Product-Led Growth vs. Sales-Led Growth vs. Marketing-Led Growth: Which is best?

Did you know that startups typically go through eight different phases?

Each of these universal stages pushes startups closer to becoming a large, successful company in the future. However, it’s a lot harder than you might think, and you’ll need to use growth strategies if you want to scale your startup in the right direction.

While building out a plan and finding the right resources, you’ve probably run into the following three growth strategies: Product-led, Marketing-led, and Sales-led.  

All three strategies provide different results that impact your bottom line and complement different business setups. However, they aren’t a one size fits all kind of deal. Whether you’re gearing up to prepare for the seed stage or ready to take your business to new heights: You’ll want to familiarize yourself with the different growth strategies to find one that fits your startup business plan.

Not sure where to start? You’ve come to the right place.

Here’s everything you need to know:

Why different startups may require different growth strategies (PLG, SLG, MLG)

Every startup is different, and so are its goals. If you’re focused on winning big enterprise-level customers, you probably aren’t going to concentrate on individual sales or consumer business. The same applies to B2C. If it doesn’t make sense for your brand to sell to close deals with bigger companies now or in the future, you’ll want your growth strategies to reflect this.

Whether you’re selling a service, software, or product: You’ll need to take a strategic approach that complements your bottom line and the goals for your startup later down the line.

Before choosing which growth strategy is right for your business, you’ll want to take a step back and reflect on your plans for the next 5, 10, and 15 years. This will help you expertly choose a strategy that will help you scale with the right audience. To see success: Your business may need to use a blend of a few different growth strategies. Before you can start implementing different growth strategies, there are a few things you’ll need to consider.

Here’s a breakdown of the three growth strategies:

What is product-led growth?

Product-led growth (PLG) is a strategy that focuses entirely on the product you’re selling. The product is the tool that helps you acquire and retain customers. If you take a PLG approach, most of your revenue likely comes from the product itself. PLG is a great growth strategy for SaaS companies and self-service products that can be purchased from your website without connecting with your sales team.

When focusing on your growth strategy, you’ll want to look for ways to improve your product offering. Focusing on the product and the user experience will help you increase the customer lifetime value and retain customers. If you have a great product that feels like a must-have for an individual, you’ll see lower customer acquisition costs and higher retention costs in the future. If you’re focused on product-led growth, you can also lower your marketing and sales costs, allowing you to put more money into your product.

During the early stages of your startup, you’ll want to have a plan for your product that acts as a road map for success. Always look for ways to improve your offering, enhance the customer experience and capitalize on new opportunities to help your business grow.

Examples of PLG companies

Zoom

Zoom is a video conferencing platform used by professionals, businesses, and anyone looking for an easy-to-use video conferencing solution. Everything they do is for their product. The product is what sells the business. After the COVID-19 pandemic and the rise of remote work, Zoom became an integrated workplace essential. It’s a product that every business professional needs to stay connected with their coworkers throughout the workweek.

Typically, businesses or individuals buy a subscription to their service that they can cancel anytime. Zoom also has a basic plan that allows individuals to experience the product before committing to the cost. Providing a free version is a great tactic that can help you build a connection with your audience and familiarize consumers with the product and its features.

Facebook

Facebook is one of the most well-known social networks, and they use this to their advantage to grow their business. Whether Facebook is looking to attract new users onto the platform or wants to highlight the benefits of using its advertising solutions: Its product is the driving force for growth and is a big contributing factor to its success.

Facebook is continuously rolling out new updates and changes designed to improve the user experience. All the features are designed to attract the audience to the product and keep them coming back. They have also added features that attract businesses, diversifying their market size and allowing them to act as a B2B and a B2C.

What is marketing-led growth?

Marketing-led growth (MLG) is growth led by your company’s marketing initiatives. Instead of traditional means of marketing, like PPC and advertising: It’s marketing assets that focus on improving your product to meet the needs of your customer. With this growth model, all of your digital marketing yields the highest results and brings in the highest quality leads for the sales team.

Marketing-led growth isn’t only about acquiring new leads. It’s also about educating your current audience and keeping them connected to your brand with well-thought-out content with a purpose. Think about how your blog content can add value to the consumer.

With a marketing-led approach, your startup will have an opportunity to position itself as an industry leader. You can develop marketing content that helps your audience trust your brand.

Examples of MLG companies

Ahrefs

Ahrefs is a search engine optimization tool that shares free resources with its customers and potential prospects. These resources are designed to teach individuals about the ins and outs of search engine optimization, so they can better utilize Ahrefs tools for their own benefit. Ahref uses these resources and classes to improve their understanding of digital marketing, build trust with the community, and position themselves as a go-to solution for SEO.

Hubspot

Hubspot keeps customers engaged and coming back for more with its suite of readily available tools and resources. Under the resources drop-down on their site, you’ll find case studies, blogs, and free courses and certifications.

Even if you aren’t a Hubspot customer: You can create a free account to access all of the learning resources they provide. Hubspot adds extra emphasis on these tools to improve the connection customers have with their brand and give them a competitive edge over other tools. Hubspot’s certifications are now featured on LinkedIn profiles and resumes, which has helped them expand their reach and position themselves as an industry leader.

What is sales-led growth?

Sales-led growth is when your sales team is the largest contributing factor for growth. When a company prioritizes SLG, the sales process is the most integral part of the funnel, and your bottom line is heavily impacted by the sales team’s efforts.

Sales-led growth is a go-to growth strategy best suited for service B2B companies that rely on their sales team to see growth. When companies take this approach, what they offer is usually a cost dependent on the brands they work with.

Examples of SLG companies

Oracle

Oracle provides its customers with cloud applications and a cloud platform. Their sales team focuses on building connections with brands and providing them with a go-to solution for cloud-based technology. If you were to visit their website, you’ll notice their contact us button says ‘contact sales’, instead. Everything they do to acquire new customers is to continue to push leads through the sales funnel.

Palantir

Palantir is a service-based company that sells foundational software to businesses. They provide potential prospects with free demos to introduce them to the platform and allow their sales team to build a connection with the customer. The free demo is the first step in their funnel and provides their sales team with viable leads.

PLG and MLG payment flows are more likely to be paid by credit card

With product-led and marketing-led growth strategies, most sales are self-service and can be paid with a credit card on the website. This means your sales team doesn’t need to be as hands-on in the process, and consumers can easily make a purchase and get set up on the same day.

If you’re planning on using a PLG or an MLG growth strategy, you’ll want to consider the buyer experience. Make sure nothing on your website disrupts the buying process or negatively impacts your conversion rate. This is particularly important if you’re having conversations with investors during the seed stage. A high conversion rate shows high demand and can help you get the funding you need to grow.  

SLG payment flows are more likely to be paid by invoice and wire transfer

Sales-led growth strategies typically require some extra leg work. Your sales team will need to create custom invoices and take payments through a wire transfer. When it comes to the user experience, you’ll want to focus on fine-tuning your forms and ensuring they have everything listed.

How solutions like Lemon Squeezy can reduce payment friction

So, which growth strategy is right for your company? This depends on your goals and what you have to offer. However, taking the time to figure out your growth strategy now, can help you see results that positively impact your bottom line and attract new investors.

No matter what growth strategy you plan to use to see results, we’re here to help. With our solution, your business can market and sell your products to your target audience.

Get started today to learn how we can help reduce payment friction.

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