When should you hire sales for your PLG company? 5 crucial questions to ask

Momo Ong
, Momo Ong
July 15, 2021
Contents:

First, do you have product-market fit for your core product?

Even for traditional companies, founders should be running sales pre-PMF to keep the market-product feedback loop as tight as possible. This is even more true for PLG companies, where the product is responsible for nailing acquisition, retention, conversion, and even referral for the initial segment of customers.

If you don't have product-market fit, layering on sales — which leads to a very high CAC — will result in a leaky bucket. Sales will be frustrated, and people will likely leave.

Do you have a particular drop-off in your customer journey that's hard to address with the product?

Specifically, is there a touchpoint in your product that requires a human in the loop and can't be solved with the product alone? One example is a data integration platform that requires data mapping. If that's the case, that's a great reason for a human to be involved in the customer journey.

That said, even in those instances, that person doesn't necessarily need to be sales — they can be account management, customer success, or support. However, sales is particularly useful if that touchpoint is important for a buying decision not far down the line.

Has expansion within many of your customers reached the limits of what PLG can deliver?

Consider this: it's easy for a company like Figma to grow among PMs/Engineers/Designers of a single team because they collaborate often. But there's limited adoption cross-team and hence it's hard to cross-pollinate.

In this case, one might argue that you've reached the confines of product-led growth. If you want to sell wall-to-wall – an enterprise-targeted product that all teams can access – then a sales rep would need to be involved in the equation.

Tactically, you can observe this if your customers have 10K users/buyers, but your product's seat growth has stopped at, say, 25 or 50.

Is the segment you're trying to target much more receptive to sales engagement?

For the sake of example, the adoption of a product like Figma is never going to happen organically in a company like Goldman or JPM. Those companies are unlikely to stumble across new products on their own, and organic adoption is quite difficult in established companies with fixed ways of executing. However, PLG is still useful because it helps build the brand, and individual designers that they hire will recognize Figma.

Can sales improve unit economics or funnel metrics?

Even if your product is growing organically, it could make sense to layer on sales to improve funnel metrics or unit economics:

  • Funnel metrics: acquisition, retention, and referral metrics such as close rates, time-to-close, deal sizes, churn percentage.
  • Unit economics: top-line growth rate, payback ratios, net dollar retention.

And, from the chart below, it's clear that a dedicated sales team can bring your PLG company to the next level primarily by increasing conversion. This is why we often see companies leverage sales to call leads even though the motion could be completely self-serve.

Source: https://tomtunguz.com/top-10-learnings-from-the-redpoint-free-trial-survey/.

Conclusion

Your PLG company is growing on its own, but you know that the time will come to layer on sales. But when's the right time? It's crucial to determine whether:

  1. You have product-market fit
  2. You need sales to counteract customer drop-off in the user journey
  3. Your company has reached the confines of PLG
  4. You need sales to more effectively target your segments
  5. You need sales to improve company metrics

If you hit 3 of these criteria, then it's often a good time to hire sales. Most PLG companies hire sales later as opposed to earlier, and when they do, it's crucial for improving the product, the customer experience, and the company itself.

Sources

Latest Posts

Make the most of the data you have

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.