#5 - Ben Williams @ The Product-Led Geek
Navigating the intersection of sales and PLG
“Boiling the ocean is a recipe for disaster with PLG. So pick a playbook to focus on first and ignore the others for now. You'll get to them." - Ben Williams
Audio links
Video
Podcast notes
[00:22] Introducing Ben Williams
[00:53] Combining PLG and Sales: Insights from Snyk
[06:21] Key Metrics for PLG Success
[08:39] Beyond Acquisition: PLG's Role in Retention and Expansion
[11:30] Integrating PLG into Sales-Led Organizations
[18:19] Deciding Where to Start with PLG
[20:13] Closing Remarks
Transcript
To get us started, can you share an example of how you combined Product-Led Growth and sales in a previous role?
I think the most well-known and arguably most successful example at scale that I have, would be from my time at Snyk. The entire motion from Snyk was actually built around bottom-up adoption of the product as a means to drive company-wide monetization.
The founders understood that developers at that time were increasingly caring about security of their code. They needed better tools and less friction than they had. What made Snyk so successful was that crazy focus on the developer experience. Not just in the product itself, but also the go-to-market model. Much of the success of Snyk has been fueled by product growth, which I think is an acknowledgement of the reality that most developers would rather not talk to sales folks.
At Snyk, we were trying to build a massive free user base, but not to try and monetize individuals there. We knew that if we were able to get a large volume of happy individual developers using Snyk for free, then they would be more likely to pay for the product when the need arose. When they wanted to use Snyk in a bigger team or when they wanted to go from a personal use case to a business use case.
There were a lot of open source maintainers using Snyk on their projects. And it was common for those developers who started using Snyk in open source to introduce it at the companies they worked at. So that whole notion of bottom-up adoption was fundamental to the strategy.
In the early days, I think as is the case in most companies, sellers would try to speak with anyone who came through the product door, that we could identify as being from a big company. And I think that was generally okay, because the first sellers were super close to the product team and through those customer conversations, a great deal was learned that helped shape the product's evolution.
But that situation, probably went on a bit longer than it should have, before the process was refined out of necessity as the signup volume increased. We needed to have a filter that helped the sales team prioritize which prospects they engage with. At first that model was based around simple signals, like has the account reached any kind of usage limits? Has a threshold been reached in terms of contributing developers, which was the licensing mechanism? Has there been a self-serve purchase?
There was a kind of naive, non-scientific definition of activation. This was broken down into what we called success levels, with different success levels scoring differently. Over time, as we gathered enough behavioral usage data, we were able to confidently redefine that. We replaced those success level metrics into something that was actually predictive of retention and of monetization. And we integrated that into the the product qualified accounts scoring model.
I think one interesting thing to note is there was never any pushback from the sales team about potential cannibalization of the self serve motion. They had seen historically that the bottom-up motion was just so important in fueling the enterprise pipeline.
In fact, even at the scale that Snyk was when I left at the end of 2022, nearly half of all recurring revenue came from companies who started using the product in a really meaningful way before any kind of sales engagement. And that is a metric I call product influenced revenue. It was quite demonstrative of the impact the bottom-up motion had on the overall revenue motion.
Besides product influenced revenue, are there any other metrics that companies need to look at when assessing if PLG is adding value to their go-to market?
Well, PLG has such a wide spectrum. How you track impact is going to be dependent on the focus and the qualitative goals you have for the initiative. Why are you doing this?
If you're solving a problem that end users deem super important and it's painful enough for them to be actively seeking out solutions, then the efficacy of your product-led acquisition motion will be something that is important to track.
From a sales perspective, you'd probably want to look at the dollar value of qualified pipeline that's generated as well as tracking the conversion rate of that pipeline when compared with the outbound motion. Over time you'd also want to compare things like LTV and net revenue retention between the different pipeline sources.
At Snyk net revenue retention was something we tracked closely. In the context of product-led sales, net revenue retention was actually double digit percentage points higher for customers that came through product usage. In other words, they were in that product influenced revenue bucket. versus the outbound motion. And that was obviously a significant finding for us.
CAC and payback period may also be things you're looking to improve. You might want to cohort things like ACV, time to value, time to close and so on. But you have to go back to the basics and ask yourselves, what are you trying to improve? What's most important to you as a business?
And the answer can't be all the things, or at least not to start with. I think focus is really important. Understanding what is most important to the business as you're embarking on this journey, setting your sights on improving that thing and figuring out what you need to measure to do that.
Based on your experience, what should people keep in mind when when combining PLG with an existing sales team?
Trying to introduce a motion for bottom-up adoption and generate top of funnel isn't going to work if there is little organic demand from end users. There has to be this user problem that is burning enough that those users are motivated to be out there actively looking for a solution to that problem.
Without that fundamental dynamic, a product-led acquisition strategy is probably just not appropriate. And that's often the case for many enterprise sales-led companies. They're solving big meaty company level problems and have less focus on user level problems. In that case product-led acquisition might be less of a focus.
It's my strong belief though that every company will need to become product-led in their approach to retention through delivering exceptional user experiences. The alternative is that those companies will eventually be disrupted by others that enter the market. These companies will provide the same value, but package it in a way that users love to use. When your product drives strong usage retention, strong revenue retention typically follows.
If you can build your monetization escalator effectively, you can find ways to generate more revenue from each customer over time. Whether that's through expansion to more users, with more consumption, or with adoption of additional use cases.
When you combine that product-led focus on usage retention with proper product instrumentation, you can begin to arm the sales team with the signals they need to farm the existing customer base for expansion opportunities. This lets the product take at least some of the load in nurturing opportunities with sales, and harvesting them when those opportunities are ripe and not before.
A common pitfall I see with companies trying to introduce product-led motions into sales-led companies and vice versa, is when intervention in an opportunity is premature. So defining a collaboration model that has patience at its core. and understanding the right signals in terms of the right time to engage is really important.
Establishing guard rails between product and sales can be really important too. When it comes to the meat of the work in terms of integrating PLG into a traditionally sales led organization. I think you most importantly have to be really conscious of the existing culture. And not try to push up against it too hard. The most effective way I've found is often to not disrupt the existing motion at all. I think it can be catastrophic if you try to change things wholesale before proving things out.
Instead, I think it's far more effective to form a small tiger team, with the right people involved, including folks from product, growth, sales, and data. And have that team accountable and responsible for go-to-market experimentation. Think of it as an experiment to figure out what are the important signals? How should we score those signals? When's the right time to engage with an opportunity that's coming from the product? How should we engage? And not try to boil the ocean.
It can be tempting to focus on all the different ways in which you can look at what's going on in the product and all the different playbooks you might run. Whether it is expansion, new revenue or churn prevention. But at the end of the day, boiling the ocean is a recipe for disaster.
Pick a playbook to focus on first and ignore the others for now. At the end of the day, I think no process, no scoring model is going to be perfect. If you start simple and you approach it in the right way, methodically, you can make sure you stand the best chance of iterating your way to something that's highly effective.
You mentioned that at Snyk there wasn't a lot of objection coming from the sales team around PLG. Unfortunately that's not always the case. Do you have any suggestions how to deal with concerns or objections from the sales organization?
I think building confidence across the organization is important. It may be that your executive team is already aligned or it may be, you're a kind of sole voice championing this. There are a couple of upfront approaches that combined I’ve seen to be effective.
You can start with making some comparisons with successful applications of product-led strategies in comparable companies and situations. Those examples don't need to be in the same industry. You might not even have the luxury of examples in the same industry. But the example should have similar context around the business and the market dynamics.
Actually, if you reach out to product and growth leaders at companies that have those similarities in model, they're often really happy to share their journey and share what works. Building a portfolio of examples like that can go a long way in making it feel like this is something that is achievable for us. That it's a path that's been trodden before.
The second thing is building out a model around your business. Sure, that model is going to be laden with assumptions, but you have to have alignment about why you're considering PLG and what the goals are. You have to have some kind of realistic foundation in why and how, whatever it is that you're looking to do, can help you achieve those goals.
Also when you're doing that, consider alternatives, like what if we didn't do this strategy? If we didn't do this, we could do that. That helps you present a more balanced perspective and not feel like you're necessarily just cheerleading on some passion project of yours. When you approach things methodically and the case you bring forward is well thought out and well researched, I think it's certainly going to inspire more confidence.
It can be useful also to think of any initiatives in this area as experiments. An exercise in learning how to grow. Though that can be a double edged sword as well. You can't mistake that for lack of commitment. Because PLG is not a quick fix. It's not a quick fix for anything. It is a strategic shift that needs long-term commitment. But pilot style projects can help build confidence for sure.
One of my clients implemented a small ungated product experience on their marketing site before making the decision to adopt a freemium strategy. After validation they created a full fledged free plan and self-serve motion with a monetization escalator around that. So identifying those things that you can do to build confidence on a smaller scale before you invest further, that can be a worthwhile exercise.
Particularly when you're in an organization that has a strong sales-led culture. If you can find some people in the sales organization, who have seen this working before in other places and recruit them as champions. If you have voices on the inside of a sales organization who are passionate advocates for the ideas that you're proposing. That can go a long way in terms of gaining acceptance within the broader organization.
As a final question, how do companies decide where to start adding PLG to their sales system? Is it the most value-adding place, or the most accessible?
It definitely helps to have someone in the team who's lived and learned across a variety of different hybrid go-to-market models. So, in the absence of that type of experience in-house leaning on an advisor can be hugely beneficial.
I think building a growth model can really help you develop this shared sense of understanding around what are the bottlenecks in your business, in how you grow. What are the constraints and why do those constraints exist? And with that help you really hone in and identify the places where elements of PLG might help.
Apply critical thinking as well. If we were to apply PLG here, what would that look like? Why do we have any confidence that doing so would alleviate this constraint or this bottleneck in our growth model? Do we have an acquisition problem or should the priority be on improving retention? And do you have the right situational content? Are there ingredients in place for that to happen?
Lastly if you're focusing on acquisition with PLG, then the market dynamic needs to be there. The user demand needs to be there. You can't just go out and build something and expect folks to come if they are not out there trying to solve the problem on their own.
I've found an effective way to decide is by modeling the business, understanding the constraints, understanding your goals for PLG and then figuring out the right place to start in terms of achieving those goals.
Thanks for joining us Ben.