Introduction

For an organization to grow in the right direction, it is essential for all teams within it to adopt the right set of growth options leading up to the right clients. Once the right clients are on board, the product must be able to turn them into loyal and passionate product advocates who become excellent sources of word-of-mouth marketing.

Broadly, there are four growth strategies that see widespread adoption in the product community:

1. Sales-led growth,
2. Product-led growth,
3. Founder-led growth, and
4. Marketing-led growth

In this blog, we will dive into a brief understanding of the evolution from sales-led growth to product-led growth, and what lies ahead in the landscape.

Sales-led growth - the traditional approach

Sales-led growth counts on sales procedures and teams take control of your revenue growth. The success of your firm in a sales-led growth environment is directly related to the performance of your sales force. The marketing team may still shape the brand narrative—for example, through branding or high-impact campaigns—but it is eventually the sales team that holds a greater influence on the company's bottom line. Salesforce and Microsoft are two examples of companies that have increased their sphere of influence by flexing their sales muscles since their inception. 

The major issue with sales-driven growth is its insistence on organizational silos. For instance, sales-led organizations function typically have the marketing team collect leads and pass them on to sales development agents. The sales  agents who qualify the prospects before passing them on to account executives.These processes, though heavily interdependent, largely behave like mutually exclusive units. Further, the metrics by which each of these teams are evaluated can often lead to unproductive friction with the process in turn taking the hit - lead quality suffers, funnel leaks, and closing rates plummet. Consequently, the entire organizational structure appears to be disorganized and fragmented. 

For service-based businesses—those that sell highly technical or proprietary products—or even consulting organizations with high-touch business interactions, sales-led growth may be the ideal method. Because sales-driven firms have longer purchase cycles, sales-led growth is mostly  typical in B2B domains. 

What is PLG and the hype around it?

Product-led growth is a company approach that focuses on acquiring, activating, and retaining customers through your product. Product-led growth (PLG) has pulled its weight as an effective  go-to-market strategy over the past decade. PLG strategies have helped startups like Slack, Dropbox, and Airtable achieve historic growth, and traditional sales-led businesses are scrambling to implement the customer-centric components of the PLG model. However, as PLG-native businesses mature, they are aggressively integrating features of traditional sales-led business models as well. As the lines between the two blur, a new hybrid go-to-market strategy emerges that combines the best of both worlds to meet buyers on their own terms. This accommodating strategy is referred to as "customer-led growth."

Although the beginnings of product-led growth as a business strategy have been widely documented, there are a few macro forces worth noting. To begin with, developing and distributing software has never been cheaper. Developers designing for their own needs have encouraged the creation of user-centric products. Second, almost all consumers now accept digital payments as second nature, allowing businesses to adopt self-service shopping. Finally, successful consumer technology businesses such as Netflix and Spotify have demonstrated that seamless user adoption can be a profitable revenue model in markets where size is king.

Product-led firms often get the following benefits as a result of leading with the product throughout the organization:

1. Lower Customer Acquisition Costs (CAC): By allowing users to upgrade on their own.
2. Higher Revenue Per Employee (RPE): Less hand-holding means higher profit margins per customer.
3. Shorter sales cycle: By allowing prospects to onboard themselves, you can significantly reduce your prospects' time-to-value and sales cycle.

Customer-led Growth - the hybrid go-to-market model

The most successful businesses will combine the best of both worlds. By mixing elements of both PLG strategies and SLG into their go-to-market approach, they will be able to create multi-faceted models that meet all potential clients on their terms. Termed as Customer-led growth (CLG), this will allow potential clients to take charge of their purchasing journey and create unique experiences of their own. SaaS sales and user journeys poised to shift from the neatly compartmentalized SLG-PLG realm, opting instead to meet somewhere mid-way. This hybrid approach to sales allows prospects to choose the level of involvement that makes the most sense for them, letting them create user journeys that make most sense to them.

When it comes to customer-driven growth, it is all about options. CLG strategies allow service providers to meet users when and where they are ready, putting the user on the driving seat of the sales process. A buyer’s adaptability and empowerment allows them to traverse the sales process as they see fit and engage with the appropriate content to fulfill their needs. As opposed to a full transition to product-led sales, a customer-led approach can be an effective bridge for businesses vying to close the gap between their organizations and those of competitors employing pure product-driven strategies. Without a swift and radical change in the GTM direction, customer-led growth will allow you to test waters with what works best for your market.

Setting up a customer-driven funnel

Once you have made the decision to give customer-led growth a shot, here’s how you can go about it in four steps:

1. Map out the early stages of the customer journey and discover the decision points
2. Chart out ways for the customer to communicate with you effectively
3. Gather and analyze the inputs shared by the customer on a regular basis
4. Track customer involvement to improve customer touch points in the future

The verdict

The distinctions between product-led and sales-led organizations will continue to fade as both mature and implement user-centric customer-led models. Go-to-market strategies will adopt a proactive hybrid approach that focuses on optimizing customer success. Each user will be served on their own terms rather than being pushed into a one-size-fits-all approach. To address these changing needs, trailblazing organizations will begin implementing all available techniques as soon as possible. They will continue to measure, track, and adjust as their customers do. Consequently, product teams that leverage this customer-led model will thrive in the new world it creates.