How to Launch a Sales Team within a PLG-First Company
May 20, 2022
Why should you consider adding a sales motion to a PLG-first company? How do you ensure the economics makes sense? And what are the key things you should figure out before investing in a sales team for your self-serve motion?
Our VP of Sales, Kyle Parrish, joined Reprise's Jorge Soto and Matthew Stein, to dig deep into deploying a product-led sales team, PQLs, & more! Feel free to watch the video or read some of the learnings below.
Jorge: “A PLG means no sales team. Why or why not?”
“It is a myth, but I’ll caveat that by saying it’s possible to have a PLG motion with no sales team. Mixmax actually started that way,” said Kyle.
“The idea was that you put the product on the internet, and people come, download and use it. This dictates how you build the product because, with no sales team to help, people are on their own to get to value. So you have to make it easy to use, easy to implement, and easy to get the value quickly,” advised Kyle.
“Otherwise, people will bounce. People’s attention spans are very short these days.
But the fact that PLG means no sales team is a myth. You can have both motions, and we do today,” commented Kyle.
“We have a self-service motion for individual users that want to use Mixmax and pay for it out of their pocket. They can certainly do that with zero sales touch. However, those deals are generally very small, and it wouldn’t be cost-effective for us to touch them as a sales team.
However, if you’ve got a product for a larger team, it is a huge mistake not to have a sales team to help those buyers buy professionally and get to value. You should also have supporting teams like customer success and support to go along with it. Perhaps even an implementation team and sales engineering.
At Mixmax, we don’t have an implementation team,” said Kyle. “We view the product as so easy to use, implement and get to value that there’s not necessarily a reason for professional services. It would go against our philosophy on the subject.
So, you absolutely need a sales team for the right customers,” advised Kyle. “Knowing which type of customers your sales team should touch and which type of customers should go self-service is a huge key learning and something that you want to figure out before investing in a sales team for your PLG motion.”
Jorge:“Why did Olof and Mixmax leadership decide to add a sales motion to this self-service motion?”
“Because of one very distinct reason,” said Kyle.
“They put the product on the internet and said people will come and buy it. And they did. They started coming in droves, and it got really exciting when people from big companies wanted to buy multiple licenses for their sales team and started asking our support team (sales) questions.
Immediately, they saw an opportunity,” explained Kyle. “If we had a sales team helping these people buy, these deals could be bigger. And we could grow Mixmax from individuals buying and putting their credit cards down to selling annual contracts. This way, we'll start having more predictability in our revenue stream and it won’t be that expensive for us to do. If we are focused on the right types of accounts, that makes sense from a financial perspective.”
“So it was larger companies wanting to buy multiple licenses for their revenue teams and needing some assistance in the process that brought us to where we are today. And when Olof did this, years before I showed up,” said Kyle, “it was with the intention that they would start to sell bigger deals. And he was absolutely right. That was exactly what happened.”
Jorge: “Matthew, what’s your take on it?”
“Kyle is 100% right. Suppose you’re starting to move up street, going for the bigger contract value sizes, selling into larger organizations with more complicated sales processes. In that case, you need someone to do the handholding and be the helper and the driver,” said Matthew.
“You get sales involved for two reasons: increase deal size and increase velocity. So if you want those deals to close fast and close bigger deals, you want to have a salesperson actively driving that process,” advised Matthew.
“You can have a PLG motion without a sales team. But if you want to get that growth and jump-start into a much faster sales cycle, you’ve got to have a sales team. It’s unlikely that anyone is going from a sales lead motion to a PLG motion with the intention to get rid of their sales team. That would not be a wise staffing choice. Maybe there’s a company out there that can do it. I haven’t heard or worked for one,” commented Matthew.
Jorge: “How do you ensure that the economics make sense and what should those pro pricing options be?”
“It’s tough because PLG loses money in the beginning. And if you’re in a growth or an early-stage company, you’ve got a lot of figuring out to do. First, make sure to limit your downside risks,” advised Matthew.
“If you have a consumption model where people pay more the more they use your product, you don’t want to let a free tier have the ability to throw your margins out of whack. You can certainly put in limits, roadblocks, and upgrade pads, but the economics are something you have to pay attention to, knowing that they’re going to evolve. So you’re going to take a measurement, and with time you will adjust things and try to get it to where you want it to be.
It is important to pay attention to your users, your cost per user, and conversion rates. See where things are falling and pivot by reacting to the measurements you’re taking. It is just a critical part of any PLG strategy. The part that makes it extra complicated is it’s not just one team,” commented Matthew.
“You’ve got to have marketing ready to react. You’ve got to have the product team able and willing to put changes in place to make things easier to use or add those conversion opportunities. For example, hitting a feature gate, that’s going to kick somebody up to that next tier. And then figuring out the handoff to sales is my favorite topic because it always gets heated, and everyone’s got lots of struggle,” said Matthew.
Jorge: “What would you say is your definition of a PQL and that sales assist motion?”
“The most important letter there is Q. It must be qualified in some way, shape, or form. You can’t just throw everything at sales because if you have 10,000 signups in a month, it’s impossible for the sales to review all of those,” explained Kyle.
“This does take some learning and iteration, it can’t be done overnight. You can’t just guess; you have to test and experiment and see what works. So you need to figure out for your motion, your company, and your product what qualified means.
For us, some of the signals are:
Did somebody start a sequence?
Did somebody integrate with another system like Salesforce? That’s a huge qualifier.
Did they add somebody else to their workspace?
Are there multiple people using this within a company?
These are all signals that tell us a lead is qualified. And these are all things that they can do on their own,” commented Kyle.
“You’ve got to figure out what makes sense for the sales team to look at and when it makes sense for the product to continue to motivate users to become hand-raisers. You don’t want to be talking to single users. That’s just a waste of time. You’re never going to make money on that. In fact, you’ll lose money because you’re paying the salesperson to talk to that person,” said Kyle.
What is a sales assist motion?
“Success before sales is a new thing. You’ve got somebody trialing the product who’s gotten to value somehow, and now they could use that extra help.
For example, if you’ve got a motivated buyer, but they’re not the actual economic buyer. They’ve got to go to somebody to get that budget, whether in finance or VP or some executive.
And then you’ve got the IT department to satisfy. So at least in Mixmax, you’re talking about touching email, and when you touch email, IT will care,” explained Kyle. “There may be other departments like compliance, especially if they’re public companies or have security requirements themselves.
And so, a lot of these things are critical to satisfy for companies to be able to buy. That’s where we start to think about the sales assist motion. It’s not: ‘do you need to buy five licenses, and we’ll just help you do it.’ We’d rather enable them to do that on their own. Just because they’ve bought self-service doesn’t mean they can’t be a direct sales customer sometime in the future.
That sales assist motion is knowing that it will make good financial sense for us to involve a sales rep because we know that we’re not going to get as much out of this customer if we continue to let them be self-service,” commented Kyle.
“That’s when sales need to get involved. And again, that’s not an overnight thing. Unfortunately, I don’t have a silver bullet for everybody out there. You need to experiment with that and figure it out on your own. But it all comes back to, does it make financial sense for the organization? And is it what you want the company to become? For example, do you want to hire an army of salespeople to sell $3,000 deals, or do you want fewer salespeople to sell 10, 15, 25, and 30K deals,” said Kyle.
These are just some of the things to consider when adding a sales team to your product-led motion.
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