Vincent Jong on PLG for Sales-Led companies, revenue cannibalization, and why PMs should work on GTM skills

Product State Q&A

Vincent Jong is VP of Product at Dealfront, and author of the book Product-Led Sales. He’s also the creator of Growth Machines — and the Founder at Connected Product. Previously, he was Director of Product Management at ZoomInfo, and Founder + CEO at FunnelFox.
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Read until the end for a FREE digital copy of Vincent’s new book.

EC: How can sales-led companies start adopting PLG?

VJ: Most people still think of a freemium model when they think of Product-Led Growth (PLG). Yet more and more companies are realizing the potential beyond this initial use case. Especially sales-led companies have started to leverage the product in new ways to improve their sales results. For example:

• Improving Go-to-Market efficiency

• Increasing retention on renewal

• Driving contract expansion

These approaches all rely on the same principles as traditional PLG. The most important principle is the focus on product usage. To get usage, you need good onboarding and an intuitive user experience.

For sales-led companies, this can be challenging. Their product may require the customer to get onboarding training before using it, which is exactly the challenge to overcome. Required onboarding training makes it harder for new users to start using the product. When that’s not possible, customers might stop adding users which will impact your retention numbers.

Another key principle is to leverage product usage data in your customer segmentation. You can use it to identify customers who are ready to buy, so your sales team can focus their efforts on the right customers. Or you can use it to identify upsell potential and help your Account Management team drive contract expansion.

The underlying idea is the same in both examples. User behavior in the product becomes part of the customer segmentation in your Go-to-Market. With these two basic principles, you can enable many different product-led strategies. Even without changing your business model.

EC: How do you prevent cannibalization of existing sales revenue with Product-Led Sales?

VJ: Cannibalization is the most common concern for sales-led companies when considering a product-led approach. Look for example at how Amplitude introduced their self-serve plan in 2023. They experimented for 2 years before they were confident enough to make it a part of their business model.

This is for good reason.

If you don’t implement Product-Led Growth the right way, there is a chance of hurting the existing revenue and growth of the business. It can even result in downgrades from existing customers, reducing your contracted revenue. Yikes!

Many companies don’t explore PLG at all because of this. Or they limit the functionality of the trial, freemium, or self-serve plan so far that it cripples the motion. Failure becomes a self-fulfilling prophecy — and management may then say “You see, PLG is not for us.”

The problem with this approach is that it leaves the company exposed. It’s like saying you won’t use marketing automation. You will simply be at a disadvantage to a competitor that does use this methodology.

If you make sure you focus PLG on key challenges the business is facing, it will be easier to create momentum. The goal is never to “do PLG” – it is to solve a business problem. For example, sales might want better leads, which means the product could help qualify the leads. If you align your efforts around that, it will be easier to overcome internal concerns.

Then, define small experiments that allow you to develop the model one step at a time. Don’t introduce a freemium or change your business model as a first step. Instead, validate core assumptions with small steps that don’t take more than 2-3 months to implement.

EC: What’s the role of the PM in all this?

VJ: For Product to be a part of this conversation, Product Managers (PMs) need to improve their understanding of the Go-to-Market process. Many PMs I meet can’t answer the following questions in detail:

• What are the main sources for leads?

• What are the definitions of MQLs and SQLs?

• What are the steps in the sales process?

• What are the volumes and conversion rates?

• What do sales reps show on a sales demo?

• What happens after a customer signs a contract?

This prevents these PMs from having a strong business impact because they cannot identify ways to improve sales results. You don’t always need new features to sell more. It’s often little improvements in the different steps of the Go-to-Market process that can make a difference.

We can’t expect the sales team to come up with all the suggestions to improve this. This is a core Product Management responsibility. Product doesn’t operate in a silo, we are just one part of the customer journey.

So I encourage PMs to make the effort and understand your Go-to-Market process. Be on the marketing and sales review meetings. Ask questions so you can understand where the problems are. And use that knowledge to suggest product-led ways to improve results.

“The goal is never to ‘do PLG’ – it is to solve a business problem.”

- Vincent Jong, author of Product-Led Sales

For more insights on how product can drive results in a sales-led company, check out Vincent Jong's brand new book Product-Led Sales. Product State subscribers & readers can download a FREE digital copy here: https://plgandsales.com/product-state