Sales Led Growth vs Product Led Growth

Product led growth companies continue to be the darling of investors. For years leading and scaling up sales organisation in startups, I’ve come across many founders and VCs trying to pursue PLG strategies at all costs without regards to wether that was right for the product, users and market. How do you know what is right for your business? I believe you need to look at key aspects of: the market you operate in, the user problems you are solving and last but not least how your company operates and it’s culture.

When is a PLG growth strategy unlikely to work for a product?

• Market specific regulations would require a product to be different e.g. how interest rates are calculated and disclosed to consumers or Data Privacy influence how sensitive data are collected, stored, and processed.
• Highly complex product (e.g. Enterprise grade) or the one that would require user training. e.g. Flight Simulation, Bloomberg Terminal
• Little or no incentives for one user to recommend the product to another user e.g. unlike big collaborative aspect that makes users want to encourage others to use the same like Figma, Notion, Slack
• Product requires implementation and configuration before it can be used e.g. Intune, Security information and event management (SIEM), Mainframe

Any of the above indicators may give organisations a hint that they seriously need to evaluate growth options. It may be best to consciously select SLG as a way forward instead of PLG.

SLG would also be best strategy for growth if a company already have or feel the need to build a Professional Services team. There are plenty good reasons to build one as part of SLG strategy as it provides plenty of benefits as well.

• It can smooth out any objections voiced by customers who don’t know how to fit that product into their organisation and processes.
• Increase confidence in project success.
• May even help with cashflow as one off services tend to bring immediate cash.

There are also less obvious indicators making strategy choice much harder.

For example, an organisation is doing well but Monthly active users or Free version conversion rate to Paid version are stagnant. Revenues are growing but growth rate is linear. In such cases the Product team need to continue to build hypotheses for improvements, test and measure them. And, not only a product itself, but its positioning and distribution channels. This is when Product teams need to talk to users even more and ask questions. Find out what could be even better? What a product need to do for them in order to justify a double the current price point or a new Premium version? If such work is organised there is a good chance that PLG and further accelerated growth is possible or provide additional justification for a pivot toward SLG.

In some cases metrics might be much more convincing to follow SLG strategy. For example, when your revenue from top 10 deals are more valuable than 80% of the bottom deals. In such case you definitely need to consider building an Enterprise sales team and pursue SLG.

One may ask, can I continue with PLG strategy and build SLG organisation in parallel? It might be possible if you got your PLG mindset from the beginning. However, turnaround from SLG into PLG is possible in theory. However, in practice, is almost impossible. SLG organisations are often larger in size, tend to depend on people and processes more than PLG lead organisations who rely on automation and technology for growth.

If you attempted, but still feel as PLG is a constant struggle, it is likely that your company culture was built around SLG. As Peter Drucker once said “Culture eats strategy for breakfast”.

In some cases, a strong leader could realise that it starts from oneself and commit to change own mindset and habits. How one brings own organisation to change is a subject of many management books and possibly a topic for another post.