A Guide to Sales Led Growth: The "Powered By" Approach

Why should you care about Sales led Growth (SLG)?

Once you’ve found product market fit and have won your first customers through PLG, it is common to hire out your first Sales team to supercharge growth and hit your triple, triple, double, double, double revenue numbers. It can be a daunting task as you could be hiring sales reps that have never sold in your particular industry and there’s no playbook at your company to onboard new reps. Nothing kills a sales team more than not having a clear direction so they can hit their number.

In this blog, we’ll dive into how we think about targeting our Ideal Customer Profile (ICP) starting in the SMB segment (and beyond) using the "Powered By" approach and how to grow contract sizes by expanding your Total Addressable End Users (TAEU).

The Power of a Well-Defined ICP

Building a precise ICP for your company is the first step in growing your Average Contract Value, shortening sales cycles, and boosting your sales team’s productivity. But crafting this profile takes intention and clarity. Defining your ICP starts with the basics:

1. Identify the Pain Point: What specific problem does your product solve?

2. Understand the Industry: Which sectors are most affected by this pain point?

3. Pinpoint the Persona: Who is most impacted by the problem?

4. Know the Decision Makers: Who are the key players making buying decisions?

With these basics in place, you’re on solid ground to attract the right customers and scale quickly.

Scaling Your Sales Strategy

Now you’ve successfully defined your ICP, gained some early traction via product-led growth (PLG), and are now ready to scale with a dedicated sales team. For the sake of this discussion, let’s just say you plan on targeting customers in the 100 - 5,000 employee range (we select this because you don’t want to get pulled to a huge Enterprise too early as it can delay sales cycles, reduce feedback loops, and make your product team tailor solutions they shouldn’t have to). You’re excited to unleash your new sales team on this market, rich with potential. The following playbook will guide you in focusing your team’s efforts to make the biggest impact.

Introducing the “Powered By” Customer Concept

One powerful approach to scaling your TAEU is to identify a “Powered By” customer—where your product becomes an integral part of your customer’s own business operations. In essence, your customers end up promoting your product as a necessary tool for their success. The focus here is on making your product externally facing, so that it becomes essential not just for your customer’s internal use but also for their ability to serve their own clients.

Benefits of the Powered By Approach

1. Insane Stickiness: When your product powers a critical customer-facing function, it becomes hard to replace. Think of it like a car: a broken glove compartment doesn’t impede driving, but a flat tire does. Your goal is to be that “tire” for your customers, a component they can’t operate without.

2. Reach More Users: An internal-use product for a 500-employee SMB may only be used by a limited number of people, such as a marketing team of five or a developer team of 20. But if your product powers a customer-facing solution, your reach could extend to thousands. Imagine an SMB with 100 customers, each with 20 users. Your product is now accessible to 2,000 users (100 x 20), vastly expanding your Total Addressable End Users (TAEU).

3. Grow Contract Size: With more users and more value being provided by your solution, you will earn the right to price your contract higher. When you bring your proposal to a CFO, you will have clear metrics to why your solution is uniquely positioned to help their company grow. E.g. prevent churn by 35%, increase customer satisfaction by 40%, increase your sales team’s ability to acquire new customers

Real-Life Application: Snowflake’s GTM Team

For horizontal SaaS platforms like Snowflake, the Powered By approach can radically increase user engagement. Here’s an example:

Scenario 1: Snowflake sells the AI Data Cloud to ACME Credit Union Inc., with 150 employees. The use case is to aggregate data for internal dashboards. There are 14 total users (engineers, analysts, marketers, and sales). If Snowflake experiences downtime, ACME may experience minor disruptions, but the business can continue as usual. After a few months of engagement, your AE has earned himself a $20k contract.. Good, but that’s not going to triple your revenue (unless you have massive scale of customers).

Scenario 2: Snowflake sells to Acme Analytics Inc., a 150-employee marketing analytics firm with a customer-facing data need. Acme has 100 customers, each customer averaging 20 users on their platform. They are having pain around servicing customer’s analytics requests due to growing data volumes and complexities. Their customers are starting to complain and might churn. They turn to Snowflake to power their customer facing analytics to solve this challenge. Snowflake is now powering insights for all of Acme Analytics 2,000 end users, and Acme Analytics relies heavily on Snowflake to maintain customer satisfaction. Snowflake becomes essential, not just optional.

How to Onboard Your Reps Using the "Powered By" Approach

A leading indicator of your success of scaling a sales org is by how quickly your sales reps ramp and start closing bookings. Train your reps to tier their prospective book of business by who fits the "Powered By" ICP.

Example: Your New Rep has a book of 2,000 prospects they can target.

Tier 1 Prospects: Your product will clearly power a customer facing use case expanding your TAEU. Might be roughly 20% of their book.

Tier 2 Prospects: Your product will provide value to internal users. Might be roughly 40% of their book.

Tier 3 Prospects: It is not obvious how your product will provide immediate value. Might be roughly 40% of their book.

How their time should be spent doing Pipeline Generating activities:

Tier 1 Prospects: 80% of the time

Tier 2 Prospects: 19% of the time

Tier 3 Prospects: 1% of the time (only handle inbounds / marketing leads)

When your reps spend an outsized amount of time targeting the right ICP, they will reap the benefits of their hard work prospecting their targeted accounts.

In summary, targeting customers with a Powered By approach increases your Total Addressable End Users (TAEU) which will increase contract sizes. It also ensures that your product remains deeply embedded in your customer’s value chain, resulting in stronger retention and growth potential. With a clear ICP and this strategy in place, you’ll be well-positioned to unlock new levels of growth and stickiness in the SMB market and beyond.