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Jul 22, 2022

The difference between traditional enterprise sales and product-led sales

Elena Verna

Elena Verna

In part 1 of this guest series, learn from Elena Verna about why product-led sales is the next big shake-up in B2B SaaS and the key differences between traditional enterprise sales and product-led sales.

As a growth person, product-led sales immediately piqued my interest as an exciting evolution in B2B software. When Alex reached out to me about collaborating on a blog series with Endgame, I was excited to share what I’ve seen work – and what hasn’t – with product-led sales.

To bring this to life, I’m doing a three blog series to help PLG companies better understand what product-led sales is and how they can incorporate it into their growth strategy. This is part one, but stay tuned for the entire series, including:

  • Part 1:The difference between traditional enterprise sales and product-led sales
  • Part 2: What are PQAs and PQLs and how to use them in product-led sales
  • Part 3: How to know your PLG company is ready for product-led sales

Intro

Product-led sales (PLS) is the next big shakeup in B2B SaaS. Modern software companies who have built a successful growth strategy with product-led growth (PLG) are starting to use PLS to increase monetization of their user base. There is significant upside to successful product-led sales, but there are some important differences compared to a traditional enterprise sales motion.

What is traditional enterprise sales?

Traditional enterprise sales is when you bring the product to the user through the buyer. Marketing is responsible for finding interested buyers and qualifying leads (MQLs) that are then passed to sales. Once vetted by the sales team, sales qualified leads (SQLs) are then run through a top-down sales motion with an enterprise buyer.

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There are instances where a buyer requests a proof of concept (POC) – but for the most part, traditional enterprise sales are based on the business need of the buyer, not the product experience. Product usage only takes place after a purchase has been made.

What is product-led sales?

To understand product-led sales, it’s important to define product-led growth (PLG). In PLG, product is responsible for acquisition, retention, and/or monetization levers within the growth model. Self-serve product usage is at the core of PLG motion, powering acquisition and monetization levers.

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Product-led monetization enables paid conversion of customer usage into self-serve purchase without the help of sales, customer success, or support.

Product-led sales augments direct sales motion on top of self-serve product usage to increase revenue.

Once the customer is using the product habitually, sales steps in to convert and grow product-qualified accounts (PQAs). Marketing also plays a role in identifying the buyer when the user and buyer personas are not the same. Sales then closes the deal with insight into the business needs of the enterprise buyer and product usage of the end user.

How are traditional enterprise sales and product-led sales different?

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The customer relationship starts with product usage versus ending with it

In product-led sales, the customer experience starts with product usage, so the foundation of the customer relationship is built on a specific and compelling value proposition for the end user.

This is completely opposite from traditional enterprise sales, where a problem/solution is marketed to a buyer and then pushed through a top-down sales motion.

By starting with usage, software companies can build a habitual user base without requiring financial commitment. This reduces friction (and cost) of entry for the end user and enables a product feedback loop that would otherwise take years or decades in a traditional enterprise model.

Pipeline comes from active users vs marketing leads

Imagine selling to accounts that have a network effect of adoption of your product instead of cold-calling leads that signed up for a webinar. It’s not quite shooting fish in a barrel, but it’s close. In product-led sales, marketing and sales work together to build pipeline from active users that fit ICP and have usage patterns that indicate readiness to buy.

Enterprise sales motions require sales to fight for attention at the top of funnel when the buyer might be aware of potential use cases, but they haven’t seen the product in action in their workplace. As a software company, you have to win over the mind of the enterprise buyer first and then win the hearts of the end user in order to retain and grow the account long term. This is much harder to do when no one in the account has used your product yet.

Monetization can happen on the their own or with a human in the loop

For PLG companies, the product creates a hook that drives product-led monetization. It empowers the user to define their own journey and even drive certain levels of self-serve monetization without having to find an enterprise buyer to bring the product to the user.

This approach can then be paired with sales and growth marketing to scale B2B acquisition in the most cost efficient way possible. On the other hand, traditional enterprise sales is gated by the sales team, and if that’s not your cup of tea as a buyer, you are forced to look into alternatives.

Final thoughts

Product-led sales is the future of how modern software companies go-to-market, but it requires first principles thinking to be executed successfully. Traditional enterprise sales was not designed for hundreds of thousands of users, so as you build your product-led sales motion keep in mind that the approaches that worked in the past won’t necessarily work in a product-led world.

Stay tuned for parts 2 and 3 of this series to better understand when PLG companies are ready for product-led sales and how to use PQAs and PQLs in your product-led sales motion.

Elena Verna is a Head of Growth at Amplitude, Growth Advisor to companies including Krisp, MongoDB, and Maze, and a Board Member at Netlify. She is also a former CMO & Advisor at Miro, SVP for Product & Growth at Malwarebytes, and SVP at SurveyMonkey. Elena has a breadth of experience in PLG models for B2B companies.

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