A Statista report shows that whether it be the Apple, Google, or Amazon app stores, there are consistently more free-to-use apps than paid ones. This indicates that the freemium subscription model of businesses has become commonplace.
As they continue to grow and expand, companies face the challenge of choosing a growth strategy that works best for them: sales-led growth (SLG) or product-led growth (PLG).
Read on to learn more about growth strategies and how to determine which one is the best fit for your business.
PLG and SLG: What are they?
For a quick refresher, SLG is a traditional approach to growth that includes sales and marketing tactics such as cold-calling or direct mail campaigns. It focuses on acquiring customers through personal interactions with them. The idea is that customers will be sold the product or service by talking to a salesperson.
If you opt for a more modern approach, however, PLG is the right choice. Unlike SLG, it does not require salespeople to interact with customers directly. Instead, companies focus on building their product or service and making it available to the public, so potential customers can try it or buy it without additional assistance from salespeople.
Key differences between PLG and SLG
As a business owner, your choice of growth strategy should be based on your goals, resources, and target audience. But aside from their key growth drivers, how do the two compare?
- The customer acquisition process
Using SLG means your team has to manually contact potential customers one at a time, which can take up significant time and money. As opposed to this, PLG enables companies to quickly reach out to thousands of potential customers by leveraging digital channels such as email campaigns and social media ads.
- Income channels
As per its name, a sales-led strategy relies on the income generated through sales. PLG, on the other hand, allows companies to diversify their sources of revenue by offering subscription-based services or in-app purchases.
- Project team members
For SLG, you need to have salespeople, marketing professionals, and customer service representatives all working together towards a common goal. Meanwhile, for PLG, a smaller team of developers and marketers is usually sufficient for product launches or campaigns.
- Risk management
The risk associated with SLG is higher than that of PLG since it involves real-time interactions between customers and sales personnel who may not be trained well enough to handle complex queries. As such, companies must invest more resources in training their teams to provide excellent service.
- Customer retention
To engage your customers with PLG, you only need to keep improving the product. This makes it easier for companies to retain their customers, as they are more likely to stay with you if your product improves. However, SLG requires significant effort from the sales team to continuously engage and nurture relationships with existing customers.
With these in mind, you can easily decide which growth strategy is best for your business.
How to choose one that fits your business
To choose the right method for your business, it is essential to ask yourself these questions to determine which approach works best for your goals and objectives:
- What are my business goals?
- Who am I targeting with my product or service?
- How much effort and resources are required to implement each method?
Asking such questions gives you a better understanding of which approach might work better for your business. But you shouldn't worry about committing to one approach because you can always use both SLG and PLG together.
Letting automation Wrk for you
Wrk can help your business take advantage of both SLG and PLG strategies. Our automation platform lets you quickly create personalized customer experiences by automating lead generation, customer segmentation, and marketing campaigns.
On top of that, we have a library of fully automated tools and steps powered by leading industry experts.
Want to give Wrk a try? Request a demo today to see how we can help your business succeed.