CHAPTER 3: Product-Led, Sales-Led, and Hybrid Onboarding Strategy

Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.
- Michael Porter

When software first hit the mainstream market, it was unheard of to receive almost-instant access to a product with the simple click of a button; shoppers had to rely on a salesperson to learn about it. 
In recent years, the market has shifted considerably. Each category has hundreds of competitors, which means buyers can be picky and choose the solution that best fits their needs. With so many options available, shoppers would rather try a product on their own terms than learn about it through a sales representative. 
SaaS businesses are adapting to this new way of selling. They want to deliver an exceptional user experience without the need to talk to a salesperson. This includes guiding new users through features and use cases with a streamlined onboarding process.
This self-serve, product-led onboarding strategy is how companies like Slack, Dropbox, and Notion have grown to become behemoths in their industry.
The concept is simple enough. 
First, offer users a free trial or a free version of a product. Second, help them perceive, experience, and adopt a product’s value on their own terms. Finally, with regular use of the product, they naturally turn into paying customers, all thanks to a brilliant onboarding strategy.
This all happens without any humans involved; the product sells itself.
In a product-led world, who needs salespeople, right?
But nothing is ever this simple. Let’s look at Slack, a classic example of a product-led company. If you think they don’t have a sales team, you’d be wrong.
In 2019, 40% of Slack´s revenue came from their sales team closing deals with larger organizations (companies making more than $100,000 in annual recurring revenue). As a result, they experienced a 66% surge in marketing and sales expenses from 2018 to 2019.
As Slack proves, there’s room to employ both a product-led and sales-led growth strategy to onboard new users. This approach is known as sales-assisted or hybrid onboarding. 
Before diving into the framework to improve user onboarding, let’s look at each of the three user onboarding strategies a little more closely. 

1. 
   
   Sales-led approach


2. 
   
   Product-led approach


3. 
   
   Hybrid approach

How do these methods compare in this new environment? 
Choose Your Hunting Strategy


In a classic blog post titled, The 5 ways to Build a $100 Million Business, Christoph Janz explains the number of potential customers in your total addressable market. He describes how your business’ annual contract value dictates your “hunting strategy,” a.k.a. how you acquire, onboard, and retain new customers.
T
To build a $100 million business, you can hunt for:

• 
  
  1,000 “elephants,” or enterprise customers who can each pay $100,000 or more per year.


• 
  
  10,000 “deers,” or medium-sized companies that each pay $10k or more per year.


• 
  
  100,000 “rabbits,” or small businesses that each pay $1k or more per year.


• 
  
  One million “mice,” or consumers who each pay $100 or more per year.


• 
  
  Ten million “flies,” or active users that you can monetize $10 or more per year each.

What you end up “hunting” for largely dictates whether you should adopt a sales-led, product-led, or hybrid approach to user onboarding.
Sales-Led Onboarding


Many large B2B companies like Workday, Cisco, and Salesforce became $100 million businesses by intentionally hunting for “elephants,” or large enterprise customers.
This required a dedicated internal sales team with heavy financing of the enterprise sales cycle. They relied on high-touch human interactions; sales representatives, account executives, and customer success team members played a crucial role in converting leads into active, paying customers.
A typical sales-led onboarding process might look something like this:

1. A lead books a call or demo with a salesperson.


2. A salesperson qualifies the lead via a call or email.


3. If they’re a good fit for the product, the salesperson presents a demo of the product.


4. The lead tries out the product if there’s a trial available.


5. If there’s no trial available, the lead signs a contract and becomes a paying customer.


6. A customer success representative onboards the new customer, which might involve upfront costs to create the new account. 

This process might change depending on the sales or marketing funnel, but the gist is along the same lines: real people drive leads to perceive, experience, adopt and purchase your product.
If you’ve been following along with product-led growth, I can hear some of you thinking, “Why would anyone want to use a sales-led approach to selling and onboarding? It’s so outdated!”
Well, it’s simple – the sales-led approach is proven, predictable, and repeatable. Salesforce grew to become a $100 million a year business with this method. 
It’s also a numbers game. The more calls or emails you make, the more sales you generate. You do this by segmenting your market, forming both an inbound and outbound lead generation strategy, along with a convincing and constructive sales script. 
This sales-led approach is not a good fit for every type of business. After all, can you imagine Netflix or Facebook employing salespeople to close deals?
That’s why sales-led onboarding is more effective in situations such as:

• The product is complex and requires a helping hand


• Multiple stakeholders are involved in the purchasing process


• The creation of a new and disruptive product category


• The market is small but consists of large contracts


• The annual contract value is typically more than $100,000

Product-Led Onboarding

If you’re hunting for “flies” or “mice,” where the annual revenue per user is between $10 to $100, consider using a product-led onboarding approach.
This process is where new users perceive, experience, adopt and purchase a product without the need to interact with a team. The primary objective is for users to self-onboard themselves (even though the rare few will need help from a support team). 

A typical product-led onboarding process looks like this:

1. Users try a product for free, either with a free trial, free account, or free sample, which happens without interacting with sales.


2. Users onboard themselves to the product.


3. They achieve their desired outcome with limited communication between sales, customer success, or support.


4. They purchase the product on their own.

The product-led onboarding process is low-touch, little effort, and has minimal overhead for your business. It’s an effective approach in certain situations such as:

• The product is simple and easy to understand.


• The market you serve is well established.


• Buyers prefer to self-educate instead of talking to sales. (Yes, there are still some people who like talking to salespeople!)


• The product solves a problem a lot of people or businesses have.


• The annual contract value is low enough for customers to pay for it on their own using their credit card or PayPal account.

Hybrid or Sales-Assisted Onboarding

Many businesses feel the need to lead with either a sales-led or product-led onboarding strategy. But this is a big misconception. As Slack illustrates, you can have success from merging both. There’s a middle ground between both pure sales-led and product-led strategies. 
Most product-led businesses like Slack, Dropbox, and Drift hire salespeople to assist in onboarding new users. They adapt as they start pursuing larger deal sizes. 

The opposite is true as well. When moving downmarket, sales-led businesses shift their sales team to help new users find additional meaningful value with their product. HubSpot, Salesforce, and Vidyard are good examples of this approach. 
It’s also worth pointing out that hybrid onboarding has a 3.5 times higher conversion rate than low-touch, product-led onboarding. Surprisingly, this is across all ranges of deal sizes for free trial B2B products.
To be successful with a hybrid approach, it’s important to have a strong sense of your market. The sales team needs to know which users to focus on, where in the user journey they should start the sales process, and perhaps most importantly, how they should do it. 
Will your salespeople start calling users the moment they achieve their desired outcome with your product? Or should they be more passive and wait until users request a demo or hit a usage limit with their account? (I’ll discuss this in detail in the third section of this book.) 
For now, we’re going to focus primarily on how to improve your own product-led user onboarding experience. 
Putting It All Together
Implementing a product-led, sales-led, or hybrid onboarding strategy will largely depend on the complexity of your buying process, along with your product’s annual contract value. 
To help visualize this, here are these two factors on a two-by-two matrix:

Here’s a little rundown on when to use each approach:

• Suppose you have a high annual contract value (typically over $100,000) as well as a complex buying process with multiple stakeholders and a long sales cycle. In that case, consider onboarding new users using a sales-led method. Cisco and Marketo are good examples of companies using this approach.


• If you offer a low annual contract value where users use a self-checkout process to purchase your product, then onboard new users with