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Partner at session.vc
Every B2B SaaS startup should consider PLG. This doesn't mean that PLG is necessarily the right strategy. Depending on the stage of your company, product type and target customers/market, different strategies can make sense.
A good framework to reflect on how and if PLG is suitable is the Moat Framework. You can read more about it here.
In the beginning, every startup needs to find its product market fit and learn how to sell the product to its customers. This is an important task for every founder. By selling yourself as a founder, you not only learn a lot about sales, but also, and more importantly, a lot about your customers and can quickly integrate learnings into your product roadmap. It can make sense to start with a Founder-Led-Sales approach and build up PLG in parallel to scale faster in a next step. I would not recommend finding PMF with PLG, because this takes too long and requires too many investments that are not PMF relevant (think e.g. of self-service / free trial).
Often I hear "PLG is not suitable for enterprise products". This is not true. Some of the most successful PLG companies sell to large enterprises. A good example is Slack, which makes 90% of its revenue with large companies. It is important to look at organizations as a group of teams, departments, etc. Can my product add value within a small team or to a single employee? Then an effective "land and expand" strategy can be implemented with PLG. Products that need to be purchased top-down and integrated into the infrastructure or process of the company (e.g. cyber security solutions, ERP systems) are less suitable for this approach.
Another myth is that PLG means you need no sales people. This is completely wrong. Ideally, marketing, sales and product work perfectly together. That is, sales comes into play when prospects have already had contact with the product and are therefore not only more effective but also more efficient.
A good approach to control the Sales-Effort is to look at the Annual Contract Value (ACV). The higher my ACV is, the more complex the sales process often is. Low ACV below 2k should be sold without sales or with minimal sales effort.
Successful Saas companies ideally grow not only through new customers, but also through existing customers spending more each year (positive Net Revenue Retention, NRR). PLG can not only help to grow and acquire customers efficiently and quickly, but can also help to develop already acquired customers effectively. Free trials for add-on functionality or the activation of additional features and users in self-service can play a central role here. Also important here is a good alignment with your Customer Success Team.
Big thanks to Joel from realgrowthhacking.com for the great insights.
