How enterprise SaaS can pivot from a sales-led go-to-market to product-led GTM
Last updated: April 4th, 2022
Enterprise level SaaS companies with sales-led go-to-market functions sometimes ask us how they can change their go-to-market strategy to be product-led.
They’ve heard of enterprise businesses like Adobe and Heroku who moved from sales-led to product-led and are convinced that if they could only make that happen, they too would experience huge revenue growth and user adoption.
But because they’re organizations with complex decision making processes and, often, a low tolerance for risk, internal evangelists for the product-led GTM struggle to make any progress.
We were recently hired by one of the most recognizable names in SaaS to help them overcome this important challenge and plan out their pivot to a product-led strategy.
In this article, we’ll explore:
- The reasons that sales led go-to-market is no longer the most effective model
- How we helped an enterprise SaaS company rethink their go-to-market strategy to move to a product-led model
- How to translate this fundamental change for the key functions in the organization
By the end of this article, you’ll have an understanding of how to build a roadmap for your organization to move from a legacy sales-led model to a product-led model that makes better opportunities for your sales team and drives more revenue overall.
Need help getting buy-in for your product-led plans? Schedule a Free SaaS Scale Session to find out how we can help you make the transition gracefully.
The reasons that sales led go-to-market is no longer the most effective model
Let’s just start by saying: at a certain point, almost every B2B SaaS business hires a significant sales force.
Here’s a section of a graphic breaking down the GTM motions of 30 B2B SaaS companies from Lenny’s Newsletter:
- Most SaaS businesses add a sales GTM to their product led model
As you can see, most of these businesses are household names (if you’re in tech) and yet, despite the idea that they’re all pioneers of the product-led model, they almost all have sales-assist or sales-led models once they hit scale.
Sales teams are not the enemy.
But sales-driven SaaS companies often suffer from low close rates and that makes it hard for marketing teams to get buy in for their work in the organization.
There are three main problems for this:
- Marketing produces poor quality leads
- Over reliance on BDRs to qualify leads
- Lead scoring models that don’t reflect buyer intent
Too many MQLs, not enough sales
Firstly, marketing teams are often incentivised to fill the sales pipeline with leads. In fact, many teams are given MQL targets to hit as their primary objective.
Contrary to the popular narrative, we actually see the MQL as a valuable part of a B2B SaaS company’s marketing system.
But frequently, marketing teams will mark a person who downloads a lead magnet or visits a pricing page twice as MQLs in order to fill the pipeline because they believe that once that is done, sales can deal with them.
But that’s like picking up a pile of dirt and hoping you find a truffle.
Consequently, MQLs that get passed to sales have very little interest in actually becoming customers or are totally the wrong fit to buy the product in the first place.
This leads to the second problem: an over-reliance on business development representatives (BDRs).
Mo’ BDRs, mo’ problems
BDRs are usually tasked with reaching out to MQLs via phone or email to work out whether they’re qualified to have a conversation with a sales rep.
Unfortunately, because the lead qualification by marketing in sales-led organizations often relies heavily on hitting arbitrary lead scoring thresholds – downloaded a lead magnet, registered for a webinar, visited a booth at a tradeshow – the MQL to SQL conversion rate is low.
The upshot is organizations need to hire so many BDRs just to work out who is qualified for a sales call.
Lead scoring models don’t tell the whole story
This creates a bloat on the company’s profit and loss that product-led businesses just don’t have because – and this is the third problem for sales-led SaaS – they make good use of intent data to enrich their lead scoring models.
In a product-led business, there may well be a demographic and firmographic lead scoring model like in a sales-led business.
But in addition to this, the marketing and growth teams have product action and intent data factored into their scoring.
Sales-led organizations rely heavily on BDRs to work out the intent of prospects. Product-led businesses need far fewer BDRs for this reason.
To reiterate: the argument here is not that sales heavy organizations are bad or outdated. It’s naïve to think that high-ACV products will be bought entirely without a sales team.
The argument is: sales driven organizations are less successful because marketing teams are less able to generate high quality leads that turn into customers at a high rate.
Now let’s look at how we advised an enterprise SaaS company when they were planning a pivot from a sales-led model to a product-led model.
How we helped an enterprise SaaS company rethink their go-to-market strategy to move to a product-led model
We’ve just established that there are lots of issues with a sales-led go-to-market strategy. Most notably: marketing tends to create leads that don’t convert and that has a profound impact on the organization’s ability to grow.
But when you’re an enterprise SaaS with a high level of organizational complexity and a diverse product portfolio, how do you pivot from sales-led to product-led?
This is the challenge a client came to us to help them with recently.
In the next section, we’ll share how we helped them to break this down into projects and translate the changes they needed to make for each stakeholder.
Rethinking the lifecycle in a product led GTM
As discussed earlier in this article, in sales-driven organizations, marketing qualified leads (MQLs) tend to be of poor quality because they don’t take into account a prospect’s actual intent – marketing usually leaves BDRs to work that out.
Our client has been around for a long time and has a vast number of ways that a visitor to the website can become an MQL.
The first major change that we advised our client to make was to treat the MQL as a stage of awareness versus a stage in the pipeline.
A visitor to a website or free-trial signup may engage with the company for a long time on a casual basis before being ready to buy.
But unlike sales-driven businesses who see someone who will usually have a BDR follow up with people that download a lead magnet or attend a webinar, in a product-led business MQLs are thought of as ‘hand raisers.’
Effectively, they’re saying that they have a level of awareness but they’re not saying that they’re sales ready.
But how should marketing teams in sales-driven organizations moving to product-led make the MQL a more meaningful stage of awareness?
In a previous article, we wrote about how we helped a client do this by creating contextualized offers for MQLs that would help build awareness in meaningful, practical ways.
Our client suffered from MQLs languishing in the pipeline. They had been marked as MQLs after they downloaded any lead magnet on the site and there was no way for them to develop their awareness.
Consequently, MQLs converted to demo or trial at a rate of between 2.5-5%.
Our strategy was to redefine the purpose of the MQL in the pipeline to as a stage of awareness and offer ways for MQLs to build towards product awareness.
The first step in that process is to create lead magnets that align to the stage of awareness a prospect may be at already.
For example, this lead magnet we created for our client speaks to prospects who are problem-aware: they know they have a problem and they’re looking for a way to solve that problem but they might not know our client’s product exists to help them do that.
When a prospect downloaded that lead magnet, they were marked as an MQL in the lifecycle because they had ‘raised their hand’ to say that they wanted information about how to solve their problem.
On the thank you page for that lead magnet, prospects saw the following:
They were told that they would receive their download by email five minutes after they requested it.
But crucially, the lead magnet download thank you page they saw offered them a five minute video explaining how to solve the problem – that they had already requested information about on the previous screen – with our client’s product.
They were also offered a 30-day free trial directly on the page with copy very closely tied to the pain we knew they already had.
This allowed the prospect to indicate their intent in a much richer way that a BDR would be able to ascertain from a 20 minute phone call or drip-fed email sequence.
Before implementing this strategy, MQLs converted to free trial at 5-10% compared to 2.5% on non-contextualised offer pages.
How to translate this change for stakeholders
Not every team needs to know that you’re redefining MQLs as you move to product-led GTM. Instead, align the change you’re making to the wants/needs/desires of stakeholders on other teams.
For example, here’s what you could say to the Sales team:
“We’re reevaluating the kinds of MQL that we send to the BDRs. You may see fewer SQLs but they’ll be much more likely to convert when they reach you.”
And as you communicate this to the leadership or C-suite:
“As we move forward in our product led pilot program, we’re making strategic changes to our marketing strategy that will ensure downstream revenue is more predictable by creating a higher level of pipeline surety for the sales teams.”
Moving to a smarter lead scoring model
Sales-driven SaaS companies use a lead scoring model that takes into account stuff like:
- Organization size (regardless of the lead’s actual job)
- Fortune 500 status (even if the lead is totally the wrong customer in the org)
- Webinar registration (even if the lead never attended or downloaded the recording)
When a prospect undertakes one of those actions or fits into one of those categories, they’re given a set number of points. Once they hit a threshold, they’re marked as ready for sales conversations.
But there’s actually a lot of missing information such as:
- Prospect’s motivations for engaging with the company
- Timelines for buying (if any)
- Product activity
- Internal conversations
- Prospect knowledge gaps
- Prospect concerns
- Prospect adoption capabilities
- Prospect buying unit
The difference between a lead scoring model in sales-led and product-led organizations is really stark when you think about it:
To move away from a sales-led and towards a product-led organization, SaaS companies must make three big changes.
Allow prospects to choose their own adventure
Firstly, they should allow users to choose their own adventures.
We all know that no two deals are alike. Even in highly replicable sales models, the characters, timelines and needs are different every time.
The product-led GTM is no different.
The image below shows two very normal but vastly different customer journeys in a product-led model:
In a traditional lead scoring model, the person on the right would likely have been screened out of the sales funnel because she took a three month break in her activity.
On the other hand, the guy on the left would have likely been screened out because he would have looked like an MQL on account of starting a trial but been screened out by a BDR before he even got to try the product.
In a product-led model where they are allowed to choose their own adventures, both of these prospects could become happy, revenue contributing customers!
Practically speaking, the key in allowing users to choose their own adventures is to move away from lead scoring based only on interaction with the marketing site and to factor in product usage signals too.
For example: inviting team member to a trial of a product is an extremely high intent signal because the person doing so likely has recognized the value and wants to ‘bet’ some of their social capital on the fact that their teammates will also find value.
Build engagement signals into marketing operations
Another way that you can improve the use of lead scoring when moving to a product-led GTM is to build engagement signals into marketing operations.
On the matrix below, we’ve added axes for engagement and for fit.
Sales-led models tend to only focus on the vertical axis of ‘fit.’
But as we’ve already seen, this actually hurts the close rates of leads generated by marketing because they’re significantly less qualified than a simple demographic/firmographic scoring model makes them out to be.
By adding in product engagement signals, we actually improve the targeting of lead nurturing.
For example, a person who is highly engaged but is a poor demographic or firmographic fit shouldn’t be assumed to be ready for a conversation with sales. A person falling into that category might not have the budget to buy an enterprise tool (although who can know?!).
But at the same time, they’re clearly a person who likes your product because they’ve engaged with it a lot. At that point, it makes a lot of sense to work out how you can add this user to an evangelist or referral program to incentivise them to tell others about how good your product is.
On the other hand, a person with low fit and low engagement can be ignored or marked as a subscriber to your blog updates.
In a sales-led GTM, there’s not a way for you to meaningfully differentiate between evangelists and people to ignore because there is no engagement data factored in. That means you waste marketing resource. Or worse, you miss out on leads that evangelists could have sent you.
Build in trigger points for sales involvement
We’ve talked a lot about how you should nurture prospects and allow them to choose their own adventures. But in enterprise SaaS, at a certain point, you need to allow sales to intervene directly.
That’s why we recommended our client build in trigger points for sales involvement.
In their traditional lead scoring model, the trigger point was simply a lead scoring threshold being passed when a BDR would take on management of the prospect.
But as they work towards adding product activity data into their lead scoring model, they’ll also have to build systems that track high value actions (HVAs).
A high value action for a SaaS product might be:
- Invites team members
- Creates [whatever your product creates e.g. invoice, report, survey]
- Interacts with a pricing ‘view’ in the app
Every SaaS’ HVAs are different and depend on the pain that the product solves.
But once they are identified, you can build automations in your CRM or marketing automation platform that trigger sales involvement when they are hit in combination with traditional lead scoring.
Here’s an example of what that could look like for an enterprise SaaS transitioning to a product led model:
In this model, a person would be passed to sales if:
They log into the trial more than 4 times and take a specific HVA (that you define)
As well as:
Having a lead score of more than 60 or have great firmographic fit
That’s just an illustration of what a trigger point for sales involvement could look like.
But by factoring this kind of targeting and segmentation into a marketing system, the marketing team will be able to generate SQLs that turn into revenue generating opportunities with minimal BDR involvement.
How to translate this change for stakeholders
Just like we communicated the change of the lifecycle states to other teams earlier, here’s how we recommended that our client frame the change in lead scoring systems for their stakeholders.
For the sales team:
You know that engaged prospects are more likely to convert. With your input, we’ll be able to identify ways to improve our definition of ‘engaged’ and adding product usage signals into the mix for the first time. The result will be that you get prospects who are highly qualified that may have fallen through the existing lead scoring model.
For the C-Suite and other execs:
In line with our goals of adding a product-led go-to-market, we’re developing systems for identifying high value opportunities in our pipeline that may have previously been difficult to see. The result will be increased volume of high quality prospects who will convert into revenue at a greater rate.
And because this stage of the process requires engineering time to track product activity, we also need to make an ask of the technical teams:
We’re trying to understand how users are interacting with the product so that we can provide the best opportunities to nurture highly engaged users. Working together, product and marketing can increase engagement with our product suite by identifying high value user events and adding relevant tracking systems.
Building a strategic plan
The final part of this process is a very practical one: you need an actionable, milestone oriented plan for making this happen.
In enterprise SaaS, you need to plan ahead. There are multiple stakeholders to get bought into a process. You’re not in a startup anymore. This stuff takes time.
So the question we asked of our client was:
What will the milestones for your move to a product led model look like on a 3 month, 12 month and 36 month timeframe?
That question in itself is very useful because it allows you to think in terms of timeframes and what might be achievable across the organization.
But even when timelines are set out, managing multiple stakeholders is extremely difficult when there’s no momentum other than planning.
We helped our client to see that building momentum as quickly as possible would be the most effective route to making an organization wide change like their GTM pivot.
We suggested that they categorize activities that they needed to make (many of them were outlined in the previous sections) on two axis:
- Delayed value vs Immediate value
- Singleplayer actions vs Multiplayer actions
What we mean by delayed and immediate value should be obvious: if you do something now, will it create value for the organization right now or will you have to wait for a period of time?
But categorizing things into singleplayer vs multiplayer is less obvious.
A singleplayer action is an action that you or your team can take without the approval or buy in of any other teams. A multiplayer action is the opposite: actions that need input, time or effort from other teams such as sales, product/engineering or executives.
Here’s a sample of how we advised our client to think about this:
But the really key piece of insight here is that in order to make this change move as smoothly as possible, organizations should focus on singleplayer actions that provide immediate value.
Completing actions such as building lifecycle materials, campaigns and revising a model for sales readiness will all have at least some immediate value regardless of whether the product-led infrastructure is in place or not.
Growth and marketing teams driving this change to product-led can then use the momentum they gain from this kind of singleplayer activity to get buy in from other stakeholders for high value, multiplayer activities.
How to translate this for stakeholders
We’re almost at the end of the planning phase of our GTM pivot. But we still need to communicate what we’re doing for the next 3 years to our organization.
Here’s how a marketing/growth team making this change could do that for sales:
We’re identifying the best next moves for adding the kinds of insights and changes to the lifecycle that we’ve told you will help improve pipeline surety and help you close more deals. In the next 12 months, we’re mostly focused on work we can do within the marketing org but we’ll also need your help with [high value project]
For the C-Suite:
We’re developing a roadmap for developing the infrastructure that will support our product-led go to market. But longer term, what we’re developing in the next 3, 12 and 36 month periods will form the basis for transforming other go-to-market strategies to product led in the future.
And for the engineering/product teams:
We’re developing a roadmap for moving towards a product led model that will definitely need input from your teams and we’d like to understand where there’s an opportunity to work within your product roadmap on a 3, 12 and 36 month timeframe. In the meantime, we’ll focus on some of the projects that we can deliver with minimal product input.
Moving from a sales-led GTM to a product-led GTM has significant advantages for SaaS businesses from small to enterprise. However, it is a fundamental and systemic change that requires time, thought and, ultimately, buy-in from multiple stakeholders.
To make the leap, enterprise SaaS companies should do the following:
- Rethink the customer lifecycle to create higher pipeline surety
- Move to a lead scoring system that factors in product engagement as well as classic lead scoring signals
- Build a long term roadmap but focus on singleplayer, high value actions in the short term
A go-to-market strategy pivot takes time. But the payoff of getting it right could be massive.
If this has resonated with you and you want to build a winning go-to-market strategy, schedule a Free SaaS Scale Session to find out how we can help you build an unstoppable SaaS business.
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