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Wes Bush, Leah Tahrin and Jesus Requena on what people get wrong about PLG
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So, we just had Wes Bush on the podcast (the guy from ProductLed.com) to talk about why Product-Led Growth sucks! (and how to fix it)
While discussing with Wes I realised that we had quite a few PLG folks on the podcast already. Which triggered me to write a bit of a summary here.
Simply because there is still a lot of BS out there regarding PLG, a few new acronyms have crept up that people throw around in very confusing ways, such as “Sales Assisted” or “PLS.”
Let’s crunch some Myths of PLG, and let’s explain some of the new acronyms!
Myth 1: PLG has little to no CAC
So there are people who will tell you that product-led growth acquires people for free. The CAC is zero. That's total garbage. All you’re doing is you're masking the fact that if you don't have sales to go out into the market, then you have the cost somewhere else.
-Leah Tahrin
This myth is probably my favorite, and I’m sure those running PLG successfully wish it was true.
First of all, Insight Partners found that the CAC:Payback of PLG companies in their cohort is higher than of Sales-Led companies.
Sure, you might not need to pay salaries to Sales Reps, but you still need to invest heavily in marketing to get people to your doorstep.
This then also makes the other argument of PLG pretty weak: it has been assumed that CAC should be lower, so more money could be invested in Product to build… better product.
With CAC actually not achieving that, you basically have even fewer resources to build better product.
So, if you are considering PLG to lower your CAC → Don't.
Myth 2: PLG is an easy motion to add
“If I were to pick my poison, I would always choose to start earlier with the PLG motion and then add on sales and do the hybrid motion. I have helped a lot of bigger organizations go through this where it's like they go from sales-led to product-led. But it's really freaking hard to make it work.”
- Wes Bush
This myth came from a place where people thought everyone needed to do PLG.
Very, VERY, similar to today, where everyone thinks they need to do AI-something.
(before PLG, it was “crypto & blockchain” by the way)
So a lot of Sales-Led folks were like “shit, we have got to add PLG otherwise we can’t grow”
Turns out, adding PLG successfully to a Sales-Led set-up is hyper difficult. Even Wes as someone who has built a business around that fact admits.
The problem stems from a gazillion angles. Here are just a few:
Your product might be too complex for a “figure-it-out-yourself” set-up
Your product organization will keep building for the bigger revenue stream - which clearly is Sales-Led
Your operations mindset needs to flip. From obsessing over forecasts and pipeline to tweaking the “sign-ups → adoption → credit card swipe” funnel
So it’s not just BS to say that if you want to do PLG, you really need to mean it and set it as a strategy to get anywhere.
Myth 3: PLG means you can ditch Sales
According to the latest benchmarks, the best product-led companies still rely heavily on one form of PLS or another.
Meaning that even with a strong self-serve motion, you still have reps helping attract and convert customers. And the more upmarket you go, the more human interaction will be needed.
What does change is the kinds of reps you employ and their strategies.
But let’s actually talk about this spectrum of “fully self-serve” to “Product-led sales”
1. Self-Serve/No-Touch
“There are products where the individual doesn't have to talk to anyone. In fact, they don't want to talk to anyone. Just find the tool, try it. They love it. It's like, this is a no-brainer. Let me swipe the credit card”.
-Jesus Requena
The No-Touch Motion lets users onboard and start using the product without any interaction with a sales team. This is typically driven by a freemium model or a free trial, where users can explore the product's value on their own.
It offers:
It gives users independence to explore and engage with the product without sales assistance.
Reduces CAC since it doesn’t require a sales team (unless you spend it all on marketing).
High scalability as it can accommodate many users simultaneously with minimal human intervention.
When should you use it?
If you have a product with low complexity that users can understand without extensive guidance
If you have users that can make purchasing decisions independently
At the early stage of a customer journey, to attract a large volume quickly.
2. Sales Assisted / Low-Touch
“This is where it's still mostly the product, but you still need some handholding, maybe a demo or answering a few questions here and there.”
-Jesus Requena
This is the step in between Self-serve and Product-Led Sales. Essentially, it gives users some level of interaction with sales through the purchasing process. This could be through live chats, webinars, or demo sessions conducted by Sales or CS teams.
It offers:
Better user guidance and additional support to understand the product better
Increases user engagement as teams support user questions
A higher cost because you’ll still require a sales team, but the level of interaction is lower than in an outbound model.
When should you use it?
If you have a lot of single users wanting to upgrade to a team plan - but they have some questions before they dare to do it
If you’re running a product that requires a bit of explanation before customers are able to really get how it works and then are able to see value
3. Product-Led Sales / Medium Touch
This final motion is the most proactive sales approach. Sales teams use their own product data to approach customers.
It offers:
A highly data-driver approach, as you use insights from product usage to determine when and how to engage users, making the sales process highly data-driven.
Targeted engagements as Sales focuses on users who show significant interest based on their interaction with the product
A higher cost, as it requires well-equipped sales teams and robust analytics tools.
When should you use it?
If you have accounts that could grow into really big tickets but need some help in driving this process
If you have a complex product with longer sales cycles that benefits from a personalized approach
In the end
Not everyone should be doing PLG. Either it’s because of your product itself being too complex or because your whole company would need to be re-wired.
And if you do PLG, chances are you will do a blend of PLG, Sales Assisted, and PLS.
And that is okay.
Just because you said you are now a “PLG company” doesn't mean that some selected prospects should not get the sales treatment.