Jun 13, 2024

Product-Led Growth vs. Sales-Led Growth

I spoke to someone about sales-led vs. product-led organisations today. I used to be in the product-led camp, but not anymore. Today, I think differently. As with anything in the world, it's not that simple — the choice depends on the context.

Sometimes you need to be tactical and assist sales in closing deals to 'buy some time' for continuing execution on product strategy and pushing innovation forward. If you overindex on product-led too much, you might run out of funding.

At the same time, you don't want to onboard potential customers who don't have the problem you're solving or who don't find your solution to their most important problems. Over-indexing on the sales-led approach can lead to creating a 'Frankenstein' product that tries to suit everyone but ends up working for no one.

The reality is that even if you have the most amazing and well-communicated strategy (Are you using SCQA?) in place, there will be times when a tactical decision to onboard a new customer will happen.

So, what's the solution? A balance.

It's hard to quantify and put on paper because it really depends on the market, its state, business goals, product performance and maturity, and the state of your technology.

Here are a couple of things to consider when making a particular choice:

Pros- Focus on long-term product strategy and innovation.
- Encourages innovation and quality.
- Enhances customer experience through well-designed products.
- Differentiates through superior product offerings.
- Helps to close deals quickly, ensuring immediate cash flow.
- Direct feedback from customers influences product development.
- Easier to demonstrate ROI to investors.
- Adapts quickly to market changes and customer needs.
- Strong immediate revenue generation.
Cons- Risk of running out of funding if not enough immediate sales.
- Slower revenue growth initially.
- Potential disconnect with market demands.
- Longer time to market.
- Higher upfront costs for development.
- Risk of creating a 'Frankenstein' product that tries to suit everyone but works for no one.
- Can lead to short-term thinking and reactive development.
- Potential for higher customer churn if product lacks focus.
- Sales-driven roadmap may overlook innovative opportunities.
Considerations- Requires strong vision and patience.
- Revolves around delivering value to the customer before purchasing
- Needs clear communication of product value to the exec team.
- Need to be comfortable saying "no" to sales opportunities.
- Requires strong sales team and customer relationship management.
- Revolves around delivering value to the customer after purchasing
- Balance between customisation and maintaining core product vision.
- Important to define and stick to core product principles.
- Align sales and product teams; foster collaborative culture.
About Max Antonov
Head of Product @ Backpocket and a Product Coach. I write about product management and random topics that are on my mind. You can find me on Twitter, Substack, LinkedIn or Goodreads