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The adoption of product-led growth is changing how B2B companies conduct their business and leading some of them to reorganize their teams. What if “sales and product” or “sales and growth” made more sense than “sales and marketing”? Let’s explore. — Anna
The new focus of product-led sales
Product-led sales is a model in which the product, not traditional marketing, helps companies understand who might be their next big customer.
Think of a freemium dev tools company, for instance: Instead of tracking which CTO downloaded their latest white paper, they look for organizations that already have dozens of employees engaging with their product on a daily basis.
Product-led sales is also a by-product of product-led growth, in which growth is driven by the product — and both are on the rise. Together, they make for a very powerful combination in which most deals can be closed through a self-serve motion, with sales teams focusing solely on potentially huge contracts.
The rise of product-led sales, or why product-led growth requires a sales makeover
But as we explored earlier this week, product-led sales requires a new approach to sales, in which expanding an existing relationship has a higher value than landing a new customer. And to achieve this, salespeople need to be more deeply familiar with the product than they used to.
To a certain extent, this means that sales functions overlap with customer success and/or solution engineering. “At the end of the day, their job is to help that customer grow, and ultimately sell through that,” Amplitude chief product officer Justin Bauer said. This begs a question: Does it still make sense for sales to operate separately within an organization?
Expansion first
As a service provider to companies of all sizes hoping to make better use of their product data, Amplitude sees a lot of the different ways organizations embrace product-led sales. And what it has noticed some companies doing, Bauer told TechCrunch, is “having sales report into the expansion product team.”
If you aren’t familiar with what an expansion product team is, a job offer from Slack describes it as “a cross-functional team that builds foundational product experiences to help teams become successful on Slack.”
On the surface, it makes sense: If sales teams in product-led organizations have customer success as their North Star (and route to monetization), why wouldn’t they be tied to expansion product teams?
However, Bauer warned that Amplitude only witnessed this type of experiment anecdotally and within a specific set of organizations: “traditional PLG companies.” That is to say, companies that have always been product-led and strongly identify with this approach.
In a similar vein, Elena Verna, a product-led growth expert and the interim head of growth at Amplitude, reported seeing some companies bringing in product-led sales “into a growth org with product.”
In this scenario, Verna said, “instead of product sitting as a silo, and marketing and sales selling the product, you’re starting to have product and sales work very closely together as a unit, like brother and sister. And marketing sits on the bottom enabling [them].”
Verna agreed with Bauer that this type of reorganization is happening only at “companies where product-led sales is their superpower.” But could this become the new normal?
Outliers or trendsetters?
Bauer said that while anecdotal today, having sales report to expansion product teams could become a trend. But he also referred to this approach as extreme and added he didn’t think this would be “the right solution for most companies.”
However, the old way of doing things also comes with problems when a company wants to implement product-led sales, Verna said.
“Traditionally, [the salesperson] has always sat together with sales teams. And there’s a lot of issues that this model introduces because you need to have really fast feedback loops. Are our [product qualified accounts] definition and sales enablement correct? Does our monetization work right? You need to have almost a growth mindset on the sales team. […] And that’s not the DNA of usually core sales teams.”
As we heard from Bauer and Verna, another pitfall of implementing product-led sales is channel conflict, in which sales teams see product teams as rivals that are eating into their bonuses. This can be mitigated by quota reliefs, meaning that salespeople don’t get penalized if more clients go the self-serve route, but it can also be addressed through a reorganization.
In a recent issue of Lenny’s Newsletter, Hila Qu, a growth adviser and executive in residence at Reforge, highlighted a model that “minimizes the potential conflict between the growth team and the sales org.”
The model in question has a head of growth reporting to a chief revenue officer (CRO) or head of go-to-market. “In this setup,” she explained, “the head of growth acts more like a general manager for the self-service product line.”
According to Qu, this creates more internal alignment “because the growth team is not taking away revenue/quotas/commissions from the sales team, and the CRO is incentivized to drive the highest annual recurring revenue at the lowest cost.”
With Cloudflare and GitHub both cited by Qu as examples of this approach, we are once again back to PLG poster children. But will a wider range of companies follow suit? And what form could it take?
It is too early to tell, but Verna has a hunch that the emerging growth sales function will be part of the picture. “Right now we have core PMs and growth PMs, core marketers and growth marketers, and I have a feeling we’re going to have core salespeople and growth salespeople.” It will be interesting to see whether her intuition is right.
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