Is Product-Led Growth Doomed?
Emerson Taymor
I help companies bring their big digital ideas to life by breaking them into small, testable experiments
A case for Sales-Led Growth or Product-Led Sales
I debated Sales Led vs Product-Led Growth at UXDX in Dublin. Representing Sales-Led Growth amidst the current Product-Led Growth trend was challenging, and even felt a bit dirty given my background in product and design.
My core argument was that Sales-led Growth remains dominant, whether you're launching a new business, scaling an existing one, or working within an enterprise. It's more capital efficient, provides deeper customer insights, and helps prove your business's viability to stakeholders like investors or the corporate board.
This significance is amplified in today's post-ZIRP world, where early stage funding rates have dropped by ~50% YoY, and deal volume is at its lowest since 2016. We all know how hard it is for projects in the enterprise to get funded today.
My caveat to SLG is that this shouldn't compromise the quality of a well-researched product. Sadly, Sales Led teams often diminish the end user experience, frustrating users.
My research revealed the dominance of Sales Led Growth. Among 107 publicly listed B2B SaaS companies studied by McKinsey, only ? were product led, and only 11 of them were high performers. Shockingly, Product Led companies spent an average of 10 percentage points more on sales, marketing, and R&D compared to their Sales Led counterparts. One of the main arguments for PLG is that you’ll spend less on sales and marketing. Well, it actually costs more because companies waste a lot of resources marketing to the wrong person and trying to convert a free paid trial to a full blown account.?
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Examining a classic PLG example, Slack, you see the utter destruction by MS Teams. Today, MS Teams has 270mm users vs Slack’s 18mm. Interestingly, Slack was acquired by a notorious Sales-Led Growth organization, Salesforce. Salesforce has grown at a CAGR of over 50% the last 20 years and almost 30% the last decade.?
Looking forward, I believe in the potential of Product-Led Sales. These successful teams will prioritize creating exceptional product experiences, ensuring ease of use, seamless team expansion, and valuable features with thoughtful design. They won't just consider the user experience but also the needs of the customer who will ultimately buy the product.
A strong sales team will still drive the growth and captain the ship through the murky and complex enterprise waters. They’ll deliver those significant 6 and 7 figure deals. And they’ll hear from the front-lines what customers actually are willing to pay for.
So as someone who has bridged the world between product, design and sales - let’s solve real problems, do that effectively and iteratively and then drive growth through sales.?
What do you think?
Transitioning to and looking for an IT Role ◆ Currently on Data Science Boot Camp, ◆Msc Digital Transformation, 2023◆ 19+ years in tech sales and financial services ◆
1 年This seems relevant to the discussion; https://hbr.org/2018/11/how-to-sell-new-products
Ethical Product Marketer & Strategist | US & Europe | Systems Thinking | Nonprofit to SaaS
1 年In my experience in the SaaS industry, I've witnessed the sale of vaporware lacking a tangible product to back it up (as seen by churn). The true magic unfolds when sales and marketing efforts revolve around a product that genuinely delivers value to customers. It becomes even more potent when sales, marketing, and customer success teams collaborate with the product development team to create something marketable. To me, Product-Led Growth (PLG) means crafting products that provide tangible value to customers. In the case of Slack (I love Slack), while they excelled in creating a beloved standalone product, they may have underestimated the importance of fitting seamlessly into a tech ecosystem, a realm where Microsoft reigns supreme. Microsoft excels not just with Slack but across various domains they've invested in, offering a comprehensive package deal. EDIT: I've also heard from other marketers that culturally PLG can mean product/engineering steers the culture and business. The same goes with Sales-led, etc etc. I wonder if it's possible to have an organization with a culture led by every department's potential to add growth and innovation. Experience-led? Idk. Would love to hear your thoughts on this.
My heart says product-led but my head says sales-led! In reality, I think you need both. The counter-argument is the Oracle type sales company that are very successful but due to deficiencies in their offerings they leave gaps for new entrants to come into the market and disrupt them. I wonder if product-led companies have greater longevity? That could be an interesting one to study in a few years.