NPLG 3.30.23: Culture Building for PLS (Guest Post: Kenneth Vincent)

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For this edition of Notorious PLG, we have a special guest blog post from Kenneth Vincent, former Global Director of Sales at ClickUp. Kenneth has lived Product-led Sales (“PLS”) across multiple successful technology companies, including being an early seller at Yammer where he helped build some of the first iterations of Freemium and Bottoms-Up selling. I think you will greatly enjoy Kenneth’s writeup and I have personally learned a lot of Kenneth over the years:

Culture Building for PLS

“Regardless if your company is pure PLG, or hybrid Sales-Led/Product-Led, or if you’re transitioning from Sales-led to Product-Led, its critical to get the culture right. In my experience, building a strong sales culture around PLG/PLS can be difficult. For one, its fundamentally different from a legacy Sales-Led team culture, beating the drums of sales process, sales methodology, data hygiene, Outbound, Inbound, sequencing etc. But PLS culture pulls from non-traditional sources such as analytics, product, data, and customer service. Balancing and integrating these two cultures can be difficult.

Aligning Your PLS Motion to Your Sales Methodology

One major challenge is that the culture for a sales-led GTM team can be somewhat at odds with the culture for a product-led GTM team. At their core, the “ends” seem to be aligned, both GTM motions want to “close the deal”, but the “means” for how to do so, are drastically different. One reason for that is sales methodology.

MEDDIC, MEDDPIC, Challenger, SANDLER, BANT, the list goes on and on… Most sales organizations lean on one or even several sales methodologies to help drive structure, rep development, and increases in predictability across the team. Even if you’re a small startup with a handful of reps, you’re likely always finding ways to overlay a specific sales method on top of your current sales process to help drive clarity across your team.

For PLS though, most sales methodologies aren’t super helpful. In fact, I’d even argue that out-of-the-box, they almost serve more as detractor, then enabler, to convert users into opportunities.

A smart way to help sales teams adopt PLS could be to incorporate or even extend elements from an existing methodology and apply them in creative ways before the sales cycle even begins. Sales leaders need to be creative and identify elements in their chosen sales methodology and bridge those with their PLS motion. 

For example, consultative selling emphasizes the importance of building a relationship with the customer by understanding their needs and providing them with tailored solutions. Specifically, through active listening, questioning, and empathizing, the salesperson can gain a deep understanding of the customer's needs and provide personalized recommendations. The goal with consultative selling is to become a “trusted advisor” to the customer and help them achieve their desired outcomes, rather than just making a sale.

These same ideas are what help to drive the user-centric approach reps need to take when engaging with PQLs or PQAs. Even in PLS, users may still have unique needs, questions, or concerns that require a consultative style approach that emphasizes genuine curiosity and building solutions specific to the users needs. 

It’s easy to take those core components of consultative selling, and align them to your PLS playbook. 

Whats more, is that leveraging a common vernacular and framework will help with PLS deployment and accelerate buy-in with the existing team; it will enhance your team's understanding of how to convert users into revenue.

Extreme Customer Service Converts PQLs + Wins Deals

The late and great, Tony Hseih (RIP brotha), Founder and CEO of Zappos, was a major proponent that customer service should play a bigger role within companies. He believed that Customer Service should be viewed as a “relationship building” team between the company and its customers to help drive happiness and loyalty. He even went so far as to say “Make every customer as happy as possible, even at the expense of sales—in the short term”

Personally, I agree, and subscribe to the same philosophy, short of sacrificing sales. In my view, PLS has the opportunity to set the bar, and set the example as a relationship building team that enables revenue, not sacrifices it. It's also worth noting, that in this current environment, where everyone now offers a free or free trial, you cannot afford to have a bad user experience.

Some of the core tenants of great customer service include:

1. Responsiveness: Great customer service requires being responsive to customer needs and concerns in a timely and effective manner.

2. Empathy: Empathy is essential for understanding customers' perspectives and feelings, and for responding to their needs in a way that shows you care about their experience.

3. Professionalism: Professionalism is crucial in customer service interactions, as it conveys competence, respect, and a commitment to quality.

4. Clarity: Clear communication is essential for ensuring that customers understand what is being communicated, and that they feel heard and valued.

5. Personalization: Personalization is important for creating a personalized experience for each customer, taking into account their unique needs and preferences.

6. Follow-through: Great customer service requires following through on promises made to customers, and ensuring that their needs are met in a timely and effective manner.

ClickUp did a great job of this. Customer experience and user-value were front and center on a daily, weekly, and monthly basis. ClickUp put their money where their mouth is, and aligned incentives such as bonuses and additional equity opportunities to those that went “above and beyond” with customers, no matter the request. We mirrored this on the GTM team, and I can say from personal experience running a large team there, I cannot count the number of times we won deals over our competitors simply due the amount of attention and “white glove” style treatment we provided.

Leveraging extreme customer service was most effective when converting PQLs into Qualified Opportunities, and when leveraging bottoms-up motion to accelerate a tops-down sales cycle. The impact of extreme customer service was compounded when clients were trialing our solution, in tandem, with a tops down motion. The over-the-top experience the end users would get from us, is the feedback they would give decision makers who were engaging with us as part of the sales cycle. We strived to be “Zappos but for sales”. We viewed PQLs as a unique opportunity to side step traditional sales methodology, and instead lead with customer experience while also providing the customers with consistent value realization through their journey. “Come for the product, buy for the service” was our mantra.

If we can integrate these CS principles into the core of your PLS sales culture, you can differentiate yourself from the competition. By emphasizing the importance of listening to and understanding your customers' needs as part of the day to day culture, tracking promptness and effectiveness of the solutions by your reps, and setting team expectations of going above and beyond, you can build a culture of exceptional service that produces results. You can create an ethos for the sales team that has meaning, and purpose; that’s reliable from a sales front, and appreciated by customers. That is the culture.

Analytics, Product, and Growth Can Help Foster a Data-driven PLS Culture

PLS is a team sport by all accounts. PLG, by definition, is the practice of overlaying your organization on top of the user lifecycle, and assigning teams to optimize each phase within that lifecycle. PLS is the key component to the conversion portion of the user lifecycle. While each team does have a dedicated focus area, the best PLG GTMs are when these teams are working well cross functionally. Team work makes the dream work!

While Reps are good at understanding a lot of funnel and sales process metrics, most reps don't understand product or growth metrics (ie DAUs, MAUs, Activation, Time-to-Value, ARPU, CTV, PQLs, etc). In order to properly enable reps for a PLS motion, reps need to be empowered to understand influential and insightful user journey KPIs.

Product and Growth teams typically have webhooks tracking hundreds of activities and events throughout the user's lifecycle to help pattern match as to what user behaviors best translate to conversions. Marketing or Product Marketing is likely tracking the effectiveness of their lifecycle marketing campaigns or even in-app onboarding messaging, etc. 

Sales Leadership needs to be actively engaged with those teams to help determine the subset of that data that is most relevant to the sales team. That is, it is leadership's job to build a PLS playbook for the sales team that optimizes for conversion. A lot of the data that growth and product are tracking is what helps to determine what is in that playbook. The data can help determine who to reach out to, when to reach out to them, and what to say.

But it doesn’t end there, sales leadership should partner with Growth and even Analytics or Marketing teams to provide regular updates and help socialize a lot of product and analytics terminology and also to foster alignment on a shared vision of what success looks like within PLG, and PLS specifically.

For example, a metric that I would closely follow is activation-to-PQL ratio. That is, how many activations were turning into PQLs. I took the time to enable the sales team on this ratio, and the details of the leading indicator (Activation rate) and the lagging indicator (PQL Volume). Thereafter, we had the Growth team give routine updates to the sales team about Activation - how they track it, what goes into it, what tests they're running, what were the features that were mostly closely associated with activation, etc. 

This created buy-in from the sales team about how the data surrounding the user journey can provide them insight into how to approach and provide value-optimized user experience. 

In my 1:1s, I would take it a step further and review a list of PQLs and discuss their outcomes, and I would have reps explain:

• What data were they looking at when determining the right approach?

• How did they attempt to drive a value-oriented user journey?

• What storyline did they gather from the data at the point of activation that determined how to approach their first call with that PQL?

Success at the rep level is tightly integrated with the reps ability to comprehend the data.

It’s also worth noting, alot of the leading PLG CRM solutions out there, offer a rep-interface for them to engage in product/growth data to help determine who to target, when to reach out, and what to say. Growth teams should be leveraging those tools as well, and partnering with sales leadership to find additional data points that would better aid the sales teams in their efforts. 

So, how do you get started? Get with your growth or product or even analytics teams to figure out what data is best for the sales team, and then co-author, as a group, how best to enable your sales team around that data, how to make decisions with that data, how the reps can find insights with that data. From there, work to challenge your reps about their strategies and provide data-supported answers in your 1:1s.

Conclusion

As most sales leaders know, your team’s sales culture is delicate, but when working right is a force multiplier. So, be deliberate, be thoughtful, about integrating some of the core elements of PLS into your broader sales culture. Be mindful of the fact that alot of what PLS is on the front end, is drastically different than what is typically pushed through a sales team. In the end though, this will only make every one of your sellers better.

Happy Hunting!”

I would love feedback. Please hit me up on twitter @zacharydewitt or email me at zach@wing.vc. If you were forwarded this email and are interested in getting a weekly update on the best PLG companies, please join our growing community by subscribing.

PLG Benchmarking (Startups):

This is a new section! I will continue to update these metrics and add new metrics. I would love your feedback on what else I should track.

Conversion rate (website → free user):

• Best: 10%

• Good: 5%

Activation rate (free user → activated user):

• Best: 60%

• Good: 30%

Paid conversion rate (free user → paid user):

• Best: 8%

• Good: 4%

Enterprise conversion rate (free user → enterprise plan):

• Best: 4%

• Good: 2%

3-month user retention (% of all users still using product after 3 months):

• Best: 30%

• Good: 15%

Conversion from website to free user:

• <1 month on waitlist: ~50%

• >3 months on waitlist: 20%

For more detail on acqusition rates by channel (Organic, SEM, Social etc), please refer to this prior NPLG.

PLG Financial Benchmarking (Public PLG Companies):

Financial data as of previous business day market close.

Best-in-Class PLG Benchmarking:

15 Highest PLG EV / NTM Multiples:

15 Biggest PLG Stock Gainers (1 month):

Complete Notorious PLG Dataset (click to zoom):

Note: TTM = Trailing Twelve Months; NTM = Next Twelve Months. Rule of 40 = TTM Revenue Growth % + FCF Margin %. GM-Adjusted CAC Payback = Change in Quarterly Revenue / (Gross Margin % * Prior Quarter Sales & Marketing Expense) * 12. Recent IPOs will have temporary “N/A”s as Wall Street Research has to wait to initiate converge.

Recent PLG Financings (Private Companies):

Seed:

• Beam, a company that helps general contractors pay subcontractors and get paid themselves, has raised $4M. The round was led by Accel, with participation from Susa Ventures and Wischoff Ventures.

• Dylibso, a developer of dev tools application designed to take web assembly to production, has raised $6.6M. The round was led by Felicis Ventures, with participation from Boldstart Ventures, Pebblebed and Crew Capital.

Series A:

• Dragonfly, a startup developing a ‘drop-in’ replacement for Redis, has raised $21M over two rounds. A seed round was led by Redpoint and a Series A was led by Quiet Capital.

• Numbers Station, a company building an intelligent data stack automation platform, has raised $17.5M at a $65M valuation. The round was led by Madrona, with participation from Norwest Venture Partners and Factory.

• Two, a developer of B2B purchase management software designed to provide quick and flexible invoice financing with smart expense management, has raised $19.2M at a $40.6 valuation. The round was led by Antler and Shine Capital, with participation from Sequoia Capital, Phoenix Court, Visionaries Club, Day One Ventures, Alumni Ventures, Alliance Venture and LocalGlobe .

Series B+:

• Hex, a data collaboration platform, has raised $28M. The round was led by Sequoia, with participation from Andreessen Horowitz, Amplify and Snowflake.

PLG Tweet(s) of the Week:

Lenny Rachitsky @lennysan

Standout PLG products like Figma, Airtable, Miro, Snyk, and Zapier disproportionately attract users through two channels: 1. Organic search/SEO 2. Product virality In other words, the product is doing their marketing. Here are a ton of examples of this in action via @poyark: