What’s the Role of Sales in a Product-Led Company?

Localogy recently released a report, produced in partnership with Mono Solutions, called “Is the Buy-it-Yourself Future Already Here?” The report tells the story of how sales automation is growing in the local commerce ecosystem.

The report describes how BIY is gradually working its way into processes that were once largely based on human beings selling to other human beings. We examine a common lifecycle in the report, where products that at first require direct selling evolve into “commodities” where the product’s purpose and value are universally understood. This latter phase is where BIY flourishes.

Ultimately our report doesn’t predict a full-on, robots-in-control, BIY future. We do envision BIY becoming more prevalent. And we see it working in concert with service models that have a human element and a greater role in revenue generation. We also see BIY increasingly as an intake channel for entry-level products.

After all, as we’ve demonstrated through our research, once a small business buys a piece of software, the real challenge begins. Getting that small business buyer to use the software is a make or break proposition for SMB software companies.

In this context, we enjoyed reading this blog post from Kyle Poyar of the VC firm OpenView Partners.  Kyle points out that companies with products that sell themselves are actually adding salespeople. And he says they should keep doing it.

Kyle’s point is that self-service, product-led businesses can turbocharge their natural rate of growth by adding salespeople. The key is to do it at the right stage of the business. And in the right way.

Sell to the Customers You Already Have

These product-led companies are all using sales to drive up account value in existing enterprise customers.

“Sales teams drive growth by catalyzing faster expansion within existing customers,” Kyle writes.

He cites the example of Atlassin, a software company that took pride in its sales-free approach to growth. That is until it decided it was time to add sales.

The post cites Atlassin CEO Jay Simons, who describes how Atlassin uses sales to increase revenue among its most complex customers. Notably, the company avoids the word “sales.” It calls its reps “enterprise advocates.”

But ultimately what they are doing is approaching the highest value customers to help them get more out of the software. This sounds a lot like using your service channel as a de facto sales channel, which is something we talk about at length in the BIY report.

Add Sales at the Right Stage

Mining LinkedIn data, OpenView found that sales headcount among product-led companies that have gone public since 2017 is up 45% year on year. By comparison, non-sales-related headcount grew by 33% year on year. The list includes familiar names like Slack, Zoom, Dropbox, DocuSign, and SurveyMonkey.

Most product-led companies that have added sales waited until the last minute to do so.

As Slack CEO Stewart Butterfield said in 2016, “I think we can get away without having a sales team in any kind of traditional way probably forever.”

Fast forward to last year. Slack had 343 employees in sales or business development roles in 2019. This is up 66% from the prior year, according to OpenView’s data.

Kyle’s post is in many ways consistent with the conclusions we reached in “The Buy-It-Yourself Future.”

An important point made repeatedly by those we spoke with for this report is that BIY doesn’t mean the absence of human contact…What BIY will likely mean in practice is that more of the human engagement will take place after the sale. Often through service models like do-it-with me (DIWM) or do-it-for-me (DIFM).

Without a live service channel to drive engagement with the product…BIY runs the risk of becoming another source of new customers that churn off at an unacceptable rate.

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