The State of Product-Led Sales (PLS) and why it's broken - Nov 2023

An Insightful Look at What's Redefining Product-Led Sales and the Overlooked Obstacles SaaS Companies Face

The report summarizes the current state, based on comprehensive surveys with GTM leaders from Seed to Series-C startups.

Survey population: 74 SaaS Founders/GTM leaders, 7 PLS vendors, 10+ PLG influencers

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The State Of Product Les Sales, Nov 2023

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1. Key takeaways

The widespread adoption of PLG self-service in B2B products drives the demand for Hybrid GTM strategies, (potentially) even in small and medium-sized businesses, highlighting the growing importance of Product-Led Sales momentum.

There’s a clear & secular trend in the industry to move to Hybrid Growth, however, the market needs more PLG startups for PLS (enables hybrid) to work

1. SaaS builders don’t see PLS as a product they should buy now.

2. The market is too small for PLS to succeed

3. PLS vendors compete with home-grown data engineering projects

4. Most PLS Vendors are struggling to find a footing

5. PLS vendors made bad assumptions

6. VC’s pumped a lot of money into the segment that’s not (yet an) independent category

1.1 SaaS builders don’t see PLS as a product they should buy.

We asked 74 SaaS builders (Founders and GTM leaders) across Seed to Series-C stage companies, and the responses we got indicated that most of them were

1. Either dissatisfied with the existing PLS vendors

2. or planning to do it themselves, using their data engineering teams

Although, there are some outliers, here’s the simplest way we found to represent their answers.

1.2. The SAM (Serviceable Addressable Market) is still too small for PLS to succeed as an independent category.

3 things need to happen (and it seems to be a pipeline problem)

1. Need more PLG Self-Service enabled SaaS products: The number of B2B SaaS products in the market is significantly low.

   1. In 2023, <5% of new startups, 10% of Series-A, and 15% of Series-B startups are PLG self-service enabled. The good news is that most want to get there, but it’s pretty damn difficult.

2. More of these PLG SaaS companies find the need for PLS (as a step function to get to Hybrid strategy)

3. More SaaS companies go hybrid GTM (PLG+GTM): Even though there’s a desire in the market to get there, the infrastructure and setup needed is massive.

Shameless plug: Explore our PLG self-service infrastructure—designed to seamlessly distribute your SaaS product through Product-Led Growth (point #1 above). Connect for a demo!

1.3. PLS vendors compete with home-grown data engineering projects.

SaaS startups find it a lot easier to whip up a simpler set of monetization signals, than pay >$75K+ annually and rely on PLS vendors

1.4. Most PLS Vendors are struggling to find a footing

1. Low penetration of PLS: Lots of hype, but <7% of penetration of PLS products. Source: OpenView Which tools do you need for PLG?

2. Calixa closing down shop: One of the earliest products (2020) closing down Dec 2023

3. Lots of PLS vendors struggling: Variance, Bliinx, RevenueHero, Pace, and Groundswell… seem to be in similar shape.

4. Stories from the horse’s mouth…

   1. Calixa’s blog from Thomas Schiavone | CEO and Co-founder

   2. Groundswell learnings from Brendon Short | CEO and Co-Founder of Groundswell

1.5. Major bad assumptions by PLS vendors

This is a small list of why the market went ahead of itself.

1. TAM was assumed to be big.

2. Investors will keep funding the category

3. Customers have acute pain and they will buy it, right now.

4. Product deployment will be simple

5. PLS vendors can take the liberty to be sales-led

1.6. VCs pumped a lot of money into the segment, that’s not (yet an) independent category

(A Sample List)

Now that’s out of the way, let’s understand PLS better.

<tldr;>

2. What is Product-Led Sales?

A lot has been written about PLS. Here’s the simplest definition we found that explains it the best (to date)

The critical piece of product-led sales is “understanding when sales should reach out to users”.

• by OpenView, Your Guide to Product-Led Sales

3. History of Product-Led Sales

Here’s the brief (dark) history of Product-Led Sales and a tad bit of prediction for 2024.

4. How do PLS products work?

4.1 Part-I: Architecture

PLS products typically are layered on top of the Product Analytics(PA), Data warehouse (EDW), CDP products, and traditional CRM products and enable outcomes via various GTM tools.

The below diagram is the best we could find (although the orange box mentions PLG CRM, we think that the market rushed to call it PLG CRM - as it was meant to help the sales team. Instead, it should have been called PLS (that’s just our take).

Source: Sapphire Ventures PLG CRM

4.2 Part-II: Signals needed for it to work

PLS products typically collect and combine data from many places and turn them into signals for the Sales team to act upon

1. Product usage - from DW, Usage Analytics tools.

2. Customer Fit – through Data Enrichment, Marketing automation tools

3. Intent to buy – through Website Click analytics tools

Notable PLS Resources

• Lenny’s Podcast: The ultimate guide to product-led sales | Elena Verna

• Product Led: Decoding Product-Led Growth vs Product-Led Sales: Understanding the Differences

• McKinsey: From product-led growth to product-led sales: Beyond the PLG hype

• OpenView: Your Guide To Product-Led Sales

• McKinsey: From product-led growth to product-led sales: Beyond the PLG hype

• TechCrunch: The rise of product-led sales, or why product-led growth requires a sales makeover

• TechCrunch: The rise of product-led growth is creating opportunities for startups

• Leah Tharin: Leah's Product-Led Growth Guide 3.0

• Calixa’s Product-Led Sales Learnings

• Brenden Short: What we learned at Groundswell

• Gartner: 2023: The State of Product-Led Sales

Market Research Data

ThriveStack has undertaken a comprehensive market research study to understand the pains, perils, and ways to overcome them, spanning various startup stages and personas from Seed to Series C companies.

The key insights presented in this report are on the topic of Product-Led Sales as heard from 74 SaaS Operators (Founders and Growth leaders), 10+ PLG influencers, and 7 PLS vendors.

Our aim is to share our knowledge and foster ongoing dialogues with our network to promote continuous learning.