Blog 71: GTM: How do product-led and sales-led strategies differ?

In blog 42, we looked at the marketing funnel stages. In this blog, we will look at the different go-to-market (GTM) mindsets. These mindsets determine our tactics for each funnel stage. There are two widely used GTM strategies or mindsets: product-led and sales-led.

1. Product-led strategy

Product-led strategy is when the product itself serves as the main driver of customer acquisition, activation, engagement, and retention. A great product will result in positive word-of-mouth. Positive word-of-mouth marketing can spark viral growth (refer blog 69: What is viral loop; refer blog 70: How did Slack create a viral loop?). Organic and viral growth can significantly bring down customer acquisition costs (refer blog 55: customer acquisition costs (CAC).

In a product-led strategy we use the product to move prospects along the marketing funnel.

Awareness: In this stage, we can leverage content marketing to attract customers. Content generates demand and leads to conversions. Content includes, blogs, social media content, podcasts etc.

Action: In this stage, we firstly aim to activate prospects into customers: i) One key activity is to let prospects experience the product (through a free trial or a freemium account) first-hand to understand its value. This will help us to identify our product-qualified leads (PQL). Refer blog 72 to better understand what entails to being a PQL. ii) Make the signup or registration process as frictionless as possible iii) Guide first-time users as they navigate through the product etc.

Secondly, drive retention and engagement: i) Strive to personalise user experiences and reward loyal users. ii) Leverage lifecycle marketing touchpoints such as email and push notifications (refer blog 66: Lifecycle email marketing and push notifications).

2. Sales-led strategy

Sales-led strategy is when the sales team drives the go-to-market activities. The sales team reaches out to prospects to sell the product. The sales team drives customer acquisition and growth.

While the product is obviously important, but it will not run the show. In a marketing funnel, leads are converted into marketing-qualified leads (MQL) and then into sales-qualified leads (SQL). SQL are then sent to the sales team to convert. Refer blog 72 to better understand MQL and SQL.

In a sales-led strategy we use the sales processes to move prospects along the marketing funnel.

Sub-activities of sales-led strategy can include i) content marketing, ii) channel-focussed activities (building trust and authority on a specific sales channel such as retail, ecommerce, social media etc.), iii) account-based activities (focus on specific accounts i.e., one-to-one marketing/sales aimed towards a particular company.

Sales-led strategy is more relevant for complex and enterprise software products.

At times, some firms also adopt a marketing-led strategy. Marketing-led strategy is when the marketing team drives the go-to-market activities. Customer research, customer insights, target audience specific messaging, and advertising tactics are what drive acquisition and growth. When products in the market are very similar, the marketing-led strategy can be the differentiator. Marketing-led strategy is extremely customer centric.

Eventually, the strategy that we choose will depend on our product’s vision and goals.

Jump to blog 100 to refer to the overall product management mind map.

All the best! 😊