Product-led Onboarding Vs. Sales-driven Onboarding Strategy: Which one you need to choose?

Kalo Yankulov

Kalo Yankulov

Co-founder and marketer at Encharge.

In the last year, the concept of “product-led” growth has been making the rounds in the SaaS community. Big boys like Calendly, Dropbox, Slack, and Zoom have been spearheading the movement by using product-led onboarding strategy to skyrocket their growth.

 It’s a simple concept:

  1. Users sign up for a free trial
  2. Experience initial value within your product
  3. And thanks to the brilliant habit-building UX, these users convert to paying customers.

All that without involving any humans. The product sells itself.

But does it work like this in real life?

When you or me, a founder or a marketer of a small SaaS, look at these examples and tries to replicate them, we find out that the product-led vision is more of a dream than a practical strategy.

  1. We carefully create our products.
  2. Implement a frictionless signup process.
  3. Build a seamless in-app onboarding.
  4. Craft personalized targetted onboarding emails.

Yet, very few of our trials convert to customers.

So what are we doing wrong even when we’re doing everything right? Why is the product-led growth not fulfilling its promise? Should we start doing demo calls and neglect our in-app onboarding and onboarding emails?

Conversely, if you’ve been doing demo calls but want to transition to an easier, more cost-effective onboarding process, what do you need to do? Is this transition even possible?

In this post, I want to answer these questions and help you choose the best onboarding process for your SaaS.

What makes me qualified to help you with this challenge?

I had the pleasure to run two SaaS startups:

  1. HeadReach — where we relied on a self-serve, low-touch onboarding process. We grew that startup to 300 customers and eventually sold it.
  2. Encharge.io — we currently use high-touch, sales-led onboarding to convert some of the fastest-growing SaaS companies like Landbot to paying customers.

Both SaaS tools couldn’t be any more different from one another.

At HeadReach, we were bringing 20-30 signups a day, had 0 demo calls, but super high monthly churn (around 12%).

At Encharge, we get just a few signups a week, convert all of our customers through a long, high-touch onboarding strategy, but have nearly 0% churn rate.

Before I explore why SaaS companies are so different, I want to unpack the two onboarding concepts and make sure we’re all on the same page when we talk about product-led onboarding VS sales-led onboarding.

What is a product-led onboarding strategy?

“Product-led growth (PLG) is a business methodology in which user acquisition, expansion, conversion, and retention are all driven primarily by the product itself.” — Product-led Growth Collective

Product-led onboarding is a fundamental part of the product-led growth and a critical stage in the customer journey in a product-driven business. It’s the process when a user signs up for your SaaS and experience value from your product without interacting with any humans.

Тo have a product-led marketing onboarding process in SaaS, you need to have a free trial or a freemium model. But merely putting a free trial in your product doesn’t mean you have a product-led onboarding if you’re not able to onboard and convert customers.

Key characteristics of product-led onboarding include:

  • Free trial or a freemium business model.
  • Users can try the app without interacting with sales.
  • Users can self-serve in your app.
  • Users can experience value and reach the Aha moment without interacting with any humans.
  • Users can achieve their desired outcomes without relying on sales/customer success/support.
  • Users can become customers without interacting with sales.

A product-led onboarding process is low-touch, low effort and has low overhead for your business.

What is a sales-driven onboarding strategy?

A sales-driven onboarding process means that you need to rely on humans to onboard and convert customers.

You can still have a free trial, but what really drives growth is the high-touch, personalized approach to sales and onboarding.

The process usually includes the following steps:

  1. A lead books a call on your site, live chat, or lead nurturing emails.
  2. A salesperson qualifies the lead through a call, live chat or email conversation.
  3. If a good fit for your tool, the salesperson or customer success rep demonstrates how the product can solve customer problems and deliver value.
  4. The lead becomes a user by signing up for the product or they become a customer if no trial is available.

Not required, but this onboarding process often involves investing upfront resources for expert setup and training or other consultative services.

Of course, there are tons of variants of the sales-driven approach depending on what your sales and marketing funnel looks like, but the gist is always the same: real people drive leads/users to the first purchase.

Product-led Onboarding Vs. Sales-led Onboarding: Which one you need to choose?

Let’s make something clear right off the bat:

I don’t think product-led is better than sales-led onboarding, or vice verse.

Don’t get me wrong. As a founder of a marketing automation tool, I have much to lose by not singling out product-led as a winner.

The truth is that as a founder of a small or medium-sized SaaS, you should steer away from buzz words and trends for the sake of doing what’s currently cool. What you need instead is a clear way to figure out what will be the most viable onboarding strategy for your SaaS business. In other words, what onboarding process drives more revenue.

To help you with the decision, I’ve outlined two methods in the next sections.

Use your Ideal Customer Profile to choose your onboarding strategy

Below is a diagram inspired by Travis Bryant’s, former Head of Sales at Front and SVP Global Sales at Optimizely, approach to figuring out your sales model (and consequently your product onboarding process):

saas marketing onboarding strategy diagram

Source

Travis believes that your Ideal Customer Profile (ICP) should “lead you to the right sales motion”.

Defining your ICP leads into the next consideration — is the product design itself capable of driving the initial conversation with your ideal customer? For companies like Slack and Zoom (both horizontal productivity tools), Travis points out that users can pretty quickly (via free trial) understand the value without having to be convinced “by a human doing thoughtful business process discovery, demonstrations, proof of concepts that lead to that first purchase.”

By contrast, Optimizely is a business process solution (built for A/B website testing), which doesn’t really start delivering value by simply being dropped in — “there’s a whole bunch of knowledge that has to come along with it.”

 — Source 

We’ve covered how to identify your ideal customer profile before, so make sure to check out the post.

Your ICP should contain information on:

  • Are they B2C or B2B?
  • How big are they? Are they prosumers, SMB, or enterprise.
  • Where these people hang out? Communities, mediums, and channels.
  • How accessible are they?
  • Are they used to trying out new tools and figuring out solutions on their own? Or they prefer to outsource solutions and avoid getting involved in the execution process?
  • How proficient are they? Do they have the skills required to use your app in a self-serve model?
  • How many decision-makers are involved when selecting a tool from your category? For example, our previous startup HeadReach could be used by a single team member. Conversely, Encharge needs the approval of pretty much everybody on the marketing team, as well as input from the development team.

Once you know who exactly you want to target, this approach to choosing your onboarding process gets much, much easier.

If your customers need to be reached by human-to-human connection, then you need to focus on a sales-driven onboarding process. “Alternatively, if you can make the connection without human intervention, you’re staring down the path of being product-driven”

Choose your onboarding strategy based on your product UX and economics

The second approach to selecting the right onboarding process is driven by your product and its business economics.

To guide you with that approach, I’ve put together a table. Use it to see where your product fits best based on the attributes in the table.

 

Product-led onboarding strategy for SaaS

Sales-led onboarding strategy for SaaS

Business model

B2C, Pro-sumers, B2B

B2B, Enterprise

Product complexity

Low

High

Product price

Low

High

Customer lifetime value

Low

Hight

Churn

Medium to high. Easy come, easy go users.

Low

Place in the value chain

Turn-key solution. Doesn’t disrupt or depend on other units.

Critical or infrastructural solution.

Facing the end customers

No. Only used as an internal tool.

Yes.

Product learning curve

Small. People can get the hang of the tool on their own and experience value quickly.

Big. Documentation, webinar, and help docs are required

Product UX and usability

Very well executed. “Show don’t tell” customer experience and UI

Allows for compromises in the UX and usability if the onboarding involves personal hand-holding.

Setup

Few steps and self-serve. No additional assistance is required.

Long, multi-step setup.

Teams involved

Only one team member or just a few people are involved in the onboarding process.

Requires multiple members from different departments to complete the onboarding

Decision-makers

One or just a few

Multiple decision-makers

Customer acquisition cost

Low

High

Top of the funnel volume

Wider top of the funnel. Many people are trying the software. Especially if it has a freemium model. E.g. you get many trials.

Narrow. Few people are trying the tool. E.g. you get a few trials only.

Take this grid as a general direction. Certainly, there will be exceptions to these guidelines.

For instance, a SaaS with a product-led onboarding could have a high retention rate. For example, Slack reports a churn of only 2%. That said, if you have a product with high customer acquisition costs and a tough setup, you don’t have any choice but to have a low churn rate.

A hybrid SaaS marketing onboarding strategy

Is it possible to have a sales-led and product-led onboarding process?

It is absolutely possible if your product UX and business economics allow for it. In fact, a report by Redpoint Ventures shows that sales-assisted onboarding Increase conversion by 3.5x+.

In the diagram below, you will see that companies with $0-5k Average Customer Value that employ salespeople as a part of their onboarding convert at 18%, while purely product-driven companies convert at only 7%.

Also, you will notice that as the price point goes higher, the unassisted onboarding drops to 0.

Screenshot 2020 03 27 at 4.08.39 PM
Unassisted (product-led) VS assisted (sales-led) trial conversion led by price point (Average Customer Value)

How to implement a hybrid onboarding process?

To give you a practical example, at Encharge, we put trial users into two parallel buckets, or swim lanes:

  1. Automated email onboarding sequence
  2. A sales-driven cadence

We use our product to orchestrate these onboarding activities/emails and get a full picture of the onboarding process of the person.

Every trial user gets in the first bucket and receives a series of time-based and trigger-based emails. We want to get our trial users to follow the shortest path to their desired outcome.

An active user in our platform is someone who has imported email contacts, created at least one email, and activated an email flow.

We strictly follow what we call the “simple email formula” that each email should have one goal, one desired outcome for the user, and just one call to action.

In the email example below, we nudge people to create their first automation flow by providing the quickest shortcut—using templates in our platform.

enchargeio onboarding email

On top of this, we use a HubSpot to execute and track sales activities that we follow for the hot leads.

The sales process is broken into three calls and supported by multiple email/social media follow-ups.

  1. The first call is a quick, 15-minute qualification call that we use to figure out if the lead fits our customer persona and if our software is going to help them.
  2. The next call is an extended 45-minute marketing automation strategy/email review call, where we try to provide as much business value as possible. This is more of an advisory call than a product demo call.
  3. The last call is an onboarding call where we discuss technical details, demonstrate specific product features, and answer specific questions.

Apart from implementing the right processes, it’s important that your sales and marketing teams are aligned together.

Implementing the right onboarding strategy

Once you’ve made the final decision of what onboarding process you need to build for your product: product-led, sales-led, or a hybrid, you need to get to business and implement it.

Implementing an onboarding process is a topic worth a blog category or two, but I want to give you a few top-level tips about what you need to focus on regardless of which approach you choose.

Key things to focus on for:

Product-led onboarding strategy for SaaS

Sales-led onboarding strategy for SaaS

  • Create bottom of the funnel thought leadership content.
  • Nurture your leads with valuable content.
  • Develop an effective sales process with a qualification call and free-strategy call.
  • Qualify leads based on value, activity in your app.
  • Act proactively with your trials. Reach out to them with personalized messages.
  • Create sales scripts that handles objections, closing logistics, and an effective call to action.

Conclusion

There’s no perfect approach to onboarding that’s applicable to all businesses out there. Use the methods shared in this post to figure out whether you need to focus product-led or sales-led onboarding and implement it!

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