Sales in a PLG World: Challenges and the Path Forward

Product-led growth (PLG) can seem like a panacea to a bootstrapped founder who has a product or engineering background. Theoretically, if a product meets a specific need and is well-designed, it can attract, engage, convert, and retain customers en masse. The resulting organization could be filled with developers and PMs, while automation does all the heavy lifting on the go-to-market side. The result would be both capital and operating efficiency and a company where the primary activity is solving customer needs through product development resources.

However, functions such as sales, marketing, and customer success are necessary for any successful SaaS business. Take a look at any scaled publicly traded PLG company, and you will see that they typically have sales teams that number in the hundreds, even for products with a low average selling price. Despite the complexity it adds to a product-centric organization, sales work.

At Camber, we see dozens of <$15MM revenue PLG companies per week. Yet, despite understanding the importance of the sales function, very few of the founders we meet have cracked the code regarding sales, despite several attempts to build out the process. Over the years, we've seen two primary failure patterns when trying to build a PLG sales organization.

Failure Scenario #1: The mid-market sales leader

When looking for a sales leader, it makes sense to look amongst the mid-level ranks of competitors in your market. They understand the product, market, and customer needs already, ensuring you will be off to the races from day one - they may even be able to bring a couple of new customers with them.

However, successful SaaS companies follow a predictable pattern of moving up-market: First, SMBs as customers, to the mid-market, and eventually to the enterprise. The economics make sense - big customers are less price sensitive, churn less often, and almost always have better net dollar retention, the most critical component of growth and market value in SaaS. With that move up-market, successful SaaS businesses evolve their GTM motion, layering outbound sales to mid-market customers as part of the mix. Success at outbound sales requires a significant capital investment in the team, data, and tools and it is unlikely to be a success without meaningful brand awareness in the market (i.e.,>$10m ARR). It also requires a new marketing effort to produce the sales content and collateral to convince prospective customers to take a first call.

To a founder, bringing in a mid-level sales leader who is looking to make the jump to VP Sales or CRO from within the industry seems attractive. In addition to all the relevant experience, they promise to add a new channel, outbound sales, to accelerate growth and the ability to attract larger customers with higher lifetime values.

Yet, when a new sales leader is brought in to scale the business, they often fail to scale revenue and are fired in 12 months, leaving behind a company with less cash on the balance sheet, a culture reticent to invest further in sales, and perhaps most concerning, a year's worth of under-performance in its bread and butter SMB segment. Why did it fail? Building an outbound motion requires significant capital to hire a team, patience to deal with much longer sales cycles, brand awareness, and a product that meets the needs of larger customers. These are all things a bootstrapped or lightly capitalized SaaS startup lacks.

Failure scenario #2: The Lone Wolf

Early in a PLG company's life, deals typically come in via self-service, assisted by customer support, with more significant sales opportunities handled by the Founder. Eventually, the volume becomes such that the CEO hires a salesperson to offload that work so they can focus on more strategic issues. The expectation is that this salesperson will have more time to focus and, therefore, run a more efficient process while experimenting with outbound and uncovering new channels. Due to the lead volume and budget, hiring a single junior-level salesperson is often the answer.

While freeing up the CEO's time certainly has value, this "Lone Wolf" salesperson rarely gets traction and offers little value to the organization. They struggle to replicate the CEO's close rates and ACVs, and the CEO often has to step into the process to win critical deals. It's frustrating to both the CEO and the salesperson.

Why isn't the junior salesperson successful?

• Early-stage startups are usually bad at vetting sales candidates. If you've spent your career in product or engineering, you likely haven't hired many salespeople and will struggle to separate the wheat from the chaff.
• Startups hiring their first salesperson rarely have an effective sales onboarding process. Even with the CEO and product team spending time with the new hire, they are left to figure most things out independently.
• Selling low-ASP products requires making many unwelcomed phone calls, writing unresponded emails, and generally banging your head against a wall for most of the day. It's easy for a single sales rep to be frustrated and lonely, especially in a remote work environment. Early career reps need community, comradery, and active sales management.
• Founders and CEOs often underestimate how much easier it is for them to close a deal than it is for others in their company. They understand the customer's problem at their core, know every feature intimately, and have the moral authority to make a small change to a particular element. They are also able to commit to an adjustment in the product roadmap, or get the dev team to work over the weekend to build a feature to land a big deal. The "Lone Wolf" has none of these things and will, therefore, never be as effective as selling.

An ambitious, high-potential early-career seller will likely leave for a more attractive opportunity with better career prospects within a year. If they're not, then they might stick around but will not move the needle at the company.

Camber Sales Center of Excellence

We've seen these failure scenarios and variants firsthand, which is why we've built a repeatable solution for our portfolio companies, the Camber Sales Center of Excellence in Austin, Texas. We've hired sales leaders with experience from successful PLG companies like Solarwinds, Datadog, Cornerstone on Demand, and ZenOss to recruit, onboard, train, and manage sales teams on behalf of our portfolio companies.

The benefit to Camber portfolio companies is that they leverage decades of experience hiring and managing low-cost, activity-based sellers instead of having to figure it out themselves or investing in sales leadership until their GTM is proven scalable. In addition, international portfolio companies benefit from our US-based team with native English speakers and US-timezone availability.

The result is that Camber portfolio companies are assured that a high-quality sales process is deployed to test the profitability and scalability of multiple sales motions and that the infrastructure is in place to scale the sales organization when the company is ready.

Posted September 12, 2023

By Jason Hable