In this article, we'll look at what product-driven selling is and how to incorporate it into a company's growth strategy.
Content
Understanding Traditional Business Sales
What Sets Traditional Enterprise Sales Apart From Product-led Sales Strategies
Challenges of Implementing Product-led Sales
Introduction
If you own a business, you've probably noticed that the B2B SaaS world has seen significant changes in sales over the past few years. The current trend is moving away from the traditional sales model in that companies that have built a successful product-led growth (PLG) strategy are beginning to use PLS to monetize their user base.
This newfangled concept emphasizes the product itself as the primary driver for customer acquisition, engagement, and retention, and in this article, we'll focus on how to most effectively adapt SaaS companies' strategies to align with the changing preferences and behavioral patterns of modern software customers.
Understanding Traditional Business Sales
In the traditional business sales concept, the journey begins with marketing teams identifying and qualifying potential customers (MQLs). These are then handed over to salespeople for further evaluation into sales qualified leads (SQLs). This process sets the stage for a structured sales approach, involving direct collaboration with business representatives in a top-down manner, emphasizing the delivery of the product through strategic interactions.
Often, buyers may want a demonstration of how the product works in real-world applications, but traditional business selling focuses primarily on satisfying the buyer's specific business needs, not on the hands-on experience of the product. Actual use and exploration of the product usually begins after the transaction is complete.
Product-led Sales
To understand product-driven selling, it is essential to first understand product-led growth (PLG). Within PLG, the product itself plays a key role in acquiring, retaining and monetising customers. Central to the PLG approach is the emphasis on allowing customers to interact directly with and experience the product through self-service, which then activates both acquisition and monetization strategies.
.png?width=395&height=632&name=Kopie%20n%C3%A1vrhu%20Prodej%20zam%C4%9B%C5%99en%C3%BD%20na%20produkt%20(1).png)
In a product-led sales, monetization is driven by transforming users into paying customers directly through their use of the product, thus bypassing traditional sales or support interactions.
This model enhances direct sales by increasing revenue through the users' own experiences with the product.
Once users become regulars, sales engage to enhance and broaden accounts with high engagement towards the product. Marketing aids in pinpointing potential buyers, especially when the user is undecided in the buying process. The sales team finalizes deals by aligning product advantages with the buyer's needs and the end user's experiences.
What Sets Traditional Enterprise Sales Apart from Product-led Sales Strategies?
Customer Relationship Begins with Product Use, Not Ends with Product Use
In a product-led sales framework, the customer relationship is established through firsthand product usage, emphasizing a value-driven connection tailored to the end user. This methodology contrasts significantly with the traditional enterprise sales approach, where the focus is on selling a solution based on identified problems, using a hierarchical sales process.
Embracing product usage as the initial touchpoint, software businesses can cultivate a loyal customer base without demanding upfront financial investment.
This strategy significantly lowers the barriers for user entry and accelerates the feedback mechanism, streamlining improvements in a way that traditional sales methods, often slow and cumbersome, cannot match. This model not only enhances user acquisition and retention by reducing initial resistance but also fosters a dynamic environment for rapid product evolution based on real user insights.
Pipeline Originates from Active Product Users, Not Just Marketing Leads
Imagine focusing on accounts already familiar with your product through its network effect, rather than cold-contacting leads from a webinar.
This approach significantly simplifies the sales process in a product-led environment, where marketing and sales together create a pipeline from active users who match the Ideal
Customer Profile (ICP) and exhibit behaviors indicating readiness to purchase. Contrastingly, in traditional business sales, the challenge lies in capturing the buyer's interest without their firsthand experience with your product in their work environment. Gaining the buyer's trust and end-user approval for long-term growth and account retention becomes a challenging task without prior product experience within the account.
Monetization Through Self-Service or Assisted by Humans
For Product-Led Growth (PLG) companies, the product itself acts as an enticing element that initiates a product-driven monetization process. This model enables users to chart their own path and supports self-service monetization levels without needing to acquire a potential buyer to introduce the product.
Merging this approach with sales and growth marketing strategies increases the scalability of acquiring B2B transactions in a cost-effective way. Conversely, traditional business sales models are strictly controlled by sales teams, restricting options for buyers who do not align with this approach, pushing them to look for alternatives.
Challenges of Implementing Product-Led Sales
Implementing product-driven sales can present a number of challenges. First and foremost, it can be about aligning product and sales strategies so that the product sufficiently supports the sales process. In this case, aligning the goals of each team is important, along with supporting training.
It is also necessary to cope with the transition from traditional sales methods and to adapt the skills and mindset of your team to be primarily product-oriented. It's important to remember that every change takes time, so don't expect miracles immediately after implementing a new strategy. To make the transition as smooth as possible, we recommend preparing individual departments for the changes well in advance and then giving them plenty of time to adapt.
Another challenge may be ensuring that the product meets the diverse needs of a broad user base and effectively supports conversions. In short, if you want to stay competitive, you need to constantly innovate, not only the product itself, but also the company's internal processes.
Creating a comprehensive feedback system to continuously improve the product while maintaining a balance between product development and sales goals can also be complicated. So, focus on not tending to prioritize one thing over the other, but instead establish a system that you will regularly review and follow over the long term.
Conclusion
The adoption of a product-based sales model represents the future for software companies and requires a fairly extensive overhaul for its successful implementation. Traditional sales models, which are typically not scalable to serve hundreds of thousands of users, are increasingly out of step with the requirements of a product-based approach. Constructing a product-based sales strategy therefore requires a fresh perspective and an understanding that effective methods from the past may not be sufficient in future years. These developments underline the need to innovate sales tactics to match the exponential growth potential of product-based approaches.
And if you're not sure how best to make this change, don't hesitate to contact us for a free consultation. Our business sales specialists will be happy to advise you on all stages of implementation.
FAQ
1. What is traditional business sales?
It focuses on direct sales through the sales team and targets potential customers from the top down.
2. What is product-driven sales?
It relies on the product itself to drive sales by attracting users who then turn into paying customers based on their experience.
3. How does it differ in customer acquisition?
Traditional selling uses direct outreach, while product-driven selling attracts users organically through the value of the product.
4. What is the role of the sales team in a product-driven approach?
The sales team focuses on developing accounts and engaging users showing high engagement rather than initial customer acquisition.
5. Can the two models coexist?
Yes, by combining strategies, the strengths of both can be leveraged, with product-driven growth being used to acquire users and traditional sales being used to close larger deals.
Topics: Sales
