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How to do product-led growth and hands-on outbound sales at the same time?
Every PLG company eventually has to embrace enterprise.
– Annie Pearl, Chef Product Officer at Calendly
The upper limit of PLG seems to be $100M to $200M ARR (e.g. DataDog around IPO). Beyond triple-digit million ARR, you quickly saturate the market of users who buy things by pulling out their credit cards. The growth of the PLG channel naturally slows at some point.
Most companies start with self-serve PLG and then layer in enterprise sales. This may not work well. Your entry-level product could cannibalize your enterprise product. Think hard about differentiation that justifies the premium. You cannot just add single-sign-on (SSO) and call it enterprise edition.
Some common enterprise features are:
|Customer supports||Support is what makes or breaks the enterprise product. Your company success is defined solely by customer success. 24/7 or business hours? Email, chat, or phone support? SLA on response time?|
|Dedicated account manager||Evangelize best practices and champion support.|
|Fine-grain authorization policy||Roles and permissions.|
|Audit logs||User and workload identity, actions, timestamp, easy export.|
|Compliance||For example, FedRAMP, HIPAA, GDPR, SOC2.|
|High availability||For example, multi-region disaster recovery, cross-region replication, four-nine uptime SLA.|
|Private network||Private link, VPC peering, single-tenant deployment.|
|Self-host||User-managed private deployment|
|Data retention period||For example, DataDog allows free accounts to view metrics from last 24h|
|Performance||For example, run the same pytorch model 100x faster.|
Another pro tip: within minutes of self-serve signups, directly reach out to that new user, assuming they pass certain criteria about company size and title. The reason is, your product is top of mind for the user right now, who clearly has been doing research about this space. If they give you the phone number, call them directly.
When to layer in enterprise sales?
Similarly, when to make the first sales hire?
You need product-market fit (PMF) and annual recurring revenue (ARR). PMF is shown through retention, exponential and organic customer growth, and net promoter score (NPS, or how upset would you be if this product disappears? How likely would you recommend this product to your friends?). To learn more about PMF, I love this post by Lenny Rachitsky.
Rule of thumb: you need at least $1M ARR to show you can sell outside of your network (friends and family).
Should your first sales hire be head of sales or junior sales rep?
You probably don’t yet need a head of sales because
- The target customers and the deal size remain uncertain, so it is hard to know if a candidate is the right person.
- Head of sales is expensive and often commands a structure in marketing, finance, legal, etc. Big overhead.
- Head of sales probably has not been down in the weeds for a while.
You should not hire anyone junior because it takes your time to train them, such as how to write emails and pricing proposal.
An ideal candidate would be an account executive (AE) at a hypergrowth company with great track record, or someone recently moved into front-line management who used to be an AE and who desires the opportunity to grow into the head of sales role.
Some revealing questions to ask:
- Tell me about a deal that you lost.
- Let’s do a mock discovery call together.
- Out of the 8 SDRs on your team, where did you come up on the leaderboard? What are the folks front-running you doing differently?
When do you start outbound?
According to Maggie Hott, Director of Sales at Webflow, the answer is always now. The goal of cold outbound is not to close deals but to build brand awareness and educate potential customers. You almost never hit the prospects at the right time, but when they are ready to buy, prior outbounds make you part of the evaluation. Whereas marketing targets a market segment, outbounds are personalized to each prospect.
Maggie recommends a 10-80-10 outbound strategy:
- First 10% is personalized and explains how the prospect could relate to your product.
- For example, “Hey John, amazing talk at KubeCon last week with such great lessons for multi-cloud adoption. I am curious how your team approaches multi-cloud observability and cost attribution. All the folks I talked to are struggling with this. I think our product can really help.”
- Mid 80% is repeatable product marketing.
- Last 10% is to ask for that call or meeting, and end with a playful closing.
Lauren Schwartz, VP of Sales at Fivetran, stressed the importance of having multiple sponsors in the prospect’s organization. People change jobs and have different types of influence.
Should we give discounts for testimonials?
In the early days, worry less about the contract size but focus on getting those logos. The bulk of the enterprise market is the early majority and late majority. They are almost never early adopters. They need testimony and success stories.
Maybe you could get more testimonials through discounts, but be judicious about discounts, because people talk, and soon more customers will ask for discounts. The best reason to give discounts is to control the close date and payment structure of the deal. You can always bring up the ask for testimonials if the prospect comes back asking for more discounts.