Decoding The Best Growth Strategy For Your SaaS Company

Raviraj Hegde, SVP of Growth & Sales at Donorbox. Advocate for SaaS growth, scaling the Giving GDP, and empowering nonprofits globally.

Scaling a SaaS business is not only about building a fantastic product—it’s about choosing the right growth strategy. Historically, sales-led growth (SLG) has been the dominant approach, as high-touch sales interactions were necessary to close deals and build trust with enterprise clients. However, the rise of digital-first buyers, self-serve preferences has propelled product-led growth (PLG) into the spotlight as a powerful alternative.

New SaaS startups inevitably have to ask themselves: Do we take an SLG or PLG approach? As the founding marketer of a B2B SaaS startup, I have faced this major decision. Based on what I’d seen work before, I took our company down one path, and my initial hypothesis turned out to be right. But the decision is rarely clear-cut, and I’ve learned from using both methodologies.

If you’re on the verge of deciding whether product-led growth or sales-led growth is the right fit for your company, read on for explanations, findings and real examples from my experience to consider and help guide you.

What Is Product-Led Growth?

PLG is a go-to-market strategy where the product does the work to acquire customers—think Zoom or Slack. Your product can be discovered, tested and adopted by users with limited sales team involvement. In other words, it’s self-service.

This is the strategy I championed at Donorbox, running website tests to boost adoption and revenue. And it worked. A free standard plan with no contracts attracted countless customers, especially smaller organizations.

PLG Advantages

• Scalable User Acquisition: Acquiring customers can be faster, cheaper and easier without needing to schedule demos, manage sales cycles and onboard new customers.

• Lower Customer Acquisition Cost (CAC): PLG strategies often result in lower CAC compared to traditional sales-led approaches. For instance, the average CAC in the SaaS industry is $702. PLG models can reduce these costs by leveraging self-serve onboarding, viral user acquisition and minimal reliance on direct sales teams.

• Fast Adoption And Viral Potential: If a product solves an immediate pain point and is easy to use, satisfied customers naturally want to share it with others, fueling organic growth.

PLG Disadvantages

• Higher Churn Risk: Without a dedicated sales or account management team to nurture customers, users may leave quickly if they don’t see immediate value.

• Lower Average Revenue Per User (ARPU): Since PLG focuses on volume, average revenue per user tends to be lower, meaning profitability depends on acquiring a massive number of customers.

• Limited Ability To Sell Complex Solutions: If a product requires deep integrations or multiple stakeholders to approve purchases, a self-serve model may not be enough to close deals.

What Is Sales-Led Growth?

SLG relies on a dedicated sales team to acquire and convert customers, often through high-touch engagement, demos and longer sales cycles. This method works well for complex, high-value SaaS products where customers need personalized solutions.

SLG Advantages

• Higher Contract Values And Longer-Term Commitments: SLG focuses on high-value customers who sign long-term contracts, offering revenue stability.

• Deeper Customer Relationships: Sales teams engage in direct conversations, often helping tailor solutions to fit the exact needs of clients. This leads to higher customer retention.

• More Targeted Expansion: SLG can be beneficial for companies looking to enter new markets where personalized outreach and relationship building matter.

SLG Disadvantages

• High Upfront Costs: Recruiting and maintaining a sales team is expensive, with costs including salaries, commissions, training, travel and tools.

• Longer Sales Cycles: Enterprise deals with an annual contract value of over $100,000 can take between 90 to 180 days to finalize, for example.

• Scalability Challenges: Unlike PLG, which allows unlimited sign-ups, SLG requires human effort for each sale, making it difficult to scale at the same pace.

For us, while PLG suited smaller nonprofits, larger ones demanded custom features, integrations and support. To meet this, I built a 12-member sales team for high-value deals, enabling us to move upmarket while supporting self-serve users.

Making The Choice: Key Considerations

If you’re debating which approach to adopt, consider the following, which recaps the points above:

If your product is intuitive and easy to onboard, PLG can work well. If it requires hands-on demos or extensive implementation, SLG might be the better fit.

Lower-priced products benefit from PLG since they can attract a broad user base. Higher-ticket software often needs direct sales intervention.

If your strength lies in marketing and product, PLG is a good starting point. If you have sales experience or enterprise connections, SLG could be the right fit from day one.

Many SaaS companies start with PLG and then layer in SLG as they move upmarket. This hybrid model allows businesses to acquire smaller customers at scale while closing larger enterprise deals through sales teams.

What’s Next?

Evaluate your ARPU, user journey and existing resources to determine the best approach for your company. Whether you go all-in on PLG, SLG or a mix of both, the right strategy will help you scale sustainably and profitably.

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