Product-led vs Sales-led Growth: What's the Difference

Dayana Mayfield

Agile Product Development

Close Banner

Free Template & Financial Spreadsheet

Create your SaaS business plan

Sign Up

Business leaders in every industry in the world are always looking for new ways to generate more qualified leads and improve their conversion rates, and it’s important to note that there is no one-size-fits-all solution here. Some businesses subscribe to the more traditional sales model (and some are forced to due to the nature of their industries), while some modern ventures like SaaS businesses subscribe to more contemporary sales strategies.

Your winning approach will depend on a variety of different factors, as well as the latest sales trends that influence the shifts in your industry. That said, it’s also important that we differentiate between the two most popular and effective strategies, the product-led and the sales-led approach.

Both strategies have their advantages and disadvantages, however, the product-led growth model is a more modern approach that the majority of SaaS businesses subscribe to nowadays, and for a number of important reasons. With all of that in mind, let’s take a closer look at these two strategies, after which we’re going to talk about the best practices you can use to excel at both in your industry.

What is sales-led growth?

Let’s start by defining the sales-led approach to growth and success, which has been the dominant approach in the 20th century, but is also a viable strategy in the modern business world. Improving conversions using the right sales process for your target demographic is essential, especially when you target the younger, tech-savvy generations of customers that are also a bit apprehensive when it comes to companies trying to sell them anything. The problem is that modern customers don’t want you to sell them a product, they want the product to sell itself.

This is the first and most important difference between the sales-led and the product-led approach. When a company relies solely on the performance of its sales department, it will bank on the ability of its sales experts to leverage outbound marketing, personal relationships, one-on-one meetings, and other somewhat outdated tactics to achieve the desired results.

A sales-led approach doesn’t really factor in all the needs and wants of the modern consumers, who want the product you’re selling to speak for itself rather than listening to your sales agents trying to convince them of why they should buy. This doesn’t mean that the sales-led approach doesn’t work, it simply means that you need to optimize it heavily for the modern consumer, or consider switching to a product-led strategy.

What is product-led growth?

A product-led approach to sales, marketing, and growth in general is a relatively new concept that more and more SaaS companies have been subscribing to in recent years. Choosing a product-led strategy as your go-to-market approach means that you rely on the sheer awesomeness of your product to boost customer experience and bring in new users while improving customer retention at the same time. After all, there is nothing that can sell your product faster than a satisfied customer and some stellar online reviews.

If you are developing an app for millennials, for example, you need to let the product speak for itself and let new customers come to you through stellar user experience and the sheer functionality of the app. There are many benefits to focusing on the product as your main sales and marketing tool, ranging from reducing financial waste to a value-based sales model, and all the way to better social proof and more.

A product-led approach has been the main growth strategy for companies like Dropbox, Slack, and many more, and coupled with the right sales automation tools and practices, it can help your SaaS business acquire new customers that will actually become your loyal brand advocates. Sales automation in particular will be an important factor when collecting and utilizing valuable user data to optimize and improve the user experience.

The importance of customer feedback

Whether you are using the sales-led or the product-led approach, it is important to leverage customer feedback to optimize your sales processes, your product, and the overall brand experience. Your goal should be to continuously optimize and improve your products and processes so that the existing customers stick around, but also to boost customer acquisition without increasing the costs of getting new customers to buy your product. Which will be extremely high.

That’s why it’s so important for managers to collect customer feedback regularly and employ data collection tools that will automatically gather feedback from users. That said, instead of using long-form questionnaires that people will automatically skip, you should use short-form pop-ups and in-app features to integrate feedback seamlessly into the experience.

It shouldn’t take more than a couple of clicks or swipes for customers to leave their feedback, but you can always add a blank field where they can elaborate if they wish. This way, you will get invaluable user data that will fuel your sales, marketing, and support processes.

Boosting sales with pricing management and billing

A product needs to be properly priced in order to create a balance between value and cost, no matter if your sales managers are contacting prospects directly or if you’re counting on your product to sell itself. No matter how amazing your software may be, you can’t expect your customers to invest more than their budgets permit. On the other hand, if you price your product too low, you will be losing money and people might not even want to buy it – if your product is too affordable, it will drive serious customers away.

This is why you need to price your software competitively, but also make payments easier to reduce customer effort. You can do this by integrating the right billing software into your processes, which will allow you to diversify your payment methods, accept multiple forms of currency, and provide other payment perks that will attract new customers.

Improving conversions through email marketing

Email marketing works for both product-led and sales-led strategies, but it’s important to note that you’ll be using it differently depending on the approach you choose. For sales-led companies, email is typically an outbound marketing tool which may or may not inspire the prospect to reply or get in touch in some other way.

For product-led companies, on the other hand, email is a conversational marketing and sales tool that you can use to inspire customers to upgrade their plans, recommend the product to others, spread the word of your brand, and more. Regardless of the approach, though, it’s important to note that the best email marketing services out there will have different key features you can use to achieve your goals, so do your research and choose your email marketing platform carefully.

Reducing customer effort for signups

One of the key problems with the sales-led approach is that it takes a long time to convert a potential customer. This is a lengthy sales process that unfortunately only increases the customer’s effort with every step, whereas your goal should be to reduce customer effort with great UI design and other quality of life features.

If you go with the product-led approach, though, you can leverage various features and tech to reduce customer effort and shorten the sales cycle. A good way to do that would be to leverage a QR Code generator that people can use to instantly download and install your app. You can also create QR Codes with your logo to boost brand recognition and help the product inspire a sale.

Leveraging location-based advertising

Finally, in order for your product to sell and boost your brand’s awareness and reputation in the online world, it needs to appear in front of the right audience in organic and paid search. It’s important for growth-oriented SaaS companies to invest in location based advertising in order to reach the right people on social media and Google and thus get their product to their ideal customers.

Targeted ads are a powerful way to build product visibility in the saturated SaaS market, and when you complement them with highly-optimized, long-form SEO content, you can also boost your products in organic search. Combined, these two tactics will help generate qualified leads with a high chance of conversion, and will grow your business in a more cost-effective way.

Key takeaways

Product-led strategies are more geared towards the younger generation of customers, especially millennials and Gen Z-ers who want to try software before they buy it (and who don’t want to get on demo calls). That doesn’t mean that a sales-led approach won’t get you results, but it does mean that you need to implement some key sales and marketing tactics to develop your competitive edge.

Use the best practices we covered today to take your sales strategy forward and empower your SaaS product to bring new lifelong customers to your business.

Close Banner

Building a product?

Discover the DevSquad Difference

Learn More