December 22, 2022

The downside of product-led growth

Matt Compton

Co-Founder & CEO

The downside of product led growth

Over the last decade, product led growth has steadily taken over as the go-to model for building scalable businesses. The implications of this market shift cannot be overstated.

What is product led growth?

According to OpenView, product-led growth (PLG) is a model where product usage drives customers acquisition, retention, and expansion.  Companies leverage the products themselves to generate trial, adoption, and advocacy … building active users and advocates that can then be converted into paying customers.

Today, the end user directly tries out software, determines if it solves their problem, and champions its adoption across a team or organization.

By not relying on scaling teams and humans within an organization to drive growth of the customer base, PLG companies are able to grow faster and more efficiently over time.

By definition, product led growth products are:

  • Simple
  • Easy to understand and adopt
  • Have a very short time-to-value

While these characteristics are mostly a win for their users, PLG comes with a set of unintended drawbacks for companies as a whole.

Fragmentation & Tool Explosion

Due to their simplistic nature, PLG products tends to be tools rather than solutions:

  • Slack: Chat
  • Zoom: Video
  • Calendly: Scheduling
  • Figma: Design
  • Superhuman: Email
  • Dropbox: File sharing
  • Asana: Task management

As a result, a user typically leverages multiple disconnected products to get a job done.

Difficulty Working Together

The more tool fragmentation exists, the harder it is to work together. Most teams have standardized on a tool for each of their collaborative needs: chat, video, scheduling, email, file sharing, task management and more. Rarely do two separate teams or companies standardize on the same set of tools. Even when tool sets are similar, teams wrap them in their own workflows, cultures, and styles.

When two or more teams need to work together, they are forced to work across many different tools. Information gets scattered. No two people are on the exact same page, and there tends to be a lack of clarity across the board.

The World Needs Solutions, Not Tools

Many of the most complex problems and opportunities are not simple enough to solve using a single self-service solution.

The world needs more complete solutions right now, not more disconnected tools. Solutions solve a complete problem, not one small piece of the problem. The issue with complete solutions is that the complex problems they solve are rarely identical. As a result, solutions require up front expertise, decisions, and configurations to analyze and design for a specific situation.

Solutions require people, critical thinking, and trade-offs.

Enter sales teams

Ironically, the answer to the tool fragmentation from product led growth is traditional sales motions: working with a team of people with the experience and capabilities to solve a problem like yours. However, we must rethink how sales teams engage, stand out, and provide value to buyers. Selling cannot be about simply convincing a buyer to sign a contract. Instead, selling needs to be about helping buyers identify and solve their unique problems through solutions.

Unfortunately, sales people are simply not providing enough value to justify the additional hurdles we are asking buyers to jump through.

It’s time to refocus sales teams around solving problems as quickly and easily as possible.

It takes more work up front, but the payoff down the road can be huge.

Digital sales rooms are the bridge between product led and sales led strategies

In order to compete in a PLG world, sales people must make the interaction as easy for buyers as possible. Digital sales rooms make the entire process easier on the buyer.

Digital sales rooms, when done right, provide buyers a single, secure, personal, collaborative, and persistent place to access and share information, interact with experts, and work together to solve complex problems.

Filo offers best-in-class, collaborative, and secure virtual sales rooms.  Easy to get started.  Free for your first deal.  To learn more, check out Filo Rooms for Deals, or to get started sign-up today for free.