Having worked with over 80 early-stage technology companies in the Newark Venture Partners portfolio, there are many patterns that have emerged giving us insight into what startups should anticipate as they build their sales operations. One message that these companies often receive is that their buyers “don’t like to feel they are being sold to”. This commonly occurs when a lack of trust has been established out of the gate, where the discovery process neglects to adequately examine what would be of value to the prospect. Frequently, after asking a few obligatory questions, sellers fall back on talking points about their product/service. For many, it’s about their comfort zone - as they are far better at talking about what they know best (product knowledge), than what is most important to sales success (determining fit/providing value).
This leads me to a sales trend that has emerged, called “Product-Led Growth”. Despite best efforts on the part of companies to improve their sales processes, in the mind of the buyer, the gap between “perceived value” and “experienced value” is very real. Every buyer has had the unfortunate experience of a purchase falling short of expectations, despite promises from their sales rep. As a result of these prior negative experiences, buyers become more skeptical of new products and promises, and default to silent objections that can kill sales success, or at the very least complicate and lengthen the sales process.
So, in comes product-led Sales, where your product/service acts as the salesperson, enabling prospects to experience the value for themselves. To be clear, quality and value in a product is essential in meeting needs in the market. NVP portfolio company Seamless.ai, which helps B2B marketers build their sales pipeline, executed on a product-led growth sales strategy by allowing users to access their database for free in exchange for providing their personal contacts list with phone/email info. Accurate contact info is one of the biggest challenges for any company selling contact info, and based on how Seamless.ai approached it early, they were able to scale a large, more accurate database, more quickly. Sales people talk, and as a result of overwhelmingly positive experiences for the end users, word of mouth advertising helped the company gain momentum.
Other companies that have successfully implemented this tactic include LinkedIn, Shopify, Dropbox, and Expensify. Their success enabled them to accelerate growth without the traditional need to hire, train, develop, and manage a sales organization which takes time, capital, and the right skill sets. By allowing the prospect to try (pilot, trial, POC etc) the product as part of the decision making process you are delivering value, as opposed to talking about it. The fundamental difference between the traditional sales strategy and a product-led growth strategy is that companies that go to market using the second approach let the product do the talking instead of the salespeople.
One thing to notice here, is that many of the products that successfully use a produce-led growth approach are found within the B2B sales ecosystem. When you have a quality product that is used by one company selling into others, it becomes easy for that product to be discovered by future prospects. When product-led growth companies are imbedded into how companies sell, they can leverage other companies to do their selling by simply being a tool used in their process.
Not every company is able to take advantage of this approach for numerous reasons. Factors like educational sale, complexity, integration, or the importance of relationships being established just doesn’t lend itself to the “experience the value first” approach. But for those that can be discovered and oftentimes experienced (Calendly, Zoom, Typeform) by being incorporated into the sales processes of other companies, there is no better way to scale quickly on the backs of others. Allowing a prospect to experience your product first hand and feel the value, can convert someone to a user, even if they were exposed to it by accident. From there, providing a simple sign up process with little to no friction, combined with the ability to upsell/convert customers to paying down the road with enhanced offerings is the formula for success.
The single most challenging thing in sales is generating a new customer. If you believe in your product, and it lends itself to the product-led growth model, what better way to establish trust quickly, convert opportunities into accounts, and leverage an engaged customer base that can accelerate growth. Simply said, let your product sell itself!
By: Kevin Petry, Director of Growth, NVP