Hi and welcome to the seventh episode of the Growth Machines podcast. I'm your host, Vincent Jong, and today I'll talk with NTI about how to combine product-led customer acquisition strategies with a sales team. This interview is part of my book about product-led sales. If you're wondering how to introduce PLG into your sales operation, then check out PLGsales.com for more info.

Now about Japma: she's currently a Product and Growth Director at Cal. Before this, she led product growth in a number of well-known companies. For example, she was a lead for product and growth at Dropbox, and she built and led the growth team at Productboard from the ground up. She's based out of San Francisco and also advises and invests in companies that need help with their growth.

Alright, hi Japma, thanks for joining today.

Thank you for having me!

Yeah, you've been part of a number of successful companies that use PLG to grow their audience. I was wondering, have you noticed any patterns between these companies that contribute to their success?

A few things I've noticed are more around practices and how you think about strategy. One thing is, I think a lot of companies tend to think about PLG and SLG sales as black-and-white, two different binary options that they must choose from. This choice gives people choice paralysis to figure out what's a good fit for their product, target customer, and market. I don't think that choice is as binary or as black-and-white as people make it seem to be. I think about go-to-market motion as a spectrum, where you have pure-play PLG and pure sales on either side. As we evolve and as new companies develop, we’re trying to figure out where we are on the spectrum. Are we a little bit more product-led or a little bit more sales-led? So, I think that if you are more flexible in your thinking of how you define your go-to-market model and can be nuanced in your way of understanding your product—Is it a little bit more complex or easier? How do you find your customer? What are the right buyer types?—and how the market actually changes over time, you can be more flexible in determining where you are between PLG and SLG and also how much you don’t know yet because you have yet to learn and experiment.

Another important point to make about patterns of success is that once you have a set of hypotheses you want to learn about, you need to actually give it the time it needs to validate or invalidate that hypothesis. I've seen many examples where folks haven’t given strategies a proper shot, then maybe see some early signal that doesn’t look good, and just put a stamp of failure and move on. Six to twelve months later, they think, "Oh, we didn’t do this properly or set this up right, or design the experiment properly." This leads to cycling back and forth on decisions instead of just having confidence that something worked or didn’t work. Really good teams will actually give the strategy a good shot, and then have confidence that it either worked or didn’t, and move on to the next thing. So, those are some overarching patterns of success that I’ve seen across many companies.

Great, thank you. Another pitfall or challenge I guess that’s often the case when you're using PLG for reaching a wider audience is that it can take a while until you see results. How do you deal with that?

Yeah, this is a really good question. I think you’re referring to the case where if a company decides to implement PLG, they have expectations that it’s going to take a short amount of time to decide if it’s going to work for them or not.

Correct.

This kind of goes back to just managing your expectations properly. I always tell folks, "Wait, wait, wait, that’s not how it works." People think of PLG as a magic growth motion. As soon as you turn it on, do some hacky experiment where you change a button color or add a trial, everything becomes better, and you have hypergrowth. I think I’m not sure where these misconceptions have come from, but when we first coined the term "growth," it came from the world of consumer and social media products that were operating at a pretty high scale and have even higher scale today. Experiments at a small scale could lead to medium-to-larger impacts and a lot of learnings about consumer behavior. That was the nature of the product—it was high-frequency engagement. But we’re operating in a world where a lot of B2B SaaS companies want to try PLG, and it’s just not the same. You can’t have the same expectations about how fast things are going to take. Plus, we have things like product-led sales and how to combine PLG with traditional enterprise sales motions.

It’s just not something you can turn on overnight and see if an experiment works right away or not. That’s why I always say, manage your expectations, and make sure you’re applying the nuances of your product, from where these principles of growth originally came from. For folks who have never tried PLG before, I usually say it takes a minimum of 12 months to see any fruits of your labor—sometimes even longer. And that’s normal for other B2B SaaS products. So, pace yourself.

And again, back to my original point, give time to a strategy, don’t shoot yourself in the foot. The other thing I think is important is that your approach to testing PLG is a portfolio approach of many different types of hypotheses and strategies. Be really careful how you design your portfolio approach. You want to make sure it’s balanced. Don’t lose sight of other opportunities, and keep in mind that you have flexibility in balancing short-term bets with long-term bets. Short-term bets can help you understand if you should invest in something in the long term, if it’s a new opportunity area you’ve never touched before, or if you haven’t done research on it. You can implement some short-term experiments as learning experiments, and if they’re successful, you can say, "Great, this is a great long-term bet that I can invest a little more in and see a larger impact."

So, you can use different approaches. You don’t have to say, "Tomorrow, I’m going to build a trial and premium product, and our PLG model will work." No, it’s a lot of work, and you don’t even know if those were the right methodologies for you. Pace yourself, set milestones, and try to develop a portfolio approach to your strategy.

You’ve touched a few times already on the combination of PLG with sales. Can you share any examples of how you combined a product-led acquisition strategy with a sales team?

Yeah, as you mentioned, I’ve worked at a few companies where we applied PLG and SLG together. At Dropbox, we started as a prosumer product and created a teams collaboration product, Dropbox Business. One key signal for potentially creating a lead and sending it to the sales team was how many members were in a team. If you reached a certain threshold, we’d send the lead to sales to start talking to them and understanding their use cases more.

We started really simple because this API wasn’t a thing back then. No one talked about it, so we just experimented with that. We grew Dropbox Business quickly using this approach. At Productboard, the product was more complex, so we used a product-led sales model, where we used top-of-funnel signals to drive our sales team. It was a collaborative product, so if you had a certain team size or multiple personas (product manager, product marketing, engineer, etc.), that was a signal to send the lead to sales.

At Cly, we started as a product for individuals but added features for teams. We had use cases like round-robin scheduling and collective group events, especially for sales and recruiting personas. Again, if people were using collaborative features, it was a signal to send to sales and all of this is essentially a way to come up with um key indicators or attributes of uh an account that sales can use to personalize conversations.

Sales already has firmographic and demographic data. Right? We use third-party services to enrich that data, but this is actually product behavior. That signal is a high signal, I would say, to more complex use cases that are worth talking about. Maybe it's harder to discover, maybe it's harder to explain, but a high-velocity sales team can help explain.

We call that identifying a PQA or a PQL and end up generating a system of creating those and sending them to the appropriate sales team depending on some of those attributes. Yeah, it sounds like the team metrics are kind of the key here for each of the companies you mentioned, which makes a lot of sense if you think about what we're trying to do.

Have you ever seen cases where it didn't work out as you hoped it would? Yeah, I would see two ways to answer that question, specifically with the team's use case. Not every product has its use case. It just tends to be that in productivity, I've worked a lot in productivity-specific B2B SaaS, and so the collaboration aspect is a really great engagement loop and a high-intent signal, as we discussed.

But your product may not be collaborative. It may not make sense to be collaborative, and that's maybe not where the value is. That doesn't mean there are other signals that you can use to help understand if that customer or account has high intent to talk to sales. Again, got to be nuanced to what your product is and what your target customer is. So that's one thing to say.

The other way to answer your question is basically, where have I seen issues or pitfalls of PLG teams working with sales teams, or trying to work with sales teams, or vice versa, and where it didn't work, where this API kind of crashed essentially. There are a few, definitely probably a lot more pitfalls than I'm going to mention, but top of my head, sometimes, when market conditions change, you have a really eager and hungry sales team, and perhaps your overall funnel is not generating enough leads or you overgrew your sales team.

Your sales team starts to cherry-pick in other pools of users that are not necessarily explicitly PQAs or PQLs that were sent to them. When they start to cherry-pick, on the PLG side, you get lower and lower intent, lower quality users. So your metrics tend to degrade because they're taking the K at the top essentially.

That also has effects on the sales team because their efficiency metrics are also degrading, but they're trying to meet quota. They're incentivized to do something a little bit opposite to the API you set up. That doesn't work well because both of you are suffering at the end of the day. Both of your metrics are suffering at the end of the day.

This leads me to the second pitfall, which is when that happens, your overall efficiency is also degrading. When I'm saying efficiency, I'm talking about, for example, going back to that concept of human calories spent. I like to use the term "human calories" because people are like, "Oh yeah, it is energy that we have to spend."

But essentially, your sales team is going to be spending their time trying to close deals on deal sizes that are going to be lower and lower if they are cherry-picking into the PLG pool. For example, I've seen companies where sales teams are spending time on deals between $2K and $5K. That's pretty low. I don't think the ROI is there. It doesn't really make sense for them to spend those calories because a calorie isn't going to translate into more dollars than what you would if you just let them convert self-serve or with high-velocity assist motion.

You have to always keep in mind what is that ratio, what is the ROI, and is it in a ratio that actually makes sense for the business to continue operating efficiently? And we're talking about sales all this time, but what about support and customer success? What are some examples of product growth teams working collaboratively with this part of the go-to-market?

That's a really great question. You're right. We always love to talk about sales a little bit more, and then customer support and success are the follow-ups, but I truly believe they need to have a seat at the table when it comes to creating a cross-organizational growth team and taking care of your self-serve customers or the lower-touch customer segment. It's really important to work collaboratively with support and customer success.

I actually find that they're one of the teams that have some of the best customer feedback and nuanced understanding of how customers are operating their product more so than any product research you can do on your own. So definitely take advantage of your success team.

One example where I think I've worked with customer success quite collaboratively, and it was really successful, was at Productboard. We were starting to build a scaled customer success team, so folks that would pay, they would have a goals metrics against some of the the lower um touch customer segment and the wider audience that you talked about.

And we wanted to basically create an integrated customer experience both in product and using outer product channels that were kind of all towards the same goal. So, be consistent and unified communication and messaging depending on what were the goals for that customer.

Product Board has quite a complex product. We serve product management teams that help them plan, generate insights from customers and markets, helping kind of create strategies and ultimately roadmaps to execute. Again, so it owns the product management life cycle, from start to end.

We said, "Okay, we need to figure out—we’ve got a good handle on our trial, but our trial is really short. We need to figure out what is the customer journey for a new customer overall, even someone who has converted?" Let’s look at it at month one and month three and be a little bit more prescriptive about what are the specific milestones we want a customer to achieve. What does health mean and look like, and how can we create something a little more holistic in terms of the user experience and journey?

We did this exercise and partnered very closely with customer success because they had been working on this part of the user journey for a long time and knew a ton about the different pathways it would take to get a customer to be healthy, degreed.

We did this exercise both from a quantitative and qualitative perspective, and we created this map—a 90-day journey map. It was an artifact for us as a team, but it was also an artifact for customer success because they had been part of it from the beginning and bought into this design exercise. We were all aligned on this living artifact that stayed useful and stayed alive for quite a long time.

The second thing that was really great is that we created goals that were either shared goals or complementary goals in terms of metrics that we wanted our teams to drive.

That’s wonderful because when you're working with a different department and their goals are completely different, or even worse, slightly opposite than yours, your cross-organizational growth team ends up with tension and conflict when trying to figure out how to execute a project.

When your goals are shared or complementary, the tension is gone, and the meetings are so much more effective and collaborative. That’s what ended up happening at Product Board in the relationship with the customer success team because it was so collaborative.

So, my overall advice and takeaway from this example is: make sure you're inviting and involving your cross-organizational team members early on and getting their buy-in. Stakeholder management 101, but it’s easy to forget. Try to shoot for shared or complementary goals. It'll make your life and your team members' lives a lot easier.

But you've been at some companies that you said already had this focus, so they're creating a large user base. How do you handle that in those scenarios?

Yeah, so generally, they have a very large free user base that they monetize over time. In that case, your support team has to prioritize their time in terms of which types of customers they support.

We had another model that we used to collaborate with supporting customer success. Again, this probably has a name today in the realm of high-velocity sales, but at the time I was working at Dropbox, it didn’t really have a name, so we were trying to figure things out on our own and experimenting with what would work.

We had our prosumer products, and we also started to introduce our more complex team use cases and features and eventually SKUs. We wanted to see if a human in the loop—a call from a human or two—could help increase conversion.

We actually worked with our support team first. These were folks who knew the product really well, knew the customer really well, could help customers make decisions, unblock things, or reduce friction in our product.

Of course, if you have millions of free users and billions of paid users, you have to prioritize your time. So, we created a set of experiments where we would proactively show popups, chat popups in different parts of the product, first starting with conversion moments.

We basically wanted someone to pop up and say, "Hey, this is JNA from the support team. Any questions I can help answer for you?" You could see like, "You might be having trouble making a decision," and a user might say, "Yeah, actually, I don't understand the difference between this plan and this plan. Or, this is my situation, and I’m not sure what’s the best fit."

That person would answer the question and help the user. We started experimenting with this motion with a small percentage of the population—very small—and a small support team. We just wanted to see if this would generate more revenue than if we didn’t do anything else and the user was just thinking about the decision on their own.

We saw success there, so we decided to double down on this and create a few different types of experiments at different parts of the model. Maybe we could expand this to different user types as well.

We started at conversion, then we also wanted to help people make the jump between free and trial, so generating more trial starts was another important decision point. Eventually, this program grew quite large over time, where we had to spin out our own team, which we called "Support Assist" or "Product Specialists" today.

These people have deeper technical knowledge of the product and can help users and customers make decisions and reduce friction during conversion moments. This became its own organization.

So, we scaled this out to a very large organization that supported the self-serve product-like growth motion. Essentially, it was our version of high-velocity sales. This was not leads that we sent to sales like PQLs or anything like that. It was just figuring out where friction points were and where a human in the loop could help reduce friction.

That’s how we scaled it at Dropbox. And that’s how support even becomes a profit center instead of just being looked at as a cost center.

Yes, exactly. They started having revenue goals and conversion goals after proving certain successes.

Amazing. Last question from my side for today. Taking a step back, what are the three things you look at when assessing whether a PLG strategy is right for a business?

Yeah, that’s a great question.

The first thing is kind of going back to Vincent at the beginning of our conversation today where I talked about the go-to-market motion and how it's a spectrum, with PLG on one side and SLG on the other. We're all trying to figure out where we are on that spectrum of go-to-market motions.

You have to be honest about what your product is, who your target customer is, and what the market looks like. You can do a few thought exercises around this.

For example, there was a company I invested in, and a few companies I’ve invested in, where they sell tools directly to growth teams or PLG teams or have a lot of teams. That’s their target market. They're always talking about growth and want to be as product-led as possible.

But their own go-to-market motion doesn’t really make sense to have a PLG outbound motion because the market is just not that large. So, they need to go outbound, do a lot of content marketing and branding, and essentially find those specific buyers or decision-makers who will purchase that tool.

A lot of these product-led sales tools, these AI-based product-led sales tools, that’s the motion that makes sense for them given the market size, buyer complexity, and the ACB. So, just be honest about your product, who you're targeting, how long it takes to implement, how long it takes to get value, and what that motion is going to look like. You can always improve it over time, but sometimes, the PLG model just isn't a fit.

The other thing is, when I see potential for a company to have a PLG model, I always ask them first, "What is the state of your monetization and journey?" I ask, "What does the funnel look like today, from acquisition to activation, conversion, engagement, and retention or expansion?"

If there is an expansion, what do those numbers look like? If you had to map it, and assign colors—red, yellow, or green—what would you assign and what are those metrics?

A lot of times, people don’t have this, so the first step is actually generating this assessment. Once you have this assessment, you get a clearer understanding of what your funnel looks like, where the money is coming from, and where the leaky parts are.

If you were to apply any PLG strategies, where might you start? For B2B SaaS, usually, if you already have product-market fit, maybe your attention is a little better. You’d want to focus on the top of the funnel. But you should do this assessment and continue to monitor your funnel.

Lastly, let’s say you do this assessment and have ideas about where to concentrate. What are the right mechanics for you? There are many different PLG methodologies or mechanics that you can apply. They may not always make sense for your product or go-to-market motion, but you can try a few different things to accelerate any metric movement or drive efficiency.

People talk about freemium motions, free trial motions, and product-led acquisition. You asked about product-led acquisition to drive net-new user accounts, instead of just expanding within an account. There’s also the API between product and sales via the product-led sales motion.

There are a lot of different mechanics you can start figuring out with the methodology you choose based on this end-to-end assessment, then start designing your experiments around those.

And again, manage your expectations about how long it will take to see if that strategy works.

Before we wrap up for today, is there anything else you want to add?

I could say that for folks determining whether PLG is right for them or they should try it, one other pattern I’ve noticed when I talk to startups is that sometimes people jump to wanting to drive growth or implement a PLG motion too fast, and they haven’t yet actually proved product-market fit.

I’ll ask, “How confident are you that your product has product-market fit?” and you’d be surprised at how many people say, “I’m not that confident.”

And then we'll start to talk about you know what are the signals that drive that ceiling um of either confidence or lack of confidence. I said if you're not confident why are you thinking about implementing a plg motion? You should make sure your product actually has value before you try all of these different things and strategies to scale the product because trust me, I’ve worked at a startup. I’ve worked at um a startup where we tried to drive growth, we spent a lot of money trying to drive growth for something that just didn’t really stick with customers and it was a constant uphill battle. It was like pushing an element uphill.

Don’t do it, that’s not where you should be focusing your time and attention, it’s much too early. So make sure you have that confidence and that confidence is coming from some substantial material or evidence, um before you decide to implement strategies or even hire a team, uh against plg.

That’s a great insight to close with, thanks so much for joining today.

You’re very welcome, happy to be here, thanks for having me.

All right, that brings us to the end. I couldn’t agree more that the decision between plg and sales is not binary, it’s a spectrum that can even change over time. And I love the idea of being patient and giving a strategy a proper try so you can either qualify or disqualify it instead of coming back to it.

For more insights like this, check out my book about product led sales on plgandsales.com. Thanks for listening and see you next time.