What should you take into consideration when choosing your growth strategy?
While it may be tempting to choose it based on personal bias, opinion, or a sound bite from a popular podcast, an impulsive growth decision can be a death knell for rising businesses.
A well-oiled growth strategy allows your company to allocate its budget to projects and investments that are going to generate value for all stakeholders.
On the other hand, failing to identify the best growth strategy means investing in the wrong areas of your company, and the chances of wreaking havoc on your performance indicators are considerable.
For example: assembling a stellar marketing and sales team to sell a product that doesn’t deliver what it promises will only generate frustration for customers; while investing time and money to create a demo for a complex product with a high ticket and a long onboarding process may probably result in churn rather than loyalty.
Choosing a growth strategy will impact a lot more than your numbers. It will also influence your capacity to focus time and resources in the right places and it will unquestionably mold the experience you provide to your consumers.
Make no mistake: without a comprehensive assessment that evaluates all of the growth-related, success-critical aspects of your business, the right answer for your company will evade you.
That’s why we, at Orogamis, would like to propose you a different approach to growth strategy: instead of thinking about it merely as a way to grow your numbers, we suggest a holistic approach where growth will also steer your other goals, such as higher profits, improved user experience, customer loyalty, company valuation, or whatever tickles your fancy.
The ideal growth strategy for your company should be informed by extensive research, audits, and analysis—all of which Orogamis can help develop.
Read on to gain a deeper understanding of the PLG/SLG dichotomy on your own.
Today, most companies don’t attribute their growth to any one contributing factor. In most cases, both exponential and linear business growth comes from successes in two key areas: Product-Led Growth (PLG) and/or Sales-Led Growth (SLG).
While there are other categories of growth (like Acquisition-Led, Founder-Led, Customer-Led, Marketing-Led, and others), for the purposes of this article, we will be focusing specifically on PLG and SLG.
On the PLG side, user adoption mostly comes from try-before-you-buy experiences (e.g. demos) coupled with easy, seamless onboarding.
Here, the features and benefits of the product do most of the heavy lifting, and the user becomes a paying customer because the solution's utility is obvious—the product by itself is its best sales pitch.
Of course, creating such a product is no easy feat. Depending on the niche, we might be looking at hundreds of thousands (if not millions) of dollars.
Alternatively, businesses that succeed with Sales-Led Growth do so because of talented Marketing and Sales teams joining forces to fill the pipeline and achieve revenue goals. It’s a concerted effort to generate leads, create new sales opportunities, and manage long, often complex sales cycles.
The expenses associated with SLG shouldn’t be taken for granted. The technology required to support a sales team can easily exceed $5,000 per salesperson, per year for medium-sized companies - plus paychecks.
CRMs, collaboration tools, productivity platforms, commissions…
It’s all needed and it all matters.
Modern B2B SaaS companies—especially those in the earlier stages of growth, including the startup stage—have a strategic decision to make: focusing their efforts and resources on the product leading the growth? Or, should the biggest investments be made into crafting the most powerful Sales and Marketing growth machines?
The answer is that it depends on a host of variables, and the answer is rarely ever the same for two different companies.
Success is more likely to come from a careful evaluation of how other companies have executed both PLG and SLG strategies, which will get you thinking about what actions you can start taking now to prime your business for growth in the near, mid, and long term.
Generally, Product-Led Growth will naturally follow investments made in total user experience, from front to back. This includes:
…whereas momentum with Sales-Led Growth is more tied to:
Most small-to-medium-sized SaaS buyers will be more receptive to a product-led offering, whereas larger, more enterprise-level buyers are going to respond better to a sales-led approach.
But that’s just a rule of thumb; as mentioned above, the only way to make an educated decision is by learning more about each of those directions and assessing your company’s reality.
When we look at PLG and SLG side-by-side and bring down a more comparative lens, we can see distinct differences that can be great for some types of businesses, and disruptive or downright disastrous for others.
PLG: Bigger initial investments into features, functionality, and UX/UI are inescapably necessary.
SLG: Guiding the buyer’s journey through a salesperson-led onboarding experience can make up for a less-than-perfect product.
PLG: Scaling is a breeze. Period.
SLG: Scaling can be challenging, but there are tools and techniques that make it more manageable.
PLG: Using a traditional cost analysis, CAC for a PLG-oriented company is minimal. That is, until you factor in the upfront development costs.
SLG: You’re going to spend heavily on qualified, effective sales and marketing talent, but these expenses could simply be viewed as repurposed product development costs.
PLG: Happy end-users are valuable, vocal evangelizers for your product and company. They’re essentially unpaid salespeople by proxy.
SLG: Product advocacy cannot exist without fresh, ongoing, omnichannel outreach efforts.
PLG: Outstanding, high-value, easy-to-use products work on their own to make for outstanding sales projections.
SLG: If a company wholly relies on salesmanship to sell its product, then its product isn’t excellent in and of itself. That’s a problem for long-term, sustainable success. Successful SLG companies strike a balance between delivering a quality product while also providing support for enterprise-level customers.
PLG: If the product is great, accounts will grow organically over time, giving an exponential trait to CLV. If churn starts to become a problem, PLG companies will revisit their product-market fit and reevaluate UX/UI if need be.
SLG: Sales teams can orchestrate longer-term, more evergreen purchasing arrangements with new customers. This reduces the risk of unexpectedly losing recurring revenue due to customer defection.
PLG/SLG: We have our first ‘draw’. For PLG companies, money that would have been spent building out sales and marketing teams is needed to continuously enhance the product. For SLG companies, well-oiled sales and marketing machines are expensive but make a less-than-perfect product more feasible.
PLG: The product can be purchased by a senior manager, director, or VP without oversight. Right out of the gate, your product solves problems related to scale, optimization, communication, project management, and mid-office technology.
SLG: For larger clients, the product is likely to require a panel of executives to approve, but would be considered a significant solution for a mission-critical business directive. The sales cycle will likely be longer, and the onboarding process more complicated.
Whether your target customer engages with a knowledgeable salesperson after requesting a demo on your website, or they hear about your product from a colleague and download the freemium version to try on their own, both customers are having an experience with your brand.
The choice you have to make is which of these experiences you want to invest in. And, as we mentioned at the outset, what’s best for your company likely won’t be what’s best for another.
Success in startup-to-early-stage company growth is more likely to come from a balanced focus on every aspect of the customer experience—time and budget allowing.
This obviously includes the product experience. The brand experience. The buying experience. The list goes on.
When all is said and done, the holistic customer experience will ultimately determine customer loyalty. It’s folly to try and ‘hack the system’ by shortcutting one type of experience in favor of another. Rather, think strategically. Look at what works for your competitors, and be sure you understand your market better than anyone else.
And finally: don’t be afraid to think for yourself. Some of the most impressive successes in the tech space (like Atlassian) have come as a result of maverick thinking—something the world always needs more of.
As we mentioned in our introduction, it’s rarely the case that the same growth strategy will work equally well for two different companies targeting users in different markets. While there are compelling success stories to be found in both the PLG and SLG camps, what’s going to work best for your company is bespoke to you.
On the one hand, do not underestimate the potentially exponential power of an elegant, easy-to-use, intuitive product with world-class UX/UI—the linchpin of the Product-Led Growth strategy.
It can be just as smart to lean fully into the hiring, training, and diligent development of sales and marketing teams that can catapult your SaaS startup into the stratosphere and make you a case study for the efficacy of the Sales-Led Growth strategy.
Last, but not least, It’s also important to consider that choosing a growth strategy is not a lifetime decision. Much the opposite: a clear sign that your company rocked the right growth strategy is growing out of it, like Atlassian and Asana.
Although focusing on the growth strategy at hand is important, being flexible and having a long-term view is paramount. Ultimately, your growth strategy success will depend on your leadership.
As always, wherever you are in your journey, Orogamis is here to help. To learn how we can help grow your business, request a discovery call with us today.