Product-Led Fundamentals

What is Product-Led Sales?

An intro to Product-Led Sales. Why it works and how to make it work for you.

Joanna Huang

June 3, 2022
·
5
 min read

B2B SaaS products are easier to use than ever. Within minutes of signing up, for example, anyone can attend a meeting on Zoom, ping a coworker on Slack, and make project plans on Airtable. Product-led growth (PLG) lets people self-serve onto a product–and it’s become the hottest customer acquisition channel. But what sales strategies will turn your large user base into revenue-generating customers?

The B2B SaaS Product-Led Funnel

Product-led sales is a go-to-market strategy where sales teams leverage insights into product usage to engage and retain end users. It all starts with a product that’s open for free trials. This delightful, simple user experience acts as the ultimate lead generation machine. Marketing nurtures users to drive the self-serve model, but the best part comes next. Sales teams (also called ’sales assists’) do warm outbound onto an existing account base to increase conversion rates and expand revenue from each deal.

Product-led sales combines a product-led acquisition model with a sales-led monetization model. The upsell motion works by uncovering a key business case and mapping it to a team or enterprise plan. Higher-paid plans let users unlock additional features, integrations, and usage while benefiting their businesses with security and custom SLAs.

Sales teams enable existing end-users to become enterprise champions who do the internal selling for you. This future champion comes from certain users known as Product-Qualified Leads (PQLs).

PQL → The New Lead Type for Your Product-Led Sales Strategy

Product-led sales teams ‘fish’ for a different kind of lead in the account base. Sales reps do prospect for Ideal Customer Profiles (ICP) –you still want to target companies whose use cases fit your solution and that offer growth potential. But the buying process accelerates when they match each ICP with product usage insights to measure buying intent. Highly engaged users whose companies meet your Ideal Customer Profile are known as Product Qualified Leads. PQLs convert 5x better than Marketing Qualified Leads that haven’t tried the product.

When your free signups have high product engagement, they are far more likely to convert into paid or upgrading customers. Even after onboarding these accounts as paid customers, the widespread bottom-up usage means they’ll be less inclined to churn. Since PQLs predict who will be your best customer, increasing PQL conversion is the best strategy for using salespeople’s time to drive revenue growth.

Prioritize PQLs Using Tiers

Some things traditional and product-led sales share include limited sales rep bandwidth and the need to prioritize needs. With much more data, PLS combines customer fit and usage-informed buying intent to let your sales reps work more efficiently. Based on the expected value of an account and its likelihood to convert, PQL tiers change the ways sales teams prioritize leads in the funnel and how they approach PQLs.

Tier 1: This group has a very high propensity to buy. They are using the software intensely and fit your customer profile. They offer the best opportunity for success since they close faster than any other deals. These accounts should be your sales team’s #1 focus. 

Tier 2: This group fits your customer profile well but only uses your product in a limited way. A salesperson should approach these users and figure out ways to deepen the account’s engagement with your product. New motions of product-led selling and product evangelism will make this approach successful.

Tier 3: Depending on deal size, this group may or may not be worth your time. They are very active accounts but may be smaller or have unsuitable use cases. You need to figure out whether the deal size is the best use of a salesperson’s time. If not, let the accounts self-serve and support them with marketing nurture.

Tier 4: Your sales team shouldn’t go anywhere near this problem tier. Poor customer fit and low engagement make these users the least likely to become productive accounts. Leave them to your marketing team and the self-serve sales motion.

PQLs become product champions when sales teams equip them with product education and business cases. These users will engage with the product more intensely and get so much value that they begin evangelizing the product among their peers. Product champions help roll out the product to the rest of the company. 

This word-of-mouth expansion lets your sales team perform a ‘land and expand’ motion. An account’s first user is rarely the enterprise-tier buyer. As the account grows from one to many users, the sales team builds relationships within the account and works their way up to the people who can sign for the company.

Benefits of Product-Led Sales

Product-led sales is a win-win growth strategy for buyers and sales teams. The self-serve model takes care of acquisition. Prospects quickly get value out of the product, which informs their purchase decision, increases deal velocity, and accelerates revenue growth.

📈 Reach and Monetize an Entire Market

Having a product open to a large volume of free trial signups increases market reach. At the same time, sales teams work to keep this volume of customers engaged and retained. They sell fast: instead of worrying about a big upfront transaction, sales reps quickly land deals and expand usage over time.

The bottom-up, product-led acquisition approach amplifies the sales team’s lead volume. Sales teams, in turn, amplify the product-led upsell conversion. These two pieces don’t oppose each other. PLG business models rely on self-serve sales motions and product insights to funnel Product-Qualified Leads into the sales team. It’s all about go-to-market at scale.

😁 Improve Buyer Experience

Modern SaaS buyers do not want to jump through hoops to see the product. They don’t want discovery calls prior to signup. They want to get their hands on the software as fast as possible to see how it benefits them. Getting out of the way lets the product show—rather than tell—its value to the user. This quick time-to-value engages the user with the product, removing friction, and helping them convert themselves from free users to paying customers.

At this point, sales reps can approach these self-qualified users, offering to help them unlock maximum value from the product. Sales teams serve as resources for demos, use cases, blockers, and product education. Their role is to guide users along a product adoption journeys. Consultative selling is about evangelizing the product and solving specific problems—a far more significant value-add than the typical hard sell.

🏎 Drive Sales Efficiency

When users can immediately access the product, they self-educate by using the software. Sales reps don’t have to do traditional lead nurturing or worry about implementation details and timelines. Users already get value from the product. That gives sales teams the ability to focus on self-qualified PQLs whose product usage clearly signals a readiness to purchase. This time saving, combined with higher deal velocities and lower churn rates, reduces customer acquisition costs (CAC).

🙌 Increase Expansion Opportunities

Early user activation and self-nurturing leads not only help land the initial deal–they even help with expansion efforts to increase lifetime value (LTV). Users sell themselves on the product, which creates momentum to upsell into team and enterprise deals. Sales reps can approach management with a much stronger sales pitch. Executives receive dozens of cold emails daily telling them to adopt organization-wide tools their company has never used. By starting with product usage instead of ending with it, your sales team assures buyers that their team will actually use the product—because they already are.

This upsell momentum is so powerful that 55% of customers who reached Zoom’s enterprise plan–the customers spending over $100k–had started with one free user. Today’s free Gmail user can be tomorrow’s enterprise tier. On top of that, PLS sales momentum creates more consistent growth.

Product Data = Sales Advantage

Layering a product-led sales motion with top-down enterprise sales creates a healthy and efficient self-serve flywheel. Your product drives user engagement and quickly surfaces Product-Qualified Leads. This high volume of self-qualified warm signups lets your sales team accelerate deal velocity. Sales reps proactively monitor product usage signals instead of waiting for one decision maker to inform them about key updates. Armed with this information, they expand the account and convert groups of users into business or enterprise customers.

That’s why it’s so important to have actionable product insights along with your CRM.

Calixa powers your product-led sales motion by combining CRM and product insights into streamlined sales workflows. Sales reps can live within Calixa’s interface for deep-dive PQL research or set automations that complement your CRM. Our platform helps you prioritize PQLs, increase upsell conversion rates, and drive your product-led growth model.

Ready to find sales-ready users? Sign up today.

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PRODUCT UPDATES

Product Updates: November 2022

Check out these latest releases and events. Calixa Automation Platform, Multi-Level Filtering, and more.

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December 7, 2022
·
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Combining top-down sales with a bottom-up PLG motion

Thomas Schiavone

December 1, 2022
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Find your best opportunities with a unified view across users, accounts and companies.

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November 30, 2022
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Product-Led Fundamentals

What is Product-Led Sales?

Joanna Huang
|
Product Marketer
|
Calixa

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June 3, 2022
ReadTime

B2B SaaS products are easier to use than ever. Within minutes of signing up, for example, anyone can attend a meeting on Zoom, ping a coworker on Slack, and make project plans on Airtable. Product-led growth (PLG) lets people self-serve onto a product–and it’s become the hottest customer acquisition channel. But what sales strategies will turn your large user base into revenue-generating customers?

The B2B SaaS Product-Led Funnel

Product-led sales is a go-to-market strategy where sales teams leverage insights into product usage to engage and retain end users. It all starts with a product that’s open for free trials. This delightful, simple user experience acts as the ultimate lead generation machine. Marketing nurtures users to drive the self-serve model, but the best part comes next. Sales teams (also called ’sales assists’) do warm outbound onto an existing account base to increase conversion rates and expand revenue from each deal.

Product-led sales combines a product-led acquisition model with a sales-led monetization model. The upsell motion works by uncovering a key business case and mapping it to a team or enterprise plan. Higher-paid plans let users unlock additional features, integrations, and usage while benefiting their businesses with security and custom SLAs.

Sales teams enable existing end-users to become enterprise champions who do the internal selling for you. This future champion comes from certain users known as Product-Qualified Leads (PQLs).

PQL → The New Lead Type for Your Product-Led Sales Strategy

Product-led sales teams ‘fish’ for a different kind of lead in the account base. Sales reps do prospect for Ideal Customer Profiles (ICP) –you still want to target companies whose use cases fit your solution and that offer growth potential. But the buying process accelerates when they match each ICP with product usage insights to measure buying intent. Highly engaged users whose companies meet your Ideal Customer Profile are known as Product Qualified Leads. PQLs convert 5x better than Marketing Qualified Leads that haven’t tried the product.

When your free signups have high product engagement, they are far more likely to convert into paid or upgrading customers. Even after onboarding these accounts as paid customers, the widespread bottom-up usage means they’ll be less inclined to churn. Since PQLs predict who will be your best customer, increasing PQL conversion is the best strategy for using salespeople’s time to drive revenue growth.

Prioritize PQLs Using Tiers

Some things traditional and product-led sales share include limited sales rep bandwidth and the need to prioritize needs. With much more data, PLS combines customer fit and usage-informed buying intent to let your sales reps work more efficiently. Based on the expected value of an account and its likelihood to convert, PQL tiers change the ways sales teams prioritize leads in the funnel and how they approach PQLs.

Tier 1: This group has a very high propensity to buy. They are using the software intensely and fit your customer profile. They offer the best opportunity for success since they close faster than any other deals. These accounts should be your sales team’s #1 focus. 

Tier 2: This group fits your customer profile well but only uses your product in a limited way. A salesperson should approach these users and figure out ways to deepen the account’s engagement with your product. New motions of product-led selling and product evangelism will make this approach successful.

Tier 3: Depending on deal size, this group may or may not be worth your time. They are very active accounts but may be smaller or have unsuitable use cases. You need to figure out whether the deal size is the best use of a salesperson’s time. If not, let the accounts self-serve and support them with marketing nurture.

Tier 4: Your sales team shouldn’t go anywhere near this problem tier. Poor customer fit and low engagement make these users the least likely to become productive accounts. Leave them to your marketing team and the self-serve sales motion.

PQLs become product champions when sales teams equip them with product education and business cases. These users will engage with the product more intensely and get so much value that they begin evangelizing the product among their peers. Product champions help roll out the product to the rest of the company. 

This word-of-mouth expansion lets your sales team perform a ‘land and expand’ motion. An account’s first user is rarely the enterprise-tier buyer. As the account grows from one to many users, the sales team builds relationships within the account and works their way up to the people who can sign for the company.

Benefits of Product-Led Sales

Product-led sales is a win-win growth strategy for buyers and sales teams. The self-serve model takes care of acquisition. Prospects quickly get value out of the product, which informs their purchase decision, increases deal velocity, and accelerates revenue growth.

📈 Reach and Monetize an Entire Market

Having a product open to a large volume of free trial signups increases market reach. At the same time, sales teams work to keep this volume of customers engaged and retained. They sell fast: instead of worrying about a big upfront transaction, sales reps quickly land deals and expand usage over time.

The bottom-up, product-led acquisition approach amplifies the sales team’s lead volume. Sales teams, in turn, amplify the product-led upsell conversion. These two pieces don’t oppose each other. PLG business models rely on self-serve sales motions and product insights to funnel Product-Qualified Leads into the sales team. It’s all about go-to-market at scale.

😁 Improve Buyer Experience

Modern SaaS buyers do not want to jump through hoops to see the product. They don’t want discovery calls prior to signup. They want to get their hands on the software as fast as possible to see how it benefits them. Getting out of the way lets the product show—rather than tell—its value to the user. This quick time-to-value engages the user with the product, removing friction, and helping them convert themselves from free users to paying customers.

At this point, sales reps can approach these self-qualified users, offering to help them unlock maximum value from the product. Sales teams serve as resources for demos, use cases, blockers, and product education. Their role is to guide users along a product adoption journeys. Consultative selling is about evangelizing the product and solving specific problems—a far more significant value-add than the typical hard sell.

🏎 Drive Sales Efficiency

When users can immediately access the product, they self-educate by using the software. Sales reps don’t have to do traditional lead nurturing or worry about implementation details and timelines. Users already get value from the product. That gives sales teams the ability to focus on self-qualified PQLs whose product usage clearly signals a readiness to purchase. This time saving, combined with higher deal velocities and lower churn rates, reduces customer acquisition costs (CAC).

🙌 Increase Expansion Opportunities

Early user activation and self-nurturing leads not only help land the initial deal–they even help with expansion efforts to increase lifetime value (LTV). Users sell themselves on the product, which creates momentum to upsell into team and enterprise deals. Sales reps can approach management with a much stronger sales pitch. Executives receive dozens of cold emails daily telling them to adopt organization-wide tools their company has never used. By starting with product usage instead of ending with it, your sales team assures buyers that their team will actually use the product—because they already are.

This upsell momentum is so powerful that 55% of customers who reached Zoom’s enterprise plan–the customers spending over $100k–had started with one free user. Today’s free Gmail user can be tomorrow’s enterprise tier. On top of that, PLS sales momentum creates more consistent growth.

Product Data = Sales Advantage

Layering a product-led sales motion with top-down enterprise sales creates a healthy and efficient self-serve flywheel. Your product drives user engagement and quickly surfaces Product-Qualified Leads. This high volume of self-qualified warm signups lets your sales team accelerate deal velocity. Sales reps proactively monitor product usage signals instead of waiting for one decision maker to inform them about key updates. Armed with this information, they expand the account and convert groups of users into business or enterprise customers.

That’s why it’s so important to have actionable product insights along with your CRM.

Calixa powers your product-led sales motion by combining CRM and product insights into streamlined sales workflows. Sales reps can live within Calixa’s interface for deep-dive PQL research or set automations that complement your CRM. Our platform helps you prioritize PQLs, increase upsell conversion rates, and drive your product-led growth model.

Ready to find sales-ready users? Sign up today.