Welcome to The Data-led Professional Podcast: A podcast dedicated to helping folks become data-led to build better products and services.
In this week’s episode, join hosts Claudiu Murariu, CEO and Co-Founder of InnerTrends, Arpit Choudhury, Founder of Data-led Academy, and special guest Tim Geisenheimer, CEO and Co-Founder of Correlated - a CRM 2.0 company, as they discuss the pivotal role that product data plays for any sales professional looking to gather information about your most active accounts, how to use that information to your advantage, and the up-and-coming CRM 2.0 companies that are making data accessible for sales teams at PLG companies.
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Is it true that Product-led Growth (PLG) companies don’t need a sales team?
[T]: Over the last few years there's been a shift from the initial position where, for example, a company like Atlassian started this trend of: “We don't have any salespeople, and we're this totally product-driven company.” But fast forward to now, and every product-led company that I'm talking to, whether it's a startup or even public companies, have sales teams.
The trick is, how do you layer in sales to a product-first motion? What does that mean? And how can you be successful doing that? Overall, it's definitely true that PLG companies need a sales team.
Why do you think open source software is the “OG” of PLG?
[T]: A few years ago, I was working with one of my co-founders at an open source company called Timescale, and had the opportunity to learn the open source business model and some of the precursor companies in open source. This progression included the first open source companies like Red Hat, the second wave, which includes Cloudera and Hortonworks, to the current crop of modern open source companies today - like MongoDB, Elastic, etc.
With those first companies like Red Hat, there was this bifurcation of how they went to market. They had millions of free users of open source software downloading and using it for free. And then those companies would typically have an enterprise sales team selling to CTOs or CIOs in enterprise-level companies.
Those very first companies struggled with how to marry these two sales approaches or go to market motions - the free usage on the one hand, and enterprise sales on the other.
What's happened over the last few years is those companies have transitioned to having a PLG type product, a SaaS or a cloud service. So they've had to use a completely different approach. And we're seeing that play out now in other categories, but open source was definitely the first.
Pretty much every single company needs a sales process, right? Even open source - if they wanted to make money, they needed a sales process. It's mandatory. And there is this assumption that in PLGcompanies, the sales process can be fully automated. Which, in some cases, maybe it works to some extent. But clearly there is a sales process, and it makes a lot of sense to have part of it automated and another part of it driven by humans. So how much do we automate the sales process? And how much of it is assisted sales?
[T]: To take a step back, what makes a company product-led? The best definition that I've heard is: can an individual user get value from the product in a self-service way? If you're able to offer a piece of software that someone just signs up for and starts using without talking to anybody, and can do what they need to do to be successful with that product as an individual, that's what makes for a great product-led company and product. To name a few examples: Slack, Zoom, Calendly, and more.
In those categories, you can get by with just having self-service for a long time; someone starts using the product, they hit a feature gate, and then they have to put their credit card in and pay for it.
Where you start to see sales layer in is when you have companies adopting products like Slack or Zoom. All of a sudden, they realize that a huge percentage of their company is using the product, and they've been paying for it with credit cards. So the IT team says, “We want to make sure there's security for this; we want to make sure that we're negotiating for a discount and not paying list price.” And that's when sales starts to get involved in these companies and can say, “We could offer discounts, we could offer these enterprise tier features that aren't available if you're just putting your credit card in and doing it self-serve.” That’s the best example for PLG companies.
[C]: What’s interesting is that all of the companies you mentioned have sales teams. Slack, and Zoom both have big sales teams. There’s definitely a sales process involved, and clearly, some of the sales process is automated. People go to Slack or Zoom, and they enter their credit card, and they buy. But there is a percentage of users that will require a personalized sales process; they want to talk to somebody, they feel that need. And that's where I assume the sales process comes in.
[T]: Absolutely. For a lot of the companies we're talking to, that's the predominant model, today; there will be a hand raise, someone comes in inbounded, is using the product already, and wants to negotiate for that discount.
There’s more inbound, more organic, and sales is taking orders, in a sense. What is starting to happen - what we're seeing and helping with - is the proactiveness, where sales people want to know: who should we be talking to that is using our product already? And how can we do that in a more proactive way?
What is the role of data in the sales workflow?
[T]: The state of this art for the last few years has been called Product Qualified Lead or PQL. A lot of companies have said, either using their own tools, or other tools that exist: we will put together different signals based on product usage, based on other signals from thermographic or demographic information about the company or person who signed up and is a user of the product, and then we will assign them a score that says, “This person is worth talking to or not based on their score.”
The direction where things are going is towards more granularity and a finely tuned ability to look at data. So that score can be frustrating, and we've heard that feedback from a lot of folks because if a salesperson reaches out to someone who has a good score, but it doesn't necessarily lead to a good conversation, then there's a lack of trust in that score.
Especially as data becomes democratized across organizations, it becomes easier to break it down, be more granular, fine-tune that signal-to-noise ratio, and use that to decide who to talk to, and how to talk to them.
It could be as simple as: Who is using our product? How are they using it? What are the features that they're using? Is that changing over time? What are some of the key aspects of the product that people are using?
For each company, there may be different signals.
But all of those signals can be valuable to sales in different ways in deciding when to talk with someone and how to talk to them.
[C]: You get that context, which is very important. And when you talk about that context, the person will actually feel it - if you know what you're talking about - and you will be able to start the conversation.
Is it an advantage of a product-led growth approach that you can push the customer to be the first to raise their hand, so that the sales team just has to act as support for closing the deal?
Waiting for the customer to raise their hand first doesn't necessarily get you to the numbers you want to hit as a company.
Where data comes into play is looking at the behavior of an organization at the account level, or down to the user level and saying: I feel comfortable reaching out to this person based on the product usage that they have, because I can then credibly say, “Hey, we see a great usage across your organization. You're organically adding seats; what if we were to give you a year-long contract and offer this level of incentive or discount.”
So no one’s saying, “Raise your hand to say that you want this,” but rather, “We're gonna proactively give it to you.”
There are different ways you can use data to move deals faster than they might have otherwise moved. But data also adds value to the customer. If you're able to provide value in return, that's a huge benefit to everybody.
[C]: So in product-led growth sales processes, the data is in the middle. So customers don't need to raise their hand literally; their behavior raises their hand instead.
How can product data be made accessible to sales teams?
[T]: Making it easier for the data that's being collected and typically stored in a data warehouse, to then be made accessible to the end business users has been a huge trend in the last year or two.
Our product - Correlated - basically sits between a data warehouse, or a customer data platform (CDP) and a CRM. We're collecting that product usage data, tying it to the accounts you're storing in your CRM, and then giving the sales team access in a way that they're able to understand product usage data through that account view, and then workflows that stem from that.
To give you a tangible example, once you're connected up to the warehouse or a customer data platform and Salesforce, you can say: “Show me a list of accounts that used our product in the last seven days, and the company has over 500 employees.” And then you can create a Slack alert whenever someone enters that particular segment. And you can get a lot more granular than that. It could be specific features, it can be combinations of usage, you can sort by title or persona.
So we allow the sales organization to get into the weeds and test out different hypotheses by targeting these segments, and then getting alerts through Slack. We're also doing integrations with other tools besides Salesforce, such as Outreach for email campaigns.
[A]: So are you saying that, besides having access to product data in their CRM, salespeople can also use product data to build personalized campaigns with Outreach?
[C]: Exactly right. What we’re doing and hearing from our customers that adds a ton of value is: If I can make these segments using the data that we're collecting about product usage, and then simply act on it in tools that we're using right now, like Outreach or others, it adds a ton of value, because it saves us a lot of work.
It means that their data or ops team isn't providing manual lists, which is what’s happening a lot today.
Enabling these sales workflow automatically. It's something that a lot of our customers are getting a tremendous amount of value from.
What does a successful salesperson in a PLG company look like?
[T]: The biggest thing that I've noticed is that you have to have a lot of activity.
Ultimately, sales boils down to doing work. And hopefully, it's the right work. So it's a combination of doing a lot of work, and doing the correct activities. The best salespeople are the ones that are looking at the data and looking at their customer’s behavior, are in touch with their customers, and constantly understand what's going on.
At a PLGcompany, you don't want to be talking to the wrong people; people who are not ready to buy, maybe because they haven't used the product enough, the right people haven't used the product, they haven't started to get to that needed level of adoption or it's entrenched enough where a group discount or a company discount makes sense.
I think the challenge for PLG is that you can’t always have all of the information at hand, especially related to product usage. The best salespeople try to get as much information as they can, typically by asking their customers or being in touch with them all of the time. But that's not always practical or easy.
Every company needs a sales process; even PLG companies. Self-service is great, but not enough on its own.
Data product usage data is the new “raised hand” of the customer. Data can be used as a way in which customers signal to you that they want to buy.
This can be employed across the organization, when marketing and support teams have access to product usage data, everyone can benefit from it. It can help increase revenue and reduce churn.
When product data is not leveraged, money is left on the table. The easiest money possible.
Luckily, there’s a tool for that! CRM 2.0. companies are here to help, all part of the modern data stack.
Have any additional questions about how sales pros at PLG companies can become product-led, or any other topics you would like to hear covered on The Data-Led Professional Podcast? Comment below! We can’t wait to hear from you.
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