acquisition costs.
No matter where your business lies on the PLG continuum, the fundamentals of selling SaaS Solutions remain the same: organizations get ahead of competitors by:
(1) ensuring company-wide clarity on the value they provide for their customers, and
(2) structuring themselves in ways that enable delivering that value, capturing it in negotiations, and maintaining the value throughout ongoing business.
History shows that every successful PLG company reaches the point at which growing demands a skilled team of enterprise sellers. When the time comes to shift focus upmarket, make sure your customer-facing teams are aligned on a messaging framework that captures and conveys value.
Across models and hybrids, one truth remains: the top companies across software and SaaS maintain an edge by achieving cross-functional alignment on the value and differentiation they provide to customers. For some, that journey means improving alignment between the product development and growth teams who manage the self-serve funnel. For others, that could be creating better alignment between selling and customer success teams that step in when free users show buying signals. The department names and functions may change, but the power of alignment on your value proposition will never change.
A simple exercise we use to help teams align on their value and differentiation starts by ensuring everyone has the same answers to these Four Essential Questions:
Our work with rapid-growth tech and SaaS firms often begins by posing these questions to a cross-functional group of leaders. For most organizations, the variance in the initial responses to these questions can be a powerful, telling moment. If your leaders can’t align around the answers, your staff and teams will also lack the business vernacular needed to be relevant to company-wide business challenges. Even if they are lucky enough to get in front of economic buyers, they will be delegated down to technical people in the organization who speak and use the same technical language. Your sale will come down to the features and functions of your product, not the value of long-term product use.
Equipping your teams with a framework they can use to articulate your solution’s value and differentiation in a way that’s relevant to enterprise-level business challenges demands consistency around these Four Essential Questions. Without language and methodology built on consistent answers to the questions, customer-facing teams will continue struggling to uncover and attach their solutions to big problems that demand urgency and funding.
The good news is that the work that begins by aligning on the Four Essential Questions has output. This discussion marks the starting point for creating a tangible tool for transformation. At Force Management, we call this tool the Value Framework.
The Value Framework isn’t a script; it’s a navigational tool that guides your customer engagement process, product development roadmap, and marketing collateral. It’s a guide and common language your teams can leverage to maintain messaging alignment on the value and differentiation that are top-of-mind for your most influential buying audiences.
In this video, former Segment CRO Joe Morrisey talks about the process of working with Force Management to build Segment’s Value Framework and how it helped an already-successful PLG firm grow ARR by 150% over two years:
Even in PLG models with self-service users on a free version, buyers want to know that their needs are understood and that your product provides the best possible solution. That message and connection still must be communicated, even if through the website, app, or other customer-facing materials. A Value Framework outlines the specific reasons companies would choose to purchase your solution. It seems simple, but most organizations have varying viewpoints on what those buying reasons are. If Product Development, Marketing, and Sales can't align on why people buy your products, you will suffer from inconsistent messages in the marketplace, time wasted describing features that aren’t important to your buyer, and ultimately an ineffective means of distribution.
Opportunities are won or lost on discovery. Companies using free trial periods or open source versions gather valuable information on usage patterns, visited pages, and who’s sending referrals. Your customer-facing teams need questions that can artfully make the connection between usage and quantifiable business pain. By having the ability to understand and quantify your prospect’s business pain, you can articulate the connection for how your product solves their specific pain points. A Value Framework gives your organization a tool for executing discovery for identifying negative consequences to current business challenges–and how your software can solve those problems.
A great salesperson can articulate the benefits of a strong product all day long. It’s harder to provide a succinct answer for why someone should choose their solution over a competitor’s. Less skilled sellers may jostle uncomfortably on price and features instead of articulating the differentiators that align with the buyer’s specific needs. A Value Framework gives everyone the talking points that clearly explain your company’s differentiation in ways that map features and functions to the desired buyer outcomes. It’s a comprehensive and concise differentiation cheat sheet that teams can reference, ensuring these selling points remain top-of-mind.
For the buyer, it's all about observing proof that you can do what you say you can do. To be truly convinced that your product or service can alleviate the business pain, the buyer needs to be assured of the positive outcomes that come from adopting your solution. Case studies, success metrics, and testimonials aligned to the needs of your prospect provide insurance that the buyer is making the right vendor decision. Many companies have these assets, but most of the time they're used inconsistently. A Value Framework organizes these proof points into a reference tool that can (1) be easily accessed by everyone in your organization, and (2) be positioned in ways that align with the top-of-mind issues for your buying audiences.
Because of the previously mentioned components, a Value Framework drives consistency across the organization. For example, your product team can make development decisions based on the value drivers and competitive differentiators that help your product stand out and maximize product-market fit. Enterprise sellers will leverage marketing more because their collateral uses the same customer language. Your Services department will better understand the promises made to customers during the sales process. A customized Value Framework built with the right inputs intrinsically aligns your entire organization behind those value drivers.
Here Jennifer Jaffe from Jama Software describes how building the Value Framework became a galvanizing moment that aligned the product team behind the purpose of what they were building and why
Reflecting on Segment’s success, Joe talks about the inevitable moment for PLG firms when remaining competitive requires investing in their sales function. Here he offers advice for tech leaders and founders experiencing the mania of virality and PLG: invest in your GTM teams early.
Recent history demonstrates that even the most viral, pure PLG models can only propel businesses so far. In this excerpt from the Revenue Builders Podcast, CEO of Endgame Alex Bilmes points to the paths forged by PLG pioneers like Zoom and Dropbox, noting that every early adopting PLG posterchild now employs a significant enterprise selling team. Bilmes makes the point that even for the topline PLG purists, it isn’t a question of if you’ll need to add Sales, but a question of when.
261%
Global Director of Revenue & Enablement, Intercom
$3.2B
Chief Revenue Officer
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Senior Vice President of Worldwide Sales