Product-led Growth

Product Led Growth Metrics & How to track them

Ruben Vleurick
Ruben Vleurick
March 15, 2022
Product Led Growth Metrics & How to track them

Alignment can feel like a bit of a buzzword—everyone in SaaS preaches it, but few really define what it looks like in practice.

And yet alignment across teams is both a requirement and a benefit of product-led growth. To help demystify what we mean when we talk about alignment, let’s take a closer look at one of the more tangible ways that teams can become aligned: metrics.

Metrics provide a common language and reporting system that cross-functional teams can rally around. The right set of metrics can act as a north star that helps all departments navigate toward the same goal. Metrics should not be siloed—they should be reported on and affected by cross-functional teams who can leverage the data to make more informed decisions and enact coordinated changes across your business.

You can use the following framework to your PLG strategy, we see familiar metrics that are important no matter what Go-To-Market strategy we are pursuing.

  • Acquisition – Signups and Qualified Leads
  • Activation – Activation Rates and Daily/Weekly/Monthly Active Users
  • Retention – Customer Churn and Revenue Churn
  • Referral – Conversions through referrals and % of Customers who become referrers
  • Revenue – Annual/Monthly Recurring Revenue and Average Revenue Per User/Customer

1. Time to value

Time to value (TTV) is the amount of time it takes new users to realize your product’s value. Your goal should be to reduce time to value as much as possible—the sooner users reach their first aha moment or activation event, the better.

To do this, focus on optimizing your user onboarding experience around the key actions within your product that correlate to activation, like inviting colleagues to your platform, importing customer data, or integrating with other tools in their tech stack.

TTV can also be defined as the time it takes a user to move from the activation to adoption phase.

2. Product-qualified leads

Product-qualified leads (PQLs) are typically activated users—folks who have completed a key action within your product, had their aha moment, and have seen the value that your product can offer first-hand. In other words, they’re probably the warmest leads that your sales team is ever going to get.

Your exact definition of a PQL will differ from other companies. How you define a product-qualified lead will depend on the specific actions that a user takes within your product that indicate they are ready to move on to the next stage of the user lifecycle.

To find your product’s activation event and define what a PQL looks like at your company, you’ll want to use a combination of user interviews, session recordings, and A/B tests to identify the user behaviors that correlate with conversion and retention.

3. Free-to-Paid Conversion Rate

Percent of users that go from a free product to a paying customer. Calculated by number of customers who become paying customers / number of customers trialing or using free version.

4. Expansion Revenue

Revenue from existing users being cross-sold/upsold. Calculated by MRR / ARR from existing customers through upsell/cross-sell. It’s a lot easier to get more money from happy, paying customers than it is to acquire new ones. It’s more cost-effective, too—it’s roughly 2X cheaper to upsell to an existing customer than to acquire a new one, and over 3X cheaper to generate expansion revenue than the customer acquisition cost (CAC) of a new customer.

That’s why expansion revenue is easily one of the most important levers for sustainable SaaS growth. Also called expansion monthly recurring revenue (MRR), this metric measures the revenue generated from existing customers through upsells, add-ons, and cross-sells.

5. Average Revenue Per Customer/User (ARPU/ARPC)

Revenue you can expect to make from an individual user. Calculated by ARR or MRR/# of customers. Average revenue per user (ARPU) is the amount of money, on average, that you can expect to make from an individual user. It’s a straightforward metric, calculated as total MRR divided by the total number of users.

6. Net Revenue Churn

Money lost after accounting for new and expansion revenue. Calculated by Revenue lost in period – new and expansion revenue / revenue at beginning of period. Net revenue churn is the amount of money that is lost after counting expansion revenue and new revenue. The formula is revenue lost in the time period – expansion revenue divided by revenue in the beginning. Net churn is often calculated as a percentage. It is a useful SaaS product growth metric as it helps understand why customers are leaving the product. This is useful in understand how to increase product-led growth.

7. Customer Satisfaction/Net Promoter Score

Gives insight into % of active users having a positive experience. Calculated by # of positive user survey responses / total responses or traditional NPS calculation.

8. Feature adoption rate

Product management teams typically have the product adoption rate high on their list of KPIs to track when launching a new product. But you’re missing a major piece of the PLG puzzle if you fail to add the feature adoption rate to that list as well.

Both rates are key metrics that indicate how well your product is received by your target users. The product adoption rate tells you the percentage of active users, while the feature adoption rate (which is also measured as a percentage) clues you into why people continue to engage with your product. You may find that the adoption rate of a new feature is what’s driving your overall product adoption rate to climb.

Getting insight into which features users find the most value in will inform your product positioning and any other product decisions you make.

9. DAU, WAU, MAU

the number of users that are active in the product for any given time period

If you follow the best practices of product-led growth, you’ve designed your product to benefit the end user. You’ve made it your primary growth channel. Understanding how many users are using the product actively for any given set of time is key to understanding if you’ve been successful in your mission to keep the focus in the right place and nail the user experience.

Learn how to implement and track all these metrics with journy.io. Lets demystify the analytics behind product led growth.

Keep reading...

Built for SaaS customer teams

Changing the way you do business, within the tools you already use.

Build revenue playbooks based on how people use your product
Stop crunching CRM records and data sheets once a month, to find risks and opportunities. Organise your workflows around real-time PQL signals, playbook actions, and customer data from across your stack.

Work in the tools you already know and use
Give easy access to product data
PQL intelligence and actions, the moment it happens
All point'n'click, no SQL or coding needed
Check out our use cases
Share Customer Data
Detect which leads are hot. Sell more with less effort.
Stop wasting time on unqualified leads. Look out for promising product qualified leads that trigger specific buying signals, and make more meaningful calls, knowing which features they're interested in.

Get prioritized call lists, sorted by likelihood-to-buy
See unified view of each account and their users
Get tasks and product data in your existing CRM
Get PQL notifications by email, on Slack, and in your CRM
Check out our use cases
health score
Easily test new PLG strategies and improve conversions
Try out new PQL conditions, assign different engagement variations, and monitor how conversions progress over time.

See which features are most frequently used
Quickly test new PQL conditions and actions
Prove which engagement playbooks work best
All point and click, no code required
Check out our use cases
PQL Experiments
Monitor feature adoption and health scores during onboarding. Reduce churn, proactively.
Keep track of each individual user and account at scale, and get notified on expansion and cross-selling opportunities. Identify those who are at risk of churning, and pro-actively reach out to them.

See all account and user activities in one place
Get notified on churn risk and expansion opportunities
Get tasks and product data in your existing tools
Get notifications by email and on Slack
Check out our use cases
journy.io customer success use case
Convert more through hyper-personal automations
Target the right audience at the right time with the right message. Your existing automations get power-boosted with customer engagement metrics.

Automatically add PQLs to engagement automations
Get product usage data in your existing marketing tools
Lower customer acquisition costs
Check out our use cases
journy.io marketing use case

Set up journy.io
in under one hour

Create your free account and start driving a product-led growth strategy in the tools you're already using.

Get Started 
© journy.io BV 2022 — All rights reserved.
The names and logos of third party products and companies shown on the website and other promotional materials are the property of their respective owners.

Email

Email

Post

LinkedIn

Tweet

Twitter

Share

Facebook

Ebook

Ebook

Back

Blog