the most important thing in product LED sales is that there is a different configuration internally of collaboration that needs to occur in traditional sales World marketing creates pipeline for sales sales sells product product engages with the paid user to drive retention
in the product LED sales product acquires and activates a customer and product creates pipeline for sales so relationship is not that there is a go to market org with marketing and sales and product just kind of throws features across the fence for them to sell the collaboration here is between
product and sales but that means the product has to take on accountability over pipeline the worst thing that you can do is to say I'm going to do product LED growth or I'm going to do productless sales and I'm gonna do it in marketing recipe for disaster you will be failure
mode within six months because product has to take accountability over selling of the product itself welcome to Lenny's podcast where I interview world-class product leaders and growth experts to learn from their hard-winning experiences building and growing today's most successful products
today my guest is Elena Verna that name sounds familiar Elena is a return guest and you be the judge but I think this episode is even better than the first which is a very high bar because that first episode continues to be one of the most popular of the podcast Elena has
worked at or advised companies like Miro amplitude SurveyMonkey mongodb netlify and a dozen others she's also a long time instructor and eir at reforge where she helped create their experimentation monetization growth leadership and their soon to be released plg course and in
this conversation we go incredibly deep into the emerging space of product LED sales Elena explains what exactly is product LED sales outfits together with product like growth and sales lead growth who and when you should consider investing in product life sales how product sales changes your approach to
sales and marketing what sorts of data tooling and people you need in place to do it well and what common pitfalls you need to avoid I've said this before and I'll say it again Elena is possibly the smartest and most experienced growth person in the world especially when it
comes to B2B and I never get tired of learning from her enjoy this episode with Elena Verna after a short word from our sponsors this episode is brought to you by linear let's be honest the issue tracker that you're using today isn't very helpful why is it that it always seems to be
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Lenny for when you need talent yesterday Elena welcome back to the podcast thank you for having me back I thought I would be the first returning guest I'm a little bit upset that I'm been beat by Casey so you should explain yourself from now on okay here's the explanation
you're the first that we rebooked back and then this one just kind of got pushed a little bit in case he had a slot earlier so technically you were the first scheduled return guest all right all right I'll accept that okay so I guess I'll just say I'm really excited to have you back your episode
that we did maybe a year ago is one still one of the most popular episodes of all time I still see people tweeting about it and sharing it and so I am really excited to have you back and have a take two I'm excited to be back let's Dive In before we get into the content when we
met last time you were interim head of growth at amplitude what are you what are you up to now what's what's happened in the past year I just wrapped up interim gig at amplitude uh in February so it's just been a couple of months uh since then I'm passively exploring if I'm gonna
take another interim position but between interim rules I always take about six to eight months a break because interim rules are very intense because there's so many deliverables that are loaded in in the first year that you're working at the company so I'm just advising I have incredible
companies that I started advising such as virio and Sanity clockwise and I'm building up my next level of Frameworks that I'm gonna dive into potentially new interim position to prototype if people are listening to this and they're like how do I get to work with Elena should people reach out to you are
you booked up what do you suggest take down an opportunity to have a great conversation and to learn about the business and to see how I can be helpful but I'm not proactively sourcing clients but that doesn't mean that I don't have availability to schedule something in
the future awesome so if it's amazing enough you're open to it absolutely always great okay here we go you always have to be open to New Opportunities yes I love that I feel the same way fomo fomo kicks in anyway as you know we're going to be devoting this entire podcast to just one topic which is product LED
sales which is this go to market motion that seems to have emerged over the past year maybe a bit longer and just feels like there's this increasing amount of interest and also this increasing amount of confusion around what it is how to approach it who it's right for and so
we're going to spend the next hour diving really deep into product LED sales let's go for it let's do it okay so let's just start with a bigger picture kind of question of just how do you define product like sales what is product sales especially when it comes
to what is it versus product like growth great question so let's start with product LED growth I always talked about it a little bit in our first episode but let's revisit the topic product LED growth is all about products ability to self-serve activate self-serve engage and convert that usage
to a monetization opportunity so you bring people you get them to an aha moment into the Habit loops and then you able to extract value back out of them extraction of the value can be direct where you actually capturing revenue from them or it can be indirect where
they're participating in your growth model via virality or user generated content and bring additional business through the doors but let's talk about direct queries to capture that value there is self-serve monetization so I'm using product self-serve I go to the pricing page I find the plan that best
suits me on pictures that I want to unlock or usage that I want to unlock and I buy it however that's not the only way to monetize that usage you can monetize that usage with sales 2. why self-serve monetization has a cap of about ten thousand dollars that's just how much we're able to process on the
credit cards before they start getting flagged and declined by the Banks and so much we as a consumers and prosumers are even willing to put on our credit card because not all credit cards have limits of over 10 20 30 40 000 so self-serve monetization is very much a prosumer use
case where an individual is trying to solve the problem on their own product let sales converts the usage that you've generated via self-serve into a sales opportunity and it attaches A salesperson to close a much larger contract which can be fifteen twenty a
hundred thousand dollars in order to bring an Enterprise level solution to a company that has already been using it in the self-serve manner amazing would you say that product like growth has always been in a sense product sales because sales was involved and there's has been kind of like way of
describing it or is this a new trend and way of approaching product like growth so prod lab growth uh has actually started more on individual use case so an individual has a problem they have a job to be done they come into the product and they solve it and that was
product LED growth in a nutshell for a lot of the B2B companies however if you're going to attach a salesperson there is nobody in the company that is going to pay 10 15 20 000 for one individual to solve their problem so productless sales assumes that there is a migration from an individual use case
that you acquired an end user with and an escalation into an Enterprise level solution that solves Enterprise level problems let me break it down and let me use for example amplitude as an example so amplitude individual what does individual wanted with amplitude I need
data at my fingertips to make better decisions for my product so I'm going to put in amplitude SDK into my product and it gives me behavioral data to help me build my pillar better what is the company level solution well it's more self-servability of the data it's democratization of data it's
enhanced insights in a more data-driven culture that's what companies solving for individual is not solving for data-driven culture individual is just solving for Data Insights for them companies solving for data-driven culture so in product LED growth you can just have an individual be very happy
with their solution for their job to be done however for product let sales assumes is that there is an escalator to an Enterprise level solution and Enterprise tool escalator is valuable to attach sales resources too because products fundamentally do a really bad job at communicating
Enterprise level value prop they're very good at showing you as a user what you can do they're very terrible at showing what organization actually can benefit out of the solution so sales can tell that story sales can bridge that Gap and then you can increase the perceived
value in order to bridge the gap to that fifteen thousand dollar twenty hundred thousand dollar contract so I would say self-serve monetization is very much an individual use case versus product let's sales is turning that individual use case and self-serve usage into a sales Pipeline
with Enterprise level value I really like that way of thinking about it basically product like growth has a ceiling you're only going to get so high in terms of spend you can only explain things so much to a potential user and then sales comes in and solves a lot of those problems and product life sales is
essentially this I think you even have this visualization now that I'm thinking about this bridge right yeah this bridge between the two and so in this world of product LED sales does sales as a function outbound sales continue to exist one and then two is it radically
different in this world of product LED sales yeah so to understand how sales should be applied in the situation you need to understand end users motivation ability and permission simple organization so for example if the user end user is very motivated they have full sense of ability to solve the problem and they
have all of the permission from organization or maybe not even permission maybe forgiveness from organization to go and explore and bring in a new solution then it can be a very much organic motion up that escalator however that's not always the case a lot of times end users Miss permission
of solving Enterprise level problems there's lots of stakeholders there's a committee that has to make a decision it impacts departments outside of their purview and maybe they're even lackability to do it maybe they can do their little job to be done but not the entire Enterprise level integration so
in my amplitude example yeah I can drop an SDK in my product area but how do I convince entire product to adopt amplitude and put an SDK on every single interaction across the entire app such as different level problem statements and this is where productlet sales is
either can be as truly organic motion where people raise their hands they submit sales forms and there's already I need and desire and understanding of it or end user might hit friction points and product let's sales has to bridge those friction points by either
attracting the right decision makers to the process so they can find an Enterprise buyer out there they can understand Who's the champion and what their capabilities and what their permission levels are and they can create a committee for the decision so there is they almost slap a Band-Aid on
the problem of people not wanting not be able to and not wanting to necessarily resolve the problem on their own and they can be very powerful with that as well as marketing because we cannot forget about marketing where they can educate of how to help people bridge that Gap and how to sell things
internally you mentioned this idea of Enterprise level problems it might help if you give an example or two of what those might be and then also just what are companies examples of companies that are doing Enterprise or product list sales well just to kind of give people a mental
model as you're talking about some of this stuff sure so let's go through a couple of them let's go through Miro Miro is an online whiteboarding platform what is individual problem that people come to Miro to solve they have a workshop they need to facilitate maybe they need a
board to just do brain writing in and they use Miro for individual jobs to be done however what Nero is designed for is the team level problem so I come in and I bring you in and we collaborate together so now there's two three four people involved but even that is still on the project level it's on the team
level nobody's gonna pay a hundred thousand dollars to solve a team level small problem that is solving what is the Enterprise level problem it's increased Innovation it's increased productivity across the entire team because now we have this new outlet in which we can collaborate now can Miro
very clearly show increase in productivity across the organization by using the product no can sale sell the story yes so Miro take you from an individual user to a team step and then sales Bridges the Gap to an Enterprise let's give another example of figma in
figma I come in as a designer and I just need a better way to capture feedback from my stakeholders a more scalable way to capture it so I can iterate on the Perfect Design what is it at the team level now there is a team that can collaborate with me more openly I can
capture more feedback from more stakeholders faster and get the project done sooner what is it on the Enterprise level well on Enterprise level are designs that just better fit the business needs they have faster turnaround time and our product is performing better that's an Enterprise
level value prop and again we're I think in the product development space gotten a little bit lazy of actually showcasing that Enterprise Value in product so we rely on Excellence of sales team to tell that story I do hope that changes by the way in the future then we put more
pressure on the products to take it all the way up the escalator so we don't have to be hundred percent dependent on the sales team going and showcasing that story and the product can really Empower that escalator from the starting point till the end on its own I want to dig into that for sure I know that's something
you just shared on LinkedIn recently and I thought that was a really interesting topic but before we get there let's talk about this bridge a little bit more so people might be listening to this that are maybe a product like growth company and they may feel like hey wait we're
already doing this we have this product like growth motion we have a sales team they figure out who to talk to what exactly is in that bridge that makes product life sales so interesting I imagine it's like helping you identify who to go after helping people go further and further and escalator
themselves how do you think about that that bridge between product and sales let's talk about how product-led growth companies start with product-led sales it usually starts by an organic demand from a user base they reach out to them through support channels by just pinging
people who work at the company saying hey I want to purchase this for my entire company that's an organic pool that you start feeling from product LED growth model into Enterprise sales world and by the way you should never hire any salespeople until you feel that pool
because if nobody's asking to purchase then you cannot just hire an SDR and make a purchase happen so you need to see those hand raisers you need to see those people demanding an Enterprise level adoption then you hire starts hiring salespeople to actually suffice
that demand and that's great and you're starting to do sales and surfacing really addressing organic Demand with a new product but that organic demand very quickly dries up if you rely on hand raisers on of your Champions if you rely on having Enterprise buyers in your user base that
are asking to just sign on the dotted line then you have a very limited ceiling for your growth because what majority of the usage transforms to be is to have product qualification that there is a meaningful sales conversation that could occur based on the signals within usage but the buyer is missing
ninety percent of product LED sales is converting the usage into an opportunity by finding a buyer outside by finding the decision maker outside this is where marketing and sales are so crucial in the process connecting that decision maker to the usage and then driving an opportunity
through sales funnel all the way to closed one deal so it's great when you start having sales team and you surfacing this organic demand that's beautiful and power to you just it doesn't last very long just because end user fundamentally does not equal Enterprise buyer and that organic demand
ends up plateauing varies shortly because you cannot just make Enterprise buyers happen from your users if a Founder is listening to this right now and they're like okay so I have maybe a product like growth component or self-serve maybe I have a sales team
maybe I don't what's a sign that your product is a fit for investing in product sales essentially every product like growth oriented companies should be eventually investing in this area or is there certain companies that like no you don't need to worry about it just stay product like growth forever or just stay
sales like growth forever to have product list sales means you're going up Market period that means you going for contract values that are probably over your sales floor so the minimum that the sales is willing to engage in close which is traditionally around fifteen thousand
dollars if you go in for contract values of fifteen thousand dollars that means you're probably trying to close a hundred two hundred thousand dollar contracts as well who can handle a hundred two hundred thousand dollar contract it's not going to be a small startup it's not going to
be an SM beam it's probably going to be higher end of more of a mid-market segment so 200 employees plus more likely it's going to be towards the Enterprise segment of a thousand employees plus so if you are not ready to go up Market I would say keep it easy on the product let's sales because sales
means quotas sales means large contract values sales means you are going up Market whether you like it or not and some products they should stay in the prosumer individual space maybe they're geared towards contractors or Freelancers or squarely towards startups
those personas are not interested in talking to sales in the first place they have much lower bearing of the how much they're willing to spend so their price sensitivity is much higher they prefer to do all self-serve in the first place so it's really needs to be conscious about what
that will do to your go to market motion because it definitely skews it and pulls it up got it so what I'm hearing is that if you're starting as a self-serve oriented product and you're starting to maybe hire your first sales person is the approach start approaching it
from product like sales Motion versus now we're going to add the sales independent team that's kind of doing their own thing right so there's two ways to get to product LED sales first the wave is that we talked about I started product LED Growth Company I really started with this individual use
case and I'm escalating to a company level value problem this is what I need product Lab sales for on the other side I might start as a top-down sales traditional organization so I have product that I only sell through sales those are usually anchored at larger segments in the first place in order to
build the top-down sales engine you're most likely going after Enterprise segment of a thousand plus employees or maybe upper mid Market of 500 employees plus and the reason to go into product let's sales is either your existing top-down motion is not working because
customers need to see value before they sign the contract so they want to see that usage in at least the first signs of perceived value before they sign on the dotted line or you're going down Market and your fixed cost of sale that you have from the traditional sales motion
does not scale it stays fairly constant yet your contract values are starting to drop as you're going down market so you want to create a lot more Automation in the selling process to remove as many as possible humans out of it so you can approach it for both ways adding PLS on
top of product lead growth or adding PLS on top of existing sales lead growth for plg you're going up Market by adding PLS for SLG or sales lead growth by adding PLS you're going down Market awesome and we're going to talk about how to actually build this infrastructure and
what's required but it reminds me one of the biggest takeaways from our first podcast and something I've quoted many times now is your bet that every sales lead Growth Company needs to add a product-led growth element otherwise they'll be disrupted by someone that does is that still your perspective
absolutely now I think there's different stages of what does it mean to add product LED growth elements I think every sales LED company should be putting pressure on product to assist with the sales process that does not mean that there is product-led growth but there is a product assist in the
existing sales lead motion that can materialize into product-led growth if you can truly solve for self-serve activation self-serve engagement and have product be able to sell itself because the biggest difference here that starts to come in and that is so apparent in every single company is that
in b2beam unfortunately we've let go of the products having accountability over monetization model we've gotten into the spiral of product just builds a product and it throws it over the fence to marketing and sales it's to sell and marketing and sales have done an
incredible job over the last couple of Decades of coming up with these stories and elaborate playbooks of how to attract Enterprise buyers and how to sell them this product and product literally only obsesses after contract is closed and there's usage that starts with serialized after contract close so
we've alleviated our product management in B2B from monetization ownership so when the SLG company actually goes into product assisted tactics or product-led growth the biggest pain point is actually educating product team on how can you get product to sell
itself which is all about monetization awareness monetization friction of conversion to get into the paid plan and then having actual correct value metrics that are understood self-served by the customer so it's a I mean yes I agree with you every single I agree with myself I should say that
it's every single sales company should at least add some product assisted tactics but I would even take it further that every sales LED company should start educating and putting pressure on the product to own monetization components of the business let's pull on that thread a little bit more what does
that actually look like does the head of product for that or the header product or specific group PMS let's say have Revenue goals and responsible for p l and things like that or what does that generally look like when they start to own Revenue so there's two ways that you can own
Revenue Revenue stream number one will be your self-serve Revenue and if there's self-serve Revenue that means product is selling literally itself so yes there has to be somebody in product that has self-serve Revenue Target now a lot of times it doesn't fall in the core product managers a lot
of times it falls on the growth team and that's because core product management is really focused on feature developerability and just that incremental expansion of the core use case and growth product management owns the product distribution strategy and then the plg case it would
be a true self-serve monetization model now when it comes to PLS you don't own Revenue Target in my opinion but what you do own is the pipeline that was created by product that you have a handshake with sales team over so what that materializes in is product
qualified accounts and it's actually a product threshold of Engagement that differs from activation and it differs from core engagement it's what volume velocity feature breadth or behavioral signals that account is throwing that says hey right now is the time to engage with sales and that is
the bridge to monetization that product team should own as even on the core team in order to drive healthy predictable and sustainable pipeline to sales okay so that's a really important topic there's this concept you just describe product qualified account it might be a
good time to define a couple other acronyms and kind of compare them so there's pqa there's pql product qualified lead there's marketing qualified lead can you just maybe describe this Suite of acronyms and then I want to follow up on the pqa because that seems really important I'll start
with pqa just because we just know we just breezed over it pqa is product qualified account it's on account level it's aggregation of multiple users that are using the account it might be on the overall Logo level so let's say you've attracted a company so you qualify pqa across the entire company usage or it
might be on a specific team or workspace level depending on what is the better predictor for you and who the sales team is going to be engaging with so product qualification is very much product metrics it's the volume of use it's the velocity change so for example yesterday
I've been adding one user per day and then today I've added 15 users to account that's a velocity change that you need to pay attention to well there is a feature usage that can be highly correlative to Enterprise interest that product should be driving towards every single account reaching in order
to qualify them for sales conversation now within a pqa there may or may not be pql so pql is a product qualified lead lead assumes there is a person in the account that I can go and sell to now leads are those buyers they're those decision makers in the account and if
you have a smaller segment so for example you and More in small businesses or lower end of mid-market segment you may very have pqls in there because user is maybe equals buyer and user can make those buyer decisions however the more you move up the market the more end user
is many steps separated from the buyer so you might have very healthy usage and you might have a pqa that is off the charts but you don't have a pql in it so if you just stick your sales against that account you're gonna have a very terrible situation a very terrible user
Journey where users are likewise sales talking to me I have no decision making power in my organization I love the product but please leave me alone and this is where you get a bunch of cold outbound and I put big quotations on outbound emails that are just not getting returned so you need to very
clearly understand who's your buying Persona and are they in your user base and if they are you have a pql have some go for it but if they're not go find it out there and this is where mql concept really comes in into play because then marketing has to still qualify a lead
to bring it and connect it to pqa so pqa can have a pql as a user already in the user base or you might need an mql with marketing or sales bringing that lead over and connecting them with the usage amazing so we're going to share a link you have this awesome visual that shows
kind of like the funnel of pqas and pqls funneling into sales along with marketing qualified leads basically there's a kind of instead of one path to sales knowing who to talk to now there's two product is funneling you people that are qualified and then marketing following you people that are qualified
and there is a third path there might be a marketing funneling people that have no usage whatsoever and that is a true top-down lead so you have three buckets of lead attribution that is coming in I have usage and one of the users is my lead I have usage I have no lead in the
account marketing is bringing me the lead but I have to leverage that usage against that lead or I have a lead coming through there is no usage I have to sell the entire thing still to them so there's no contacts that I can use of existing usage and those three channels are super important to identify they all
have very different conversion rates they all have different playbooks so how you close them and honestly they require often different sales team to go after them because it's a very different sales enablement you remind me of uh you have so many hilarious memes that you share on
LinkedIn by the way everyone listening should go follow Elena on LinkedIn And subscribe to our newsletter because it's hilarious and also informative it's a it's a magical combination one of my favorite memes of yours is The Shining one that we just kind of touched on
where someone's just like using a product for five minutes and then hey do you wanna it's a sales guy just reaches out with like the ax hey do you want to chat so that actually it's painfully true that's one of my most highly engaged memes that I've that I've put
out there I have also one of the urinals where A salesperson comes on would you like to chat about our Enterprise plan like 10 urinals and he's like right next years yeah exactly so uh the piece here that a lot of companies Miss unfortunately is that they Jam product LED sales into a traditional
top down sales Playbook now what does that mean in traditional top-down sales book an mql that you have or a lead that you gather already is in consideration cycles for your Enterprise level offering however in product lead sales a new user that signs up they now work close to
Enterprise level consideration they're just trying to complete an individual job to be done they're not solving a problem for their their company so if you can imagine it as like a very large funnel you start with just users looking for problem solve then you transition to awareness consideration
and intent channels for Team level problem and then you escalate for awareness consideration and intent channels for Enterprise level problem top down sales process goes after the bottom of that funnel where there is already an intent to solve company level problem
versus at the very top is where product lab growth starts on individual level problems it's a different timeline so if you go after individual user that just signs up for the account and you reach out to them 10 minutes later after sign up asking what's your budget and are you ready to buy
it's a it's a complete mismatch of where they are in their consideration Journey so you cannot consider a new product sign up an mql in the traditional sense they're just not there yet they have a fraction of the Enterprise problem that they're solving and they're not ready to buy
and it's especially annoying because there's so many SAS products now and everyone is coming for you especially if you're at an awesome company that they're trying to sell so gotta be yeah I mean anytime I even started I remember I started at amplitude when I started a year ago it's like my inbox was just filled
but like now you're doing this now you're doing this bye bye bye I mean it's I don't know it's I I can't even I can't even notice anything in that outbound unless somebody reaches out to me with something authentic that is already usage based it's ignore and it's going to get worse with GPT
oriented uh cold outbound emails absolutely this episode is brought to you by rose.com the world runs on spreadsheets you probably have a tab open with a spreadsheet right now but the spreadsheet product you're using today was designed decades ago and it shows
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you actually do this how do you actually build a system of product LED sales and I feel like there's maybe three buckets there's what data do you need what infrastructure systems do you need in place and then what are the people you need in place and how do you resource it so maybe let's start with the data what
what sort of data do you need in order to do this well there's different levels of scale on how you should be attacking this problem first of all it starts with just top-down intuition what are the signals that you're seeing around the accounts that are highly correlative to sales being
very excited about this hand raiser or about the sales form submit out of the usage and you just start with that it's as simple as that how many others are exhibiting those signals when you have very low lead volume still you don't want to get too complicated with it at
the beginning you want to be very transparent you want to just understand what sales are seeing what they get excited about and feed them as many accounts that fit that model the one thing is not to do is just to start sending every single user to sales because that's the fastest way for sales
to say this product channel is garbage and I don't ever want to see a lead from it again because they have such low close rates and they're quoted their salary depends on their ability to close that they just start disregarding this as a meaningful Channel now the second escalation to it is okay now you'll know
intuition but now let's actually look at the reality of who is hand raising in the product so you look at the signal of who looks like a hand raiser smells like a hand razor acts like a hand razor but is not hand raising and that's a maybe very simple regression model it might be
just a simple histogram analysis that you do of what differentiates people that are hand raising from people that are not hand raising and who else fits in into criteria and looks like a hand raiser based on those differences and that should be your first pqa model
it should be very simple it should just be if you can run a linear regression against some of the top coefficients that you that you notice so you know which has the biggest weight to predictability and you go with that the main piece here is to involve sales very early on so you're partnering with them
you're not just dumping it on them and that you have a very strong feedback Cycles from sales or whether what you've identified is correct or not correct because pqa definitions should not be static they're constantly evolving so just because it's right right now that
does not mean it's going to be right next quarter so you have to have a lot of rituals with sales team to gather that feedback one thing I'll mention is amplitude and mixpanel both have a regression tool that help you identify correlations and and uh and causal kind of connections between metrics so maybe
shout out there I think it's called Compass yep and then uh and then mixed panels I think is called signal yep I honestly to be fair most of the time I've done it manually at first because it requires so much um understanding of the data and if the data is correct and if I'm even seeing
because you don't want to throw in too many co-related uh variables into the model because then you have issues of those variables like describing themselves so to speak and even if they're firing there might not be actual predictive so it's partnership with analytics team and its
partnership with the intuition from the sales team and then you can start throwing it into a regression model and start to automate and think about scaling it which there is a lot of PLS platforms that are coming up and finding the product Market fit at the moment they can do that for you but I don't
know if I would start there right from the beginning unless you actually understand the data because buying a platform will not bridge the gap for you understanding what actually matters in your data buying a platform or using a third-party solution will help you scale
your efforts once you hit the first I would say datum sales fit that you can then scale and this increase distribution of data sales fit wow that's a new new term there we go I have not heard that before data sales fit I love it so you're saying basically start manually to make sure you fully
understand what's going on that's my take yeah I I just I I don't I don't I have a hard time scaling something that I don't fully understand because data can tell you lies and you can just fit any story that you want into data and you can really understand it and how it
fits and what you are observing and that it makes sense before you go and start using automation on it cool okay and then just one last question on what you were just talking about which is finding correlations and causal relationships between usage and users and understanding who to send to sales what
are some common metrics and attributes that you've found that are indicative of they should go to sales so one of the most important things is to create network effects within the company within a team which each additional team member added to an account benefits from
everybody else this does not mean you have to have platform Network effects so you're not trying to be LinkedIn you're not trying to be Instagram there was a platform network network effects what you are trying to create is the value of each additional user into account what
that means I'm going to go through slight deviation here is that they're not should not be only pulling mechanism where I pull you into my account there also should be pushing mechanism any new sign up that happens from the company that already has an account in my system should be presented
with an option to join that account not just create a brand new account what you don't want to create is hundreds of Rogue individual accounts that don't know about each other we as humans we are creatures of Community where creatures of would like to be surrounded by people to be
validated by people and at least you want to create that herd mentality inside of the company and push and pull people into the account so one of the biggest pqas is number of users in the company using your product by the way the magic number is usually seven the
more time you have seven or more users in the company and there's like some some weird parallel here to seven friends at Facebook and seven connection collections at LinkedIn but seven I've seen very often as a check mark hey there's enough value here distributed across multiple people inside the
company that there might be an Enterprise conversation to be had the second most important is usually some sort of volume threshold so for example for amplitude it's number of events that you're sending through which means that you are really starting to tackle your
entire application with analytics as opposed to just a small portion or with Miro it was number of boards that you have in the account with figma I think it's number of revisions that you have on any given design and the last one I would say is velocity velocity is the
trickiest one just because we don't have a very easy way to measure velocity in our transactional data but it's actually one of the most powerful one that triggers the right timing for the in for the the involvement because the change in velocity either in number of users being added or events being sent or
storage that is being utilized is usually a fantastic predictor amazing okay so kind of like the simplest model to tell you there's a peaky way is number of users usage and velocity yep amazing and users by the way can be either usage of velocity metric too it's
just like if you're gonna do anything just look at whichever accounts have most users it's like a 80 20 rule for 20 of the efforts you're probably going to get 80 of the value love it okay so I took this off track and you're talking about what data you may need in places or anything else
along those lines I would say that it's very important to under identify behavioral signals as well and I'll give an example at Mira we had a very strong behavioral signal that if there is an admin switch in the account some sort of evaluation is happening so admin transfer new admin being
assigned that should be ding ding ding all of the Bells Are Ringing that you should maybe reach out to that person and see what's going on the other one that is fascinating is your terms of use Pages your privacy and policy nobody cares about it unless they're considering Enterprise deal if you see
anybody from account land on your terms of use Pages reach out to that person more likely than not you have a buyer on the hook and you can assist them in increasing their perceived value wow that is so interesting that's the kind of stuff you only learn having done it many many times yes but
those signals by the way Universal we looked at it at mongodb it was very much true so these things of when you wouldn't product constitutes evaluation process and what are the Enterprise buyers are looking for I wouldn't say by the way like watching a webinar or landing on an
Enterprise landing pages of good behavioral signal because it might be annoying that I just like on accident landed on a landing page and now I'm being spammed by an outdown SDR sequence but it's a more meaningful actions that are deeper within engagement user Journey are incredible predictors you
talked about again about this idea of spamming from sales and it made me think about like I don't even know if I want to ask this but is there have you seen downside to sales just continuing to hammer you as a potential user like does that actually hurt like I don't want to
know almost because I feel like the answer is no but what do you think I think you have to look at the channel Effectiveness you have only so many channels to communicate with a customer email is obvious uh you can communicate with them in app you can have some sort of chatbot maybe you can
deploy some sort of paid marketing maybe social or retargeting display ads but those are very expensive to to utilize so stepping back and thinking when it's the right time to reach out how can I grab their attention and if you highly saturated the channel that you are is
your primary for reaching out to the user they're not going to react even if it's more of a right time for them to react so will it hurt you I don't think you'll notice it right away but over time I think people become blind to channel communication if it's not applicable to them because fool me once
shame on you like find like you tricked me to opening this email fool me twice at shame on me and I'll be a lot more frugal of which emails I open or which notifications I react to so I think that you have to put user Journey first and you have to really think about the
timing that it's right for user and pqa all it is is the right time to engage with a customer and then go hit them hard over all of the channels of communication but then also know that accounts go in and out out of pqa so today I might be in the pqa next week I
might not be so you need to Sunset the efforts if you didn't get in touch with the customer and wait for the next pqa moment it will happen if your product is holding that goal and is accountable for getting more and more accounts to reach a threshold for pqa well that's really
interesting I'm also happy to hear that answer great okay so let's continue down this track of what what it takes to implement a product called sales motion just talked about the data component what about just systems and infrastructure and tooling what do you recommend there as a start I approach
the subject always as an evolution not a revolution so start with your existing systems as much as possible I would say the biggest mistakes to avoid if your sales team is very heavily embedded in the sales force don't try to have them switch to a different solution it's just
not gonna work you need to try to figure out how to embed what you need the data in the Salesforce not get them to use some other third-party tool and then I wouldn't jump into any big commitments until I really prove out viability of product-led sales motion before automating any of it so I'm more of this
kind of Wizard of Oz it as fast as much as possible to get the initial traction so then we can validate that there is investment to be had in scaling it and there's a business value in it and the tools you're using at that point is like Google Sheets or is there something else
involved and it's Google Sheets it's your Luca Tableau dashboards it's your amplitude charts and reports it can be widgets within Salesforce or etls that you pipe through HubSpot marketos into Salesforce or it can be CRM Solutions or plg specifically that you literally
deliver in Excel sheets to sales team to Prototype at different Outreach Have you shared any of this kind of like MVP product like sales stack that you recommend and if not I think you should because that seems pretty useful yeah I think I definitely should all right I have my idea for an Xbox
got anything out of this chat we've got that okay in terms of people so you're talking about data we talked about tooling infrastructure what do you suggest in terms of people and resources to invest in this area as a start and then also as you evolve for PLS the people that you need is product
managers that will be able to get account to pqa stage you will need sales people that will understand which usage rigored pqa and how to apply that information to find a buyer and to enable a buyer to convert them to an opportunity you need marketing to educate both the end user or
Enterprise buyer on why the value of this Enterprise solution is going to make sense to you and you need analytics team you need a data analyst that will continuously dig in the data to find correlative signals that you can test causation in those are the four people that you need
product analytics marketing cell I should say engineering too obviously but I kind of bundling them together with product now it's an evolution not a revolution so if you're starting from sales let growth I would highly suggest of you going to a sales team and asking for somebody to
run a pilot with you so don't just throw these leads into the top down sales process and assume that everything is gonna be just fine attached to yourself a pilot AE so account executive or an SDR and see how that works so you kind of separate yourself from the mothership of the
sales engine and you actually prototype this separately in a little bit of a vacuum not under pressure of them top-down quota relief and if you're in a product LED Growth Company then I would suggest do your own sales it's kind of like a founder-led growth so like think about it like hey you need to close
maybe first couple of deals you sell first so you truly understand what's happening I would not get first hand raisers and say oh we can close it unless we have a salesperson no just have somebody on support to do it have somebody on finance do it you do it I've been on chat myself plenty of times
trying to close the deals just to understand what's the sales process for the customers looks like and then you can figure out who to actually hire and who to actually scale but for PLS that starts in plg you actually just start with more of blend of an SDR and AE
together because you don't need two separations so the same person can both outbound to a customer and close them at the same time and then you can go into specialization of the role so start small start Nimble prove it out scale along the way but half marketing and analytics support you the entire Journey
that is really simple what I'm hearing is you don't need to hire someone new necessarily you have the resources most likely and then it's just how do you allot some time of this team to start investing in violating yeah I'd say I'd say It's My Philosophy is that I want to
have an Roi for a new hire before putting a job wreck out there and to create an Roi I need to prove it out of what potential can there be myself first so I can almost like fund this higher with the revenue that we can generate out of this channel originally but obviously
that includes a lot of individual contributor work that you have to do in the area potentially that is not comfortable but that's the fastest way to grow in your career so they think that's a necessary step for successful execution you want to hear a crazy stat about product-led growth and
not hiring sales sure okay great uh I was chatting with the founder of notion for the series I'm working on and notion didn't hire the first salesperson until they were past 10 million error I believe that Miro did not hire their first salesperson until they were like
five or seven million in ARR they were literally closing the contracts through support team and it was just fine same with notion it was their customer success and support team yeah medicine product like growth right there yeah I love it amazing Okay so we've talked about data tooling people
is there anything else that you find is really important to being successful with rolling out a product LED sales Bridge motion the most important thing in product LED sales is that there is a different configuration internally of collaboration that needs to occur in traditional sales World marketing
creates pipeline for sales sales sells product product engages with the paid user to drive retention in the product lead sales product acquires and activates a customer and product creates pipeline for sales so relationship is not that there is a go to market org with marketing and
sales and product just kind of throws features across the fence for them to sell the collaboration here is between product and sales but that means the product has to take on accountability over pipeline the worst thing that you can do is to say I'm going to do product LED growth or
I'm going to do productless sales and I'm gonna do it in marketing recipe for disaster you will be failure mode within six months because product has to take accountability over selling of the product itself and that is not to be taken lightly because so many product
teams are deeply deeply uncomfortable with owning monetization targets now I'm not saying that products should just be gold on Revenue because that's a very short term short outcome past performance there has to be a very clear designation until long-term goals and long-term objectives and revenue
ownership and by Revenue ownership I don't mean that individual product manager also should have a revenue Target on their back what I mean is that the product leadership should be accountable for the revenue Target but the product people should be responsible for more of kpis
free to pay conversion rate package mix pqa maybe even pqls but those are all of the kpis into Revenue so the piece to me that is of utmost importance is to keep product accountable the queue cannot start this product like sales motion and marketing and sales and think that you
can continue with the same configuration inside the company and still succeed product has to have a seat at the table and product has to feel accountable and responsible for it and when you say accountable what does that actually look like is it like their okrs have certain
goals around here's how many pqas you're driving is it a number like what does accountable mean in this I think so um every product has some sort of goals and they definitely should have goals on keeping healthy engaged user base they should definitely have goals in terms of
maybe feature utilization or customer satisfaction but what I'm saying is to have also some sort of monetization goals what that is for each company I think differs depending on their level of comfort and their love and how close they are to revenue capture mechanism but let's say at Miro our head of growth
product how to self-serve Revenue Target on her back she drove it she had Revenue goal that she had to hit in product and she shared marketing because I ran Marketing in that in that company we shared a pipeline goal creation because pipeline cannot be created without marketing too marketing will
need to educate marketing will need to find the buyer marketing will need to do accounts based Marketing in order to attract the buyer and connect it with the usage so product and marketing now pull together to create the pipeline and give it to Sales but product can no
longer sit in this island as a feature Factory it's a it only works but the top down sales organizations which as I said I think are going to be heavily disrupted over the next 10 years with value first product like growth this is another hilarious meme that you shared on your LinkedIn so another reminder go
check out Elena's LinkedIn with this hilarious meme of product teams being presented hey you're going to own some Revenue targets and they're like oh no yeah exactly it's actually super interesting because a lot of growth leaders shy away from revenue targets acquisition targets sure retention
Target engagement Target sure but monetary Target oh no how can I possibly own a revenue Target I think we all in Tech and I specifically point a finger at my industry in B2B industry just got a little bit complacent with Revenue ownership from product side and I I I do
think it's catastrophic for us in the long term if we don't fix it I love it I want to do a whole podcast in Your Meme strategy and your your parodies that you put out but we'll stay on track here in terms of the revenue Target what is that goal like is it just in this quarter x million dollars of Revenue is
it a growth rate from you quarter recorder how do you find people actually Define that Revenue Target right so uh there's there's different targets that you would have for self-serve Revenue versus product LED sales revenue so for self-serve Revenue your kpi should absolutely be free to
paid conversion rates or trial to pay conversion rate it's the package makes it's the average revenue per user or our pool it may be retention rates first term retention rate second term retention rate in order for you to sustain the healthy Revenue that's what
outputs self-serve Revenue those should be the pieces do I do I have a problem in friction and acquiring new paid user in maximizing their value or in retaining that paid user those are the three inputs that go into self-serve ARR Target and you should just understand
where the biggest opportunity for your team to focus on driving it in any of those cases most of the time free to pay conversion is the biggest focus of Any Given team just because we want to better convert and inflow into our user base assuming we have good product Market fits so we have a solid retention
happening in free to paid conversion there's three pillars that you constantly I need to work on and one pillar dominates them all it's monetization awareness simple as that if you have a freemium product I guarantee you 75 of your customers in freemium product are not aware of what you're selling
so only focusing on monetization awareness can give you incredible output on driving monetization and it's really its products ability to communicate via feature walls via usage walls via trials or what the value of the paid offering is and I see I've heard stories from slack
of just showing message limits messaging and how big of an improvement on conversion rate it had I've had it firsthand at Survey Monkey where just adding consistent UI across all of the paid triggers that were that Amazon gold color and making sure that each user has been able to see
at least three of them there's a rule of three that goes into advertising that we need to see things three times in order to remember them that drove monetization awareness and conversion rate up but that's basically consumes 80 of your work the second one is just conversion
rate optimization so your pricing page optimization your checkout page optimization your currencies that you offer the payment methods that you offer to make sure that there is as low friction as possible in order to actually pay and then the last one is is what you're selling do people want to
buy this is where you actually go after monetization model change which features are in each plan what are the price points in each plan how does the upgrade path look like do you have add-on strategy do you have just pay to paid monetization plan strategy and that one
is like the last one that you should cross because it involves a lot of cross-functional effort in this decision making but free to page conversion upsell potential and retention that's for self-serve AR for product list sales what products should own into speak QA but who defines
pqa that's the big question and who iterates on pqa and then how do you actually get people to get to the pqa stage and just like product often will own engagement metric or maybe even activation Target your own pqi Target so that just becomes one of the goals and depending on where
the biggest effort that needs to be it can be an activation can be engagement like pppqa but more and more I see product LED especially mature companies needing to focus their product teams on pqa yet they don't have a clear definition because sales kind of goes wrong and
does their own thing and product fails to deliver predictable pipeline to sales which pushes sales into a top-down motion prematurely and a pqh argue would be like 1 000 pqas this quarter is that the way yeah yeah so uh you usually actually look at it almost from conversion rate so you look at okay how
many how many teams do I have in my ICP so ideal customer profile segment that are active that's my denominator and how many of those themes are reaching pqi Target this month so it's like a conversion rate to pqa out of engaged ICP teams one thing that I love that you
touched on is this awareness of monetization yeah people knowing that you have more features and that you may get access to more if you pay how do you track that is it just like people seeing it per account or per user like what percentage I've seen one of these upsells or seen them three times I try
kids fairly simple two ways one qualitatively I just run surveys against people say do you know what we're selling it's shocking how many just have no idea what's in our paid plans you know like we have a major issue here or I just track pricing page views per activated account so how many of the
activated accounts landed on the pricing page at least once because that's at least a level of exposure that they hit some sort of trigger that pulled them to explore pricing page one of the things that I just want to give a hint to anybody who's listening from a sales
top-down companies one issue you might have is that when your product is developing functionality especially paid functionality they just design review it and ship it for paid plans only so if I'm in the free plan or in the lower tier plan I don't even see it I don't even know that existence because
it doesn't exist in the app because it was never designed for me to even see it so just doing one small change of pushing your design reviews to review functionality from every single state of the customer free state lower paid State and Target state that this functionality is actually unlocked
can do all of the difference in the world because then you'll actually understand how that pink functionality is being exposed to a free user so them to become aware in self-serve manner of its existence I love love love all these little tactical little insights and tips
so thanks for sharing all these little little things that end up being the most useful to people just a few more questions that and then I'll let you go one is around pitfalls what have you found are the most common pitfalls that startups run into as they're trying to invest in product LED
sales you've touched on a few but what comes to mind when I ask you that let's just go through some summary that we've mentioned already throughout our conversation don't treat PLS as a traditional top-down sales process every single user does not equal it's an
opportunity for you to co-chase after you need to understand the right triggers and usage they can help you automate qualification process so it's almost automating some of the SDR efforts to say when is the right time for my sales for my human that I'm paying a lot of money to intervene into
this account and add value because sales interaction has to add value to user Journey not be disruptive or create additional friction because I've seen so many even people posting of like why am I getting a phone call 10 minutes later it's annoying I'm gonna stop using the
product because of it because they feel misunderstood for that profile your customers understand whether you have buyers whether you have users and they're in your ICP segment no disinformation of friends so you can serve a best experience possible number two hold your product accountable this
cannot be just executed through marketing and sales product has to have a seat at the table and product and sales relationship has to be one of the closest ones in this motion and that's really hard to change especially in the traditional top down sales company where
marketing and sales have closer relationship so try to create new rituals try to create the new ways of communication between the teams for them to be aligned behind the same goals number three don't leave marketing out of the equation majority of your usage will not have a buyer in it you will need
marketing your Enterprise marketing your account based marketing to go and find and Hunt that buyer and to bring them and connect them with usage so lean on your marketing team just because you're doing product LED growth and product LED sales does not mean you don't need
marketing and strong product marketer I can do wonders here in helping you with messaging with Outreach and sales enablement materials and number three don't weight on data and efficacy too long you might be using your intuition at the beginning very well but start thinking about how you will need to scale your
data issues because productless sales is all about leveraging usage for pipeline creation so you need to be able to measure that usage understand that usage track it and evolve it amazing two more things one is you shared before we started chatting that you have some benchmarks around some of these metrics
that you mentioned of just what is good so that people can understand what their goals might be what can you share there yes so in terms of benchmarks first of all it's time to get from Individual usage when that user comes in to have a single job to be done to creating an
Enterprise level contract it does not happen in hours it does not happen in days it doesn't even happen in months of usage so couple of benchmarks for you all across netlify Miro or amplitude which are all of the companies I've worked at it was 12 months plus of usage
that had to happen before sales contracts can be created on sustainable way now that's not an all-encompassing rule you will have very high intent buyers coming in sometimes and you'll be able to close them within a week but on average it takes a year of usage to escalate the problem from individual
to a company level solution it takes time be patient so this is not the problem of get more signups this quarter and close more pipeline in the same quarter this is you building for long-term growth and you're closing contracts and the sign ups that happened really last year in the best
case scenario number two is don't confuse user and buyer please please please profile your users upon sign up do not skip those onboarding questions no they do not detract for your onboarding completion rates and people that do drop off in the profiling stage
they were low intent anyways they were never going to be activating if one extra question deterred them from completing um from continuing with your product so profile you people know who you're talking to it's more important than couple percentage drop off that will never gonna activate in the first place
so um no no no die user please because all of us are tired of receiving leaving outbound that is not relevant to us and then the third one is conversion so conversion rates here actually stand from the true plg companies so freemium conversion rate is usually around five
percent trial conversions are more closer to 10 to 15 percent but your contract values start to go up so it's not so much that you're increasing conversion rate because a lot of those companies will still go through self-serve monetization flow before they become your sales pipeline Prospect so
conversion rates stay the same but your contract values and your lifetime value of the customer is what starts to it increasingly uh go up and that you can influx into creating a smile Revenue curve incredible the question you had about profiling your user I was going to ask
what questions to ask I'm guessing maybe a better approach is just go to Miro or amplitude and just go through the sign and flow and see what they're asking yeah I would give some couple parameters in place number one limited to maybe three to four screens because otherwise
it starts to feel too long uh make sure they only ask information that you're either gonna use in the data segmentation that then you can escalate to personalization and messaging but at least that you're gonna use on data segmentation and experiment with the how deep of an information that you can ask
you should always be able to ask about company size about the department which customers coming from about their seniority on the team and about their use case those four questions the uniform everybody's used to answering them the rest um like phone number or like some bit
maybe like if you need to know the address or so so on those experiments how much you actually want to make them required questions versus optional so but please please please experiment on your onboarding questionnaires all of you closing question everyone started with sales sales LED
growth and then product LED growth emerged and now there's this bridge between the two of sales LED growth feels like there's always this new way of grow growing a business and approaching go to market is there something Beyond product sales what's next if anything well I wonder how much uh rise in AI is
going to automate some of those sales conversations so it's not going to be truly product LED growth because it's not like just the products that's going to sell itself but what if on the other side of that chat or other side of the email or even a zoom call because they
can do a deep fake of anybody it's going to be AI selling to you and giving you very deep and personalized answers I am curious to see how that's gonna evolve because the plethora of information that AI can Surface to you in a very personalized manner in matter of seconds
is far stronger than any human or even content management system can do at the moment do you want to coin an acronym right now for what that might be have to be AI sales it's a mouthful Elena this was everything I was hoping would be I imagine this episode will be even more popular than your first one
thank you so much for making time and getting into such detail in all the things we talked about two final questions where can folks finding online if they want to reach out and learn more and how can listeners be useful to you I'm on LinkedIn a lot but I have started
my own sub Stacks so please subscribe to my newsletter if you can do more short content on LinkedIn and longer form explanations in my sub stack not to compete with your Landing newsletter but plenty of reason for everyone I I recommend yours within sub stack and we're going to link to it and definitely
there's like no reason not to subscribe if you're listening to this podcast it's only only upside well thank you uh we're also creating plg course with reforge that is going to go into very Nitty Gritty details of everything that I'm talking about to help you operationalize
these Concepts it's launching in Fall 2013. so uh do check that out and other than that I'm a really big believer in democratizing knowledge so we don't have to all make the same mistakes over and over again so the biggest way that you can help me is just share your insights
share your knowledge and share your learning so we can all grow so much faster together well you're one of the best at doing that and thank you again for doing this thank you for having me learning bye everyone thank you so much for listening if you found this valuable you can subscribe to
the show on Apple podcast Spotify or your favorite podcast app also please consider giving us a rating or leaving a review as that really helps other listeners find the podcast you can find all past episodes or learn more about the show at lennyspodcast.com see you in the next episode