PLG CRM: What is it (and does your sales team need one)?‍

If you’re using a product-led growth (PLG) motion, you have different team structures and ways of engaging your users. But do you also need different tools to manage your customers?

Over the last several years, companies adopting a PLG approach have had the tough job adapting existing CRMs like Salesforce and Hubspot to work for this new business model. 

More recently, a category of tools has emerged that some call “PLG CRMs,” or product-led growth customer relationship management. This new category of tools promises to help teams looking to drive product-led revenue get a fuller view of their users, how they interact with the product, and who is most likely to benefit from human intervention.

Using the information a PLG CRM provides, companies with a hybrid go-to-market motion can better align resources to the users who need it most, efficiently generating and growing revenue.

In this guide, we’ll provide an overview of PLG CRMs. We’ll explain what they are and why they exist. We’ll highlight their benefits, share typical use cases, and offer tips for evaluating them.

What is product-led growth (PLG)?

Before we dive in, let’s get a refresher on PLG itself.

Product-led growth (PLG) is a B2B SaaS growth strategy in which a user’s interaction with the product (rather than sales or marketing) is the primary driver of customer acquisition, conversion, and retention. 

The term was coined by Open View Partners, who has created a wealth of content on the topic.

How a PLG motion looks in practice can vary. However, a typical pattern looks like this:

• A user begins using the product. Product usage begins through a time-limited free trial, a free version of the product with limited capabilities, or an ungated “sandbox” environment.
• While exploring the product, the user starts to see how it might help them solve a particular problem or pain point.
• The user can then indicate their interest in the product explicitly (for example, by upgrading their free use to paid usage) or implicitly (by demonstrating certain behavior that is highly correlated with becoming a customer).

Users that demonstrate explicit or implicit buying intent trigger a product-qualified lead (PQL). Drawing from the concept of a “marketing-qualified lead,” PQLs alert the sales team to get in touch with the prospect.

At Pace, we divide PLG companies into two distinct types: PLG Natives and PLG Transformers.

1. PLG Natives are companies that started out with a PLG strategy as their primary go-to-market motion. Examples include Slack, Airtable, Dropbox, and Stripe.
2. PLG Transformers, on the other hand, are companies that started with a different GTM motion (most commonly direct sales) and pivoted towards (or layered on) a more product-led approach. Examples include MongoDB, New Relic, and Vidyard.

What is a PLG CRM? 

Although products delivered using a PLG motion can be similar to more traditional software offerings, the customer relationship is a little different. That impacts how these companies use CRMs.

Traditional CRMs are geared to sales and marketing teams who are generating leads and then nurturing them down the funnel. 

With a product-led motion, teams must consider not only the parts of the funnel that exist before a prospect becomes a user, but also the customer journey that occurs within the product itself. 

It's then the role of sales teams to identify the users with the highest potential for the different product-led sales motions like conversion, upsell, consolidation, and expansion.

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You may wonder, “Why does a product-led company need a tool for sales and marketing?”

In most PLG companies, the product is the acquisition mechanism, and there is usually a large cohort of customers that deepen and expand their usage completely on their own. However, this is usually accompanied by sales and marketing teams whose primary goal is to improve organic conversion rates and grow revenue faster than an entirely self-service motion would on its own.

When a PLG CRM is doing its job, it allows the sales team to gain insights into thousands of users, considering how users interact with the product. Because PLG companies are so dependent on understanding user behavior in order to grow, the right CRM that can deliver customer insights counts for a lot.

The problem with existing SaaS CRMs

Existing SaaS CRMs dominate the market– Salesforce was ranked as the #1 CRM for the eight consecutive year in 2021 with a whopping 23.9% of the market. Although Salesforce and other dominant CRMs such as Oracle, Microsoft, and SAP provide robust solutions, they aren’t a perfect off-the-shelf solution for PLG companies who want to keep track of customers and act on the information. 

Traditional CRMs have been expensive to maintain because of the amount of data entry required. Plus, adding features requires help from a dedicated internal team or consulting firm. But the real issue is that traditional CRMs were built long before SaaS became the default mode for building and selling software.

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Here are a few of the challenges:

• Salesforce and other traditional CRMs organize data into a rigid, standardize model, while modern SaaS products have an ever-increasing number of product-specific objects.
• Traditional CRMs have strict hierarchies, while modern SaaS products have many layers of hierarchy (Workspace, Team, Group, etc.)
• Traditional CRMs are based on accounts with the idea that each contact can belong to exactly one account. But modern SaaS tools are based around the team/user, and users may belong to multiple workspaces or accounts.

The mismatch between CRM records and SaaS product objects is just one example of why teams struggle to adapt traditional CRMs to a PLG go-to-market model.

As a consequence, revenue-generating teams are left with blind spots leading to missed opportunities and customer churn. To fill in the gaps, teams hire analysts to mine product data and build internal reports and dashboards, buy product analytics tools to store and visualize data, and use data sync tools to load data into existing tooling. All of these options are viable, but they’re cumbersome and present their own challenges.

The difference between traditional CRMs and a PLG CRM for SaaS

Traditional CRMs and PLG CRMs for SaaS ultimately serve the same purpose: to help companies manage their customers. But in today’s landscape, they ultimately serve different functions. Here are a few key differences to consider:

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It's unclear whether PLG-focused tools will emerge as a distinct category or remain a specialized type within the existing CRM ecosystem. If it's any indication, Gartner recently grouped PLG CRMs in a new category called "Product-Led Revenue applications" in their most recent Hype Cycle for CRM Sales Technology.

Benefits of a PLG CRM

By opting for a more specialized platform, product-led companies can see a few major benefits:

Better sales efficiency

Understanding who is qualified and who isn't in a PLG world requires the combination of traditional firmographic and profile information with data about how the prospect has engaged with the product. A PLG CRM gives enables teams to bring these data points together and build prioritized views of the users and accounts that sales should focus on.

Improved conversion from signups

Because a PLG CRM gives more visibility into customer behavior, it leads to improvements in conversion rates. Product, marketing, and sales teams can better understand which customers are most likely to convert based on their behavior, then target those that may need more assistance.

Prevents data silos

PLG CRMs prioritize giving customer-facing teams all the information they need about a customer. This means that all relevant data sources are connected within the tool. Sales and customer success teams don’t have to jump from product to product to try to find the information they need. 

Less churn

A PLG CRM will help you identify when customers are most likely to churn so that you can help these customers be more successful with the product. Thanks to the visibility provided by a PLG CRM, you can drastically reduce the number of users who churn and increase customer lifetime value (CLV).

Reliable, automated reporting

One of the best things about a PLG CRM is that teams don’t have to dig around for the analytics they need. Instead, PLG CRMs serve up reliable, automated reporting for the metrics that are most important to PLG companies. 

A traditional CRM like Salesforce can slow down reps significantly as they have to dig around for info or to wait for a specialist to build a custom report for them. 

Features to look for in a product-led growth CRM

Even though PLG CRMs are a relatively new class of software, you’ll still want to make sure the tool is going to meet your needs. Here are some of the most important features to look for as you explore.

Native integrations with your most important data sources and customer engagement tools

In most B2B SaaS companies, important data about your customers is spread out across a number of different types of sources. The four most common types of data sources are the cloud data warehouse, the customer data platform (CDP), a traditional customer relationship management platform (CRM), and the backend database of your application.

A PLG CRM needs to natively sync data from these sources to provide a complete, unified view of your customers.

Additionally, go-to-market teams at B2B SaaS companies engage with customers through several different channels. A PLG CRM should enable you to drive customer touchpoints across sales engagement tools (like Outreach and Salesloft) and support syncing data back to CRMs and marketing automation tools like Salesforce, Marketo, and Hubspot.

Flexible customer visibility

The properties, metrics, and events that matter most are unique to your business. Any PLG CRM you choose to use should be flexible enough to surface the data points that are most important to your team. 

Additionally, the information should be presented in a way that is intuitive for stakeholders who aren’t intimately familiar with the underlying data sources.

Finally, your PLG CRM should help you segment your customer base in ways that help you align resources and prioritize your team’s time. 

Proactive, contextual alerts

One of the primary use cases for a PLG CRM is to alert customer-facing teams when important customer activity occurs so they can react appropriately and in a timely manner. Look for a PLG CRM that enables you to build custom alert logic and send them to the right person at the right moment. If your team works primarily out of a tool like Salesforce or Slack, ensure the PLG CRM supports these systems as alert destinations.

For alerts to be useful, they need to help the recipient understand what triggered the alert and help them decide on next steps. Make sure the PLG CRM you’re evaluating can provide the necessary information and context along with the alert.

Data governance and monitoring

Bad or stale data can be worse than no data at all. Because PLG CRMs aggregate information from multiple sources, it’s critical that they also let you know when a data sync has failed or has errors.

Additionally, your PLG CRM should help your team work from a consistent view of your customers by providing consistent definitions of key metrics, properties, and events.

Common use cases for a PLG CRM

Product-led companies turn to PLG CRMs for a number of reasons. Here are a few of the most common reasons you might consider adopting a PLG CRM:

• You need a self-service way to see customer data at the account level
• You want real-time insight when customers and free users might benefit from your team’s time
• You want to understand what makes customers more likely to convert, expand, or churn

Who needs a PLG CRM? 

Any company with a product-led growth motion can likely benefit from a PLG CRM. However, there are certain factors that help you determine whether it’s critical or just a “nice-to-have.”

If any of the following apply to your business, you should seriously consider a PLG CRM.

You have more users and customers than your team can support with a high-touch approach

When your customer base expands faster than your customer-facing teams, you must prioritize where those teams spend their time. A PLG CRM can ensure that the customers who most need your teams’ attention are addressed in a timely manner. On the other hand, customers who are healthy and growing on their own can continue to self serve.

You have dynamic or usage-based pricing

With a traditional subscription or license-based pricing model, your customers’ consumption of your product changes over the course of weeks or months. In a usage-based model, their consumption can change much faster. This means your teams need a higher level of visibility into fluctuations and real-time alerting so they can get ahead of contraction or churn while taking advantage of opportunities for expansion or upsell.

You have bottoms-up and top-down sales motions

Many B2B SaaS companies with a product-led growth approach have free and pay-as-you go plans that can be used without having to speak with a salesperson. However, once a company wants to expand their usage or get access to premium features, they may qualify for a custom or enterprise pricing tier.

The added complexity and higher price point lends itself to a higher-touch buying process led by a salesperson. Additionally, the seller running the sales process typically works with a decision maker within the customer account that is an end-user of your product. A PLG CRM can help your sales teams use data-backed insights to demonstrate to their customers how their teams are using and getting value from your product.

Should you build your own PLG CRM?

Every business has a slightly different way of prioritizing and engaging with their customers. As a result, some teams choose to build their own internal PLG CRM using a number of different free, open source, or third-party tools. In fact, we wrote a series on how you can build your own simple PLG CRM.

Tools needed to build an internal PLG CRM

To meet the needs of customer-facing teams at a product-led company, a homegrown PLG CRM needs to:

• Sync, aggregate, and model data from multiple sources
• Display the data in a format accessible to non-technical teams
• Alert the right stakeholders when important customer behavior occurs

Even the most basic implementation requires data integration tooling (Reverse ETL, iPaaS, data modelling tools like DBT, etc.), visualization tools (Tableau, Google Data Studio, etc.), and workflow automation software (Zapier, Tray.io, etc.).

Building PLG CRM capabilities internally requires specialized data engineering expertise and tooling.

Each of these tools has a cost associated—either to buy access or to maintain them.

If you already have resources dedicated to building out these types of internal tools with the expertise needed to maintain, troubleshoot, and improve them over time, it may make sense to build internally. 

Adopting a PLG CRM like Pace can reduce the need for specialized data tooling.

However, the vast majority of PLG companies would benefit from adopting a pre-built solution and focusing on their own end-customer experience.

Meet Pace: PLG CRM for hybrid go-to-market motions

Built by former MongoDB sales, product, marketing, and data experts, Pace help sales teams at companies with a PLG motion better focus their efforts on the customers who need it. Pace unifies data spread across the CRM, CDP, and cloud data warehouse into a intuitive, actionable view for customer-facing teams. 

Pace makes it easy for customer-facing teams to get the information they need about their accounts and users.

Conclusion: PLG CRMs can drive efficiency and uncover hidden revenue

If you've implemented a PLG motion, you’ve already had to overcome an array of challenges. To ensure your product-led strategy is a driver of bottom line growth, it’s essential to efficiently convert more users, get ahead of churn, and drive more expansion.

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