PLG: Comparing the profitability of product-led vs. sales-led companies.

Could you please introduce yourself and your company?

Hello. It's such a pleasure to be here. My name is Tim Cakir. I'm the CEO of TaskDrive. What is TaskDrive? You might ask? TaskDrive is the engine behind sales-led growth, and I'm very excited today to talk about sales-led growth and product-led growth mainly

What is the difference between the sales-led and product-led approach?

Sales led, as we call it now, sales-led growth, it's your traditional growth.It's where you have salespeople. They'll go through some contacts, they'll contact them, they'll message 'em, they'll show up at their door. That's very, very old school. And they'll sell a product.
Product-led growth versus sales-led growth is that product-led is actually an inbound approach. Is your product is such a must have and is findable on Google, is findable on content and so on, and it's very easily acquirable.So basically people can sign up on a free trial, on a freemium, testing the product very easily and they can find this journey through themselves and get inside the product. And when they're in the inside the product, the product is so good and has so many different ways of converting people into paid users, that product-led growth is really the new trendy way, especially for platforms and software and SaaS businesses, of course, that are very product heavy and that are also pleasing UX and pleasing UI.

In terms of Customer Acquisition Cost (CAC), what's the difference between product-led and sales-led growth?

The difference is, it's quite big because on a sales led you're gonna have humans. You're gonna have humans that has to have these phone calls, LinkedIns, messagings. This is gonna take much longer time and so on. And it's, it's not as scalable if I may say that.
So your customer acquisition costs your CAC, it's gonna be much, much, much higher on sales led growth. And we'll discuss in a bit why that's okay. Right. But on the product led growth, your customer acquisition cost is be much, much lower than on sales led growth. Why? Because at the end of the day, your, your product led growth is what's very scalable, right? What you can repeat for 10 users should be able to be repeated for a hundred thousand, hopefully millions for your business. Right?
So these users should be able to acquire themselves.You know, that's the idea of product-led growth. So the customer acquisition cost, in the beginning might be a little bit higher as well, to be honest. And as you develop the product, as you develop onboardings, as you develop documentation guides and marketing efforts inside the product, then your product led growth CAC (customer acquisition cost) will lower.And when that's lowered, that's where actually you can start throwing much more revenue at it, much more attention at it, because that's gonna be your amazing scalable system that you have for your business.

When is product-led more relevant than sales-led approach and vice versa?

Okay. That's a great question. So I don't think it's about the relevancy, but there might be a product that has different packages, right?
So if they have a small, medium package that, let's say it's $50 a month, $250 a month, right on a recurring revenue, right? On a SaaS model, on a subscription model then your product led growth makes much more sense. But some of these products, let's say that you're charging per users, you're charging per volume or so on.
Then let's say you have an enterprise package,  if you have an enterprise package, it's, you know, 50 uses more or 50,000 data points more or something like that. And that revenue that you're gonna get from Enterprise is much higher, which I think we can discuss in a minute. But if it's much higher, then you're gonna start taking the sales led growth approach.

So it's really some businesses that are much easier to attain as a product and they are much smaller on monthly recurring revenue or average revenue per account on yearly, you will focus on product-led growth and for some of businesses, that's enough. They don't have an enterprise package. They don't have big couple of thousand a month packages. So then your product led growth is what's really good for you. But if you do have these different packages, you might have a combination of product led growth and some sales led growth, but also some businesses that are much more enterprise. Right. I think you know the examples are big platforms like Salesforce and so on, right?
They will be a lot on sales-led growth because they're enterprise, their sales cycle is months and months and months, right? When it's that you do want somebody, a human to be able to work those deals, to build that relationship, to show the examples and so on. So don't see it as separate, right?
But see it as something that you could combine according to your subscriptions, according to your packages that you're offering. But please do not forget. It's not all for one, you know, doesn't mean that sales led growth is for you. Product led is growth for you or it's not for you, or a combination is for you.
Everything is really custom to your business. But I think that the main selling point of both strategies or systems is actually looking at the revenue that you are gonna do per account. And that's where I would really start comparing those. I would say, you know, this is my package. This is another package.
Can product led growth be in both, or does it make sense to have sales led growth? Or if you have very high packages, do you really wanna focus on product led growth or do you wanna focus on sales led growth?

For average size deals, is product-led growth better than sales-led growth?

Okay, well, so I see this, this a bit difference than what you were telling me here. So when we're saying 5K to 10K, that's actually a really sweet spot to start sales-led growth. So you can start sales led growth around 6K average revenue per account yearly, right? Why am I saying this? Because this is up to your lifetime value as well, right? So if your lifetime value is over 18 years, 18 months, sorry, or 24 months, you know, two years. One and a half year, two years, and, and more than the 6K (average revenue per account) makes sense. But this is also where you are, in which country, how much does salaries cost, right? Especially your salespeople. If they're costing very, very high, then your average revenue per account might be a little bit higher. But luckily today in a remote world, we can get salespeople from all around the world.You know, at TaskDrive, what we recommend is 6K + plus average revenue per account.
You are ready for sales-led growth, right? But, between 6K let's say, and I'm gonna bring that number a little bit down to 3, 4K, I think for me, that's where your question is, right? That's a little bit. The unsure spot. Is it product led or sales led? Again, this is a very pricing strategy. You know, where are you, which clients are you're serving in which country? You know, where are your people working from? What's your pricing packages? You know, and if you find yourself in a place where you're unsure, then you're gonna have to look at your CAC, your customer acquisition costs, and you're gonna have to look at your LTV, your lifetime value. And according to that, you have to find the sweet spot for you. And you know, you might be able to say, okay, I'm dividing. You have one package. I'm dividing this into two packages, right? What was in package one? It was certain number of users, okay? So I'm gonna limit that, you know, and I'm gonna put unlimited in an enterprise package. And suddenly I'm gonna go over a 6K average revenue per account.
Then I'm gonna have my enterprise package on a sales-led growth, and I'm gonna possibly bring down that package that I, I had that was bringing me 3, 4K average revenue per account. I'm gonna bring that down to 1,5K, 2K.It's easier to come in, it's product-led growth, and if your product, and I hope that, and your product should not be a vitamin, but it should be a painkiller. If your product is a painkiller, then what happens is that you're gonna help them grow. As you help them grow, they're gonna upsell themselves into your enterprise package, right? And when that happens, your customer acquisition costs from here to here is even cheaper than just taking it from an enterprise package. So this is why, you know look at your average revenue per account. Look at your lifetime value, look at your CAC and make the right decision. You know, and don't just say, okay, the market says 5 to 10 K. And that was a great question, but combinations of packages of, again geographical locations on, on your salespeople or your product people, this will change a lot.

Sales-led vs. product-led for expansion: what's the best approach?

A hundred percent. There's a big difference between that because when we say acquisition, you might have acquired only 10 users in a company of a hundred people that might use the product.
Right? Let's say that we are a note taking platform, right? And we have a hundred people in our company, in our client's company, and only 10 of them are using, it's only the marketing department, right? So we think that we acquired this company, but there's so much more potential there. There, there is a massive expansion that we can do on the account, right? So there is another 90 users that could use your platform. So on product-led growth, there is a bunch of things that you can do, right? By telling them, Hey, do you want some other users? Do you want to get them to test invite them, right? You can share, share documents and notes, and these documents and notes might be able to show people that, oh, okay, they're using this in the marketing team and I want to use that, right?
But also, If you don't see the potential, because you don't know how many people are there and so on.

This is where companies like Successeve is coming very, very handy. Right? And we're gonna talk about that in a second. But basically those 90 users, if you're aware of those 90 users, and they also fit somehow your ICP, right? Because at the end of the day, the company has bought in 10 of the people in marketing works really well, and it's a note taking platform. You want them to collaborate better. I've seen many companies with different noting platforms and, and it's a mess. You don't want that mess, right?
So if you're expanding on there, you could do that with product led growth, but also the sales led growth. It doesn't mean that you've acquired in that's that, right? You can follow up in three months. See, the 10 users are very active users and they love the product. You can call them up, right? You can ask for a time, a user interview and tell them, Hey, and they're showing you some features, and they'll be like, oh, so why don't you have the rest of the team on here?
There's so many other little nudges and triggers that can happen throughout their lifetime with you that can expand, right? So you have to really think again about that. If 10 users bring you $250 a month, right, which is great, but what about a hundred users? It's gonna bring you really 2,500.
Then your average revenue per account is so much higher. You've brought them with product-led growth, but are you ready to actually expand with the sales-led growth strategy? But these are the questions that I would actually ask myself each time that I look at, at my users, you know, and understand what's the potential of expansion inside that company.

How does a hybrid model work (product-led & sales-led growth)?

This is where again, I'm gonna repeat, but an amazing platform like Successeve is gonna help you, right? Because you'll be able to segment, you'll be able to understand who is for product-led growth and who is for sale-led growth. So let's say that you have a freemium, you have a free trial. And you're able to suddenly put your ICP (ideal customer profile) in Successeve, you're able to segment them, and then on the x y chart, if I'm not mistaken, right now on the platform, you're able to see, oh, these are big potentials. They're big fishes, right? And these big fishes, okay?
They came on their own, they came with our product. That's strategy, right? They found the platform, they found their on Google, they found the documentation. They've been trying it, and they're gone. They're not active anymore, right? So, Suddenly you can put them in, you can, you can make sure that they go into your sales-led growth strategy. To ask them, "Hey, why did the trial didn't go through?" You know, can I help you on a personalized demo? Because you didn't have that chance to do that before, right? But also, the segment that you found out that is not up for your sales-led growth is on your product-led growth, right? And they still didn't convert.
That's where your email sequences, your onboarding, your webinar invitations, many other things can play an amazing role to also make sure that they are paying users at some point.Right. So this is why I think analytics platforms like Successeve is what's gonna differentiate the game for you, is to understand, start segmenting, and don't think every user is the same. Every user's behavior is different. Every company has different use cases. Even if you believe that, hey, my platform is for this use case, different, different personas will use it differently.

So this is something that you have to be able to understand, right, so that it fits the customer at hand. Not just all customers. And then you're also be able to understand if they can adopt the product from a segment, from a product led segment, or can you also help them with human approach, with a concierge service, if you want to call it on the sales-led growth, to make sure that you're maybe customizing things for them.If you do have that potential, and you know, by talking to them also, this is where you're gonna learn a lot more on optimizing your product, developing better your product. So, so start using platforms like Succeseve to be able to segment these people in different groups and understand the groups a little bit better.You know, don't go just for, okay, we have these two personas and that's it. There are so many different segments, different use cases, different frequencies of usage. I've seen this a lot. You know, a lot of companies are going for daily active users, but hey, your product is for weekly reporting. So while you're thinking for daily active users, look for weekly active users, and these are the type of platforms again, That is gonna really help you make these decisions so that you can have a better growth strategy, even if it's product-led or sales-led growth.We're all here to grow.
Tim Cakir
CEO at TaskDrive
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