This article posted by McKinsey discusses the path for product led growth (PLG) and sales led growth (SLG) companies and some of the metrics around those organizations. What I found most interesting was the finding that outliers were coloring the overall story of PLG. In other words, these outliers were so successful, it made it hard to see whether strict PLG was really the right motion for companies, on average.
A quick spoiler: based on the article, product led sales (PLS) is currently the winning formula.
A few key takeaways from the article:
- Out-performing PLG companies get a much higher valuation than SLG companies. PLG companies spend more on marketing, but also make it up in revenue.
- SLG companies generally have better cost control, especially over average PLG companies
- There needs to be effective use of data to drive conversion and increase MRR.
In a PLS flow, you can use your freemium/free-trial users to build your initial sales funnel of high volume low cost sales. From there, your initial low cost sales become the next part of your funnel, either for moving into upsells for functionality or for enterprise subscriptions.
Based on the conversations we’ve been having with companies on both sides of the growth spectrum we see:
- SLG orgs struggling with early conversions and understanding how to get users into the free/low cost and low barrier options
- PLG orgs struggling with knowing which orgs are ready to convert or how to increase that conversion rate
Dacture can help you advance through the PLS flow, getting you more conversions at each spot in the funnel by using predictive modeling. Specifically, you can predict which users are likely to convert, so your teams can target them, either through campaigns or high-touch sales, depending on where they are in the funnel.