What is SaaS Product-Led Sales (PLS)? 

SaaS product-led growth is an approach in which a SaaS or software company uses its product as the main channel for acquiring new customers.  

Rather than using cold emailing or other traditional sales and marketing methods, a product-led growth team will engage with users who are already using the product.  This approach places the user experience at the center of the equation, allowing the usefulness of the software to take over the discussion and replace the need for a pitch.  

SaaS product-led sales is very important, as customers have gotten used to ‘try before they buy’ and by the time a salesperson reaches out, the prospect has already used the product and knows what it does, which impacts conversion rates. 

In the traditional SaaS sales model, there is a ‘top-down’ approach.  Under this legacy model, marketing efforts result in leads (MQLs) obtained via gated content, and sales representatives may invest weeks or months to persuade high-level executives within the company to authorize the transaction before software installation commences.  

The success of the salesperson depends on their capability to convince the buyer, who may never use the tool in the first place.  

In contrast, the PLS approach is based on a ‘bottom-up’ motion.  Small teams and individual contributors can sign up for a free trial or ‘freemium’ edition of the software.  As soon as they realize the value of the software, the sales team takes over to help them extend the usage of the software to the rest of the organization.  This gives rise to a sales and marketing process that is based on the actual usage of the software instead of hypothetical benefits. 

The SaaS product-led sales model has specific elements that need to be measured using metrics.  The concepts part of this approach are:  

• The Self-Service Funnel: A simplified entry point where customers sign up, onboard, and find a solution to a problem without the need for human interaction.  
• Product-Qualified Leads (PQLs):  A PQL is identified as the user who has reached the AHA moment within the app or SaaS product.  
• Customer Lifetime Value (CLV): Long-term expansion is the focus of the PLS approach.  Since the customers are already accustomed to the product, churn is less likely to appear, so CLV takes the lead in metric priority.  
• Expansion Revenue: SaaS PQL is focused on moving the client from a free or paid basic plan to an enterprise or pro package, having advanced features.  

The trend towards using product-led growth (PLG) has several factors as an explanation.  

• Rising Cost of Customer Acquisition (CAC) is perhaps the most significant issue for businesses, especially in software as a service (SaaS).  Almost 87% of B2B buyers want to self-serve for at least part of their journey.  Companies can potentially expand their user base using this method, and its impact on sales headcount may vary.
• PLS helps in enhancing the relationship between the product and the sales and marketing teams.  Sales representatives recognize the potential value for engineers in understanding which features correlate with upgrades, and engineers consider incorporating elements that may influence product adoption, potentially offering information for the sales team.  It is a stable and effective way to grow in a competitive market.  

Shifting to the SaaS PLS model opens the door to both advantages and disadvantages: 

It is important to note that SaaS companies do not function on a single sales model.  In fact, they are using a hybrid version, combining SaaS PLS with traditional approaches. 

Here are the steps to follow if you are considering this idea:  

• Keep an eye on your data: Monitor the actions your users are taking in real time.  
• Define the PQL: Set 2-3 actions that correlate the most with a paid upgrade. 
• Align Incentives: Reward sales reps for “expansion” revenue, not just “new logos.” 

Decision Factors for Moving to PLS: 

• Does your product have a “Time to Value” of less than 24 hours? 
• Can an individual user get value without their whole company joining first? 
• Is your market large enough to support a high volume of free users?