Product Led Growth

Everything you need to know about growing a SaaS business. Including, detailed recommendations on how to start implementing a product led growth strategy.

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PLG stands for Product Led Growth. It’s the practice of growing a SaaS business by delivering an exceptional product experience that continuously builds a stronger relationship with your customer.

Despite the acronym, PLG is as much about the customer as it is about the product. It is about deeply understanding the needs of your customer and focusing your business on delivering extreme value to your customers at every turn. Understanding your customer will enable you to focus your efforts on meeting the needs of your customer.

If understanding your customer is one side of PLG, the other is working tirelessly to remove friction from your product experience in an effort to keep your promises and build trust.

SaaS B2B businesses have been implementing product led go to market strategies for several years, but the strategy has only recently gained mainstream interest. Dropbox, Slack, DataDog, Atlassian, SurveyMonkey, New Relic, and DocuSign, to name a few, are all publicly traded product led companies – currently, there are over 20 publicly traded PLG SaaS businesses with a combined market cap over $200 Billion!

These two charts from OpenView Venture Partners Build eBook present the scale of the product led growth movement, as well as the potential for new companies adopting the strategy.

Public PLG Companies
Source: OpenView Venture Partners Build E-Book
Product Led Growth, Publicly Traded Companies
Source: OpenView Venture Partners Build E-Book

You can see why so many companies are eager to implement a product led growth strategy – there is a clear upside.

So how do you do it?

Product Led Growth Strategy

Step 1: Identify Your Customer

Succeeding with a product led growth strategy begins with understanding your customer. In order to deliver an exceptional product experience, identify your target customer, and make sure everyone is on the same page.

Step 2: Understand Your Target Customer

Get to know your customer. Spend the time upfront to get to know your customer as intimately as possible. This will help your team stay focused. It will help you prioritize product updates. It will help you avoid feature creep. It will help you prioritize content, b2b marketing initiatives, sales demos, and everything else. 

Step 3: Attract Your Target Customer

You have a deep profile of your target customer and now it’s time to put it to use. Build a plan to attract your target customer to your product. Emphasis on your target customer. You need to right people using your product in order to consistently deliver remarkable experiences.

Step 4: Engage Your Target Customer

You’ve done all this upfront work to understand and attract the right people to your product, and now it’s time to deliver. Your product experience is where your product led magic happens. Do everything in your power to give your customers an amazing product experience. Pull out all the stops and make it happen.

Step 5: Retain You Customers

You can’t be product led if you don’t retain your customers so be sure to keep the focus of your product on your core customer base. Don’t get distracted by a whale that wants to you compromise your product to make it work for them, keep your eye on the target and keep adding value for the customers you’ve worked so hard to identify, understand and attract.

Growing a B2B SaaS Business is all about delivering value to your customer.

You’ve probably picked up on theme by now, but just in case you missed it, Product Let Growth is all about understanding your customer. Your product is for them, and if you lose sight of that you will churn customers and slow growth.


Identify + Attract + Engage + Retain = Grow

Product Led Growth - Build a product your customers love

1: What is product led growth?

What Is PLG? 

PLG stands for “product led growth”. It’s the practice of growing a SaaS business by delivering an exceptional product experience that continuously builds a stronger relationship with your customer.

Despite the acronym, PLG is as much about the customer as it is about the product. It is about deeply understanding the needs of your customer and focusing your business on delivering extreme value to your customers at every turn. Understanding your customer will enable you to focus your efforts on meeting the needs of your customer.

If understanding your customer is one side of PLG, the other is working tirelessly to remove friction from your product experience in an effort to keep your promises and build trust. This guide will help you better understand both sides of the product led growth coin.

Product Led Growth Basics

At its core product led growth is simple, build a product that meets the needs of your customers, is easy to use, and most importantly, adds significant value to your customer’s business. In reality, there are a lot of moving parts that require strategic thought and planning and need to be managed. When implemented successfully, a product led strategy is really just a healthy relationship between your product and your customer.

​​

A Timeless Strategy

The best products have always been product led, and if I’m being honest, there’s no better way to build a viable business than to create a product your customers love. The rise of SaaS has led to countless B2B and B2C businesses learning this fact that hard way, and has spawned a groundswell around product led growth. In reality, this is nothing new.

Here are a few examples to illustrate this point:

  • After experiencing a bad meal or poor service at a restaurant are you more or less likely to return for a second meal? For the sake of argument let’s assume you give it another chance and experience more of the same … the odds you return continue to decline.
     
  • When you head out for lunch from the office and run into a 20-minute wait are you likely to return? Maybe, but if this continues to occur you will be less and less likely to spend your precious lunchtime waiting in line – no matter how good the food is.
     
  • When you try new software you have an objective in mind and have limited time available to commit to this trial. If you run into barriers, have to overcome an extensive learning curve, or simply cannot complete your desired task you will likely bail, and go back to google to find an alternative.

Product Led Growth Principles

  1. Understand your customer deeply
  2. Focus on delivering value
  3. Eliminate friction at every turn
  4. Identify and measure your key metrics
  5. Keep your promises

Things To Avoid

  1. Do not assume you know what your customer wants
  2. Do not make promises you can’t keep
  3. Do not add special features to win deals
  4. Do not over complicate your product experience
  5. Do not rely on sales and customer success to pick up the slack for a poor product experience

Product Led Growth is a Business Strategy

The term product led is intended to draw attention to the fact that for SaaS businesses your product needs to be the first priority. Not sales. Not Marketing. Not Customer Success … for PLG to work the entire business needs to be on the same page regarding the importance of your product experience. We are in the age of instant gratification and infinite choice.

Product led organizations believe the most effective way to grow their SaaS is to focus the entire business on delivering extreme value along with an amazing product experience.

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

2: Understanding Your Customer​

Products Are For People

Aside from stating the obvious this headline is intended to stress the importance of the role your customers play in growing your SaaS business. Without customers your product is nothing. There was a time when you could get away with selling a business need to another business, but that time is long gone. Today, people try products, and based on their experience, emotional response, and perceived value determine how to move forward.

Given the plethora of SaaS tools and services that exist today, the human connection has become critical to your growing your B2B SaaS business. It’s a fact that your customers hold all of the power in the buyer/seller relationship and you have a limited opportunity to deliver the value of your product to them.​

Given the plethora of SaaS tools and services that exist today, the human connection has become critical to your growing your SaaS business.

The Best Intentions

Founders set out with an idea that is often fueled by a desire to improve some function of their work, life, or both. They identify a problem and develop a solution designed for a specific target audience. In the early days, this is all that matters. Founding teams spend a great deal of effort working on clearly defining a target audience and market, and defining a product to meet the needs of the market. It’s all about the customer.

Product Led Growth (PLG) is not a magic wand. It does not guarantee your business will go public, or that you’ll beat your competitors, or that growing your business will be easy.

PLG is simply a business strategy that positions your product as your primary growth lever. 

Seems simple right? Well, it is … until you have a board breathing down your neck, or you’ve missed the target for the second month, or your sales lead just quit, or your biggest customer just churned, you pick the scenario. The point is when your back is up against the wall the decisions you make will determine your fate.

Most B2B and B2C SaaS businesses start out with nothing but the best intentions, but staying true to your mission when the pressure is on is what makes great businesses, great. Easier said than done. Here are some things you can do to help keep the focus on your product and the relationship your customers have with your product.

Clearly define your target customer

Chances are you worked tirelessly to define your target market and customer when forming your company and used that information to develop your prototype and alpha product. You probably used some, if not all, of these techniques in the process:

  1. Define the problem
    The first step to understanding your customer is clearly defining the problem you’re solving for. Until you have a rock-solid definition of the problem you can’t move on to the next step.
     
  2. Develop a thesis regarding your target customer
    You’ve defined the problem, now you can develop some theories regarding the people your product, in its current state, best serves.
     
  3. Validate your problem statement
    Leverage your friends, business partners, colleagues, LinkedIn, and any other sources at your disposal to have conversations with your target customer. The goal here is to collect feedback on your existing problem statement.
     
  4. Update your target customer profile
    Incorporate your learnings and build as much detail as you can into your target personas.
     
  5. Create a handful of user stories
    These user stories will help keep your teams on the same page and working towards the same goals. They provide context for both the problem you are solving for and the customer you are targeting. They help keep you honest, they help keep you focused, and they are the foundation for everything that is to come. Do not skip this step.


 

Solve your target customers problem

Your product is for people.

People that have a business problem that you have worked to define and map out a solution. It’s time to build it. You’ve completed all of the foundational work — the picture is as clear as it’s going to get at this stage — it’s time to build the solution.

  1. You’re not building a bridge across the ocean, you’re just solving for the problem you identified earlier.
     
  2. Solve the problem as cleanly as possible using the stories you’ve developed as a guide.

Validate your product / solution

Leverage your community of “friendlies” during the development process to ensure you’re building a service that adds value to your customer’s existing workflow. Your product doesn’t need to be perfect at this stage, but it does need to deliver value and provide some level of insight into the longer-term vision.
 

  1. Hold regular feedback sessions with advisors that represent your target persona.
     
  2. Leverage services like Full Story and/or Hotjar to record user sessions. Use these recordings to Identify points of confusion and friction.
     
  3. Define and instrument event tracking to identify Activation and Value using Google Tag Manager, Segment, or Mixpanel.
     
  4. Lastly, go into these user sessions with clearly defined goals and objectives, and a plan to collect, analyze, socialize, and action the findings.

Pay attention to user experience

Your SaaS product is only as good as your user experience. Meaning, you can build the most valuable product the world has ever seen, but if the user experience sucks it will fail. As founders, we are reluctant to admit there are other tools out there that can replace ours, but the truth is people have more choice in the tools they select than ever before, and the cost (in time and money) to switch from one service to another is extremely low.

Your SaaS is only as good as your user experience. Meaning, you can build the most valuable product the world has ever seen, but if the user experience sucks it will fail.

  1. Focus on user experience early
     
  2. Your product can’t be for everyone which is why you spent so much time up front defining your target customer and market. Stay true to your target and solve their problems. Trying to solve everyones problems is a recipe for disaster – don’t do it.
     
  3. User experience is not limited to your product, it requires attention at every customer interaction. Marketing, Customer Success, Product, Sales … these experiences, together, makeup the whole of your user experience. Get them aligned, keep your promises, and work to continuously improve them.

Deliver value

If you’re not delivering value to your customer they will leave you, just as you’re not likely to return to the restaurant that delivered you food poisoning. Products that deliver value quickly, and with minimal effort, take on a life of their own and grow.

Value is about solving your customer’s problems. In order to do that you need to understand and focus on your target customer. It should be clear by now why it is so critically important to understand your customer when running a product led business strategy.

Its ALL about your customer.

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

3: Eliminating Product Friction

Why is eliminating friction so important?


The short answer is that it’s important because eliminating friction will grow your business, the long answer is more complicated. The world has become more and more accustomed to having instant access to whatever they want.

Here are a few examples:

  • I can order something on Amazon and get it delivered to my door the same day
     
  • We carry around mini-computers in our pockets that are faster and more powerful than laptops from 3 or 4 years ago
     
  • Services like Hulu and Spotify provide us with instant and nearly unlimited access to tv shows, movies, and music

Technology has enabled us to purchase and consume products and services at our leisure. We’ve become spoiled. Slow internet or loss of cell service ruins our day, and if we’re unable to get 2-day shipping from Amazon … well what’s the point, I’ll just go to the store.


How is this relevant to eliminating friction in your B2B or B2C business?

Well, humans have been trained to get things now! The bar has been set extremely high and as a result, your customers enter your product experience with equally high expectations.

This is the first factor that you need to take into consideration when building your product experience. Instant access has become the norm.

The second thing you need to be aware of has to do with the power of choice. The rise of cloud services and SaaS has reduced the barrier to entry, resulting in a more competitive and product-rich landscape … in other words, people have more choice than ever.

In addition to SaaS reducing the barrier to entry for new products and services, it has also made it significantly easier for consumers to “change their mind” once they have made a decision. Winning a deal is no longer good enough, the changing landscape demands that businesses work to continuously keep their customers engaged and productive.


What is product friction and where does it come from?

Friction is anything that gets in the way of your customer accomplishing their goals. It could be a tiny speed bump, a toll booth, or full-on traffic jam; all of these obstacles have an effect on your customer experience.​

To understand where friction comes from we need to circle back to understanding your customer. The better you understand your customer, the more efficiently you can get them from point A to point B. 

We design products to solve problems for our target audience (not the whole world) but as you might imagine even our target audience has varying goals and objectives. Every assumption you make about your customer impacts the experience they will have with your product which is why understanding their intent is so important.

Getting this  wrong results in friction.

Humans also have a tendency to over-complicate problems and solutions, and in doing so unintentionally introduce friction into product experiences. This can happen when we try to please existing customers by building custom features, it can happen when we lose sight of the overall objective, and it can happen when we have varying opinions on how to solve a particular problem.

Ok, now that we’ve identified some of the ways friction gets introduced to our product, let’s explore some techniques for identifying and eliminating friction.

What are some of the techniques used to eliminate product friction in my SaaS customer experience?

Ok, now that we got that out of the way, let’s explore some techniques for eliminating friction in your customer experience.


Techniques for eliminating product friction in your SaaS customer experience

  1. Keep it simple – solve your customer’s problem in the most efficient way possible. 
     
  2. Remove unneeded features and have a rigorous process for getting new features added to your product that includes customer feedback. Be wary of using the same friendlies over and over, it’s best to include new customers and have variety when vetting new features.
     
  3. Measure the time it takes customers to activate, record user sessions, and review the ones that get stuck for opportunities to improve customer experience.
     
  4. Measure the time it takes customers to achieve value, record user sessions, and review the ones that get stuck for opportunities to improve customer experience.
     
  5. Measure feature usage and consider ways to improve adoption and/or remove the features that get little or no use.
     
  6. Be deliberate about onboarding and what you want your customers to accomplish and then help them get there. Test different techniques such as email programs, in-app messaging, live customer support, guided tours, webinars, etc.

What are some of the tools I can use for eliminating product friction in my SaaS customer experience?

There are a number of tools in this category, too many to name so I’ll run through a few of the tools I’m most familiar with and whenever possible name some of the alternatives.

  1. MixPanel – when it comes to product analytics this is a great place to start. MixPanel has a number of features, but the core value is in-app event tracking. You can use MixPanel to add event tracking for the key moments in your customer experience (e.g. activation, value, key feature usage, paid upgrade, etc). Some alternatives to MixPanel would be Google Tag Manager, HeapAnalytics, or Segment.
     
  2. Appcues – they brand themselves as the product led growth platform, a bold claim that has some truth to it. Their product is a leader when it comes to personalized onboarding, driving feature adoption, and collecting in-app feedback. Some alternatives here would be WalkMe, and Pendo.
     
  3. FullStory – record user sessions and collect a lot of engagement data using FullStory. This is a powerful tool for really digging in and analyzing user experience. Recorded sessions deliver tons of insights into areas of confusion and friction, providing much more color than typical conversion metrics. Record sessions, define funnels, build segments, filter by device … It’s a powerful tool, check it out. Other tools that are similar include HotJar, CrazyEgg, and MouseFlow.

These tools provide a wealth of data and a strong foundation for understanding and improving your customer experience. This is not intended to be an exhaustive list. Every SaaS business is going to have unique requirements and priorities. The 3 categories above will provide you with enough intelligence to operate with confidence and as your growth stack matures you can fill in the gaps to meet your specific needs.

What are the key metrics I should be tracking to measure product friction to improve my SaaS customer experience?

The first thing you need to do is define your funnel and some of the key metrics associated with your customer experience. The main things to focus on here are activation, value, and key feature usage.​

  1. Activation Rate – in order for your customers to begin using your product there is a certain amount of setup required – this is referred to as activation. This is going to be different for every product, so it’s up to you to define what constitutes the bare minimum required to begin using your product. Once you define that moment in your app, trigger an event using (mixpanel, segment, or google tag manager) when customers reach that milestone.

    Once you have the event firing you’ll then want to pay attention to:

    Activation Rate = the % of your customers that reach activation 
    (Total Activated Accounts / Total Accounts Created)

     
  2. Time to Activate = how long does it take for your customers to reach activation
    (Activation TimeStamp – Account Creation TimeStamp)

     
  3. Value – Once you’ve gone through the process of defining what value looks like in your app, take the same steps you did with activation and fire off an event when customers reach your defined threshold for value.

    Once you have the event firing you’ll then want to pay attention to:

    Value Rate = the % of your customers that reach value 
    (Total Accounts Achieved Value / Total Accounts Created)

     
  4. Time to Value = how long does it take for your customers to reach value
    (Value TimeStamp – Account Creation TimeStamp)

     
  5. Key Feature Usage – Understanding key feature usage can help you understand a range of things about your customers and your product. The data can help you understand if you are attracting the right customers if you’re prioritizing the right development work if your approach to onboarding is working, and what features are more likely to result in paid accounts, to name a few. The key here is to tag your key features (maybe all features depending on the number) with event tracking so you have the data to analyze as questions arise.

    Once you have the event(s) firing you’ll then want to pay attention to:

    Overall Key Feature Usage – % of total accounts using each feature
    (Total Accounts Using Feature X / Total Accounts Created)

     
  6. Active Users – this one requires you to define an active user. Your definition should include some level of key feature usage so you can be sure the activity is value-driven and not simply a login. One word of advice, creating a soft measure for value will cause the remainder of your funnel to suffer. Don’t cheat, hold your product accountable. (Active users per your definition (daily, weekly, monthly))

Using this guide you should provide the information you need to put in place a plan to identify friction within your customer experience, measure the key customers touch points and interactions, and track your progress towards eliminating friction.​

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

4: The Product Led Growth Funnel: There’s Still a Funnel it Needs to be Managed

If you’re running a business, you’re going to need to measure your ability to progress your prospects through a series of steps that engage, deliver value, and build trust with your customer.

You can use all the flywheels you want along the way, but you still need to define and manage a funnel. The PLG  funnel is a little different than your traditional funnel, but the basic idea is the same – as prospects move through the funnel they become more and more qualified until they eventually become customers and advocates.

If you’d like to think of this funnel as a flywheel, you can do that. At scale, the continuous cycle of positive experiences with your product act as a flywheel, building more top of funnel interest with each positive experience delivered.

Here’s the product led growth funnel:

Product Led Growth Funnel

Let’s break down each stage:

Acquisition

Key B2B SaaS Metrics

  • Unique Website Visits
  • Traffic Sources
  • Signups


There are a number of different strategies for building and sustaining website traffic. The resources you have access to will largely dictate how effectively you’re able to leverage the various channels. In the end, you’ll end up with some combination of Organic, Direct, Social, Referral, and Paid traffic entering your website. 


I suggest you keep things simple at first. Start by establishing a baseline for  [Uniques by Channel]. From here set some growth goals and build a plan to achieve your goals, within a certain timeframe. 


Let’s say you want to grow overall traffic 15% month over month for the foreseeable future. You might consider some of the following activities:

  • Optimize the website for high-value keywords
     
  • Publish 3 new blogs per week
     
  • Break blog content into shareable pieces, share via LinkedIn, Twitter, Instagram
     
  • Share content on social media daily
     
  • Identify opportunities to syndicate content with external partners
     
  • Launch a brand advertising campaign
     
  • Attend 3 trade shows this quarter
     
  • Launch paid search campaign
     
  • Launch targeted b2b marketing campaigns
     
  • Launch paid social campaign
     
  • Launch a CPL program with an external partner
     
  • Etc.


There are dozens of things you can do to influence traffic. Don’t expect to know exactly what the right recipe is to drive your 15% MoM growth. Establish an understanding regarding the opportunity/cost each channel presents, and build a plan that fits your budget and can be executed by your team.

  1. Establish traffic baseline, by channel
  2. Launch campaign
  3. Measure the impact you have, by channel
  4. Adjust
  5. Repeat

Activation

Key B2B SaaS Metrics

  • App. Accounts Created
  • Activated Accounts
  • % Activated Accounts
  • Time to Activation


Ok … you’re driving traffic to your website. What’s next?

If your website is doing its job, visitors are excited about your product and you have a steady stream of new accounts being created in your app. Sweet!

In the activation stage of the funnel, we want to ensure new users can get through the bare minimum requirements for using your product. 

Take care not to over complicate this stage. It’s not about realizing a benefit, using all the features, or getting to value.

When your user gets through the basic setup and configuration of your app. fire off an event and track both the number of activated users and the percent of total accounts activated for a given time period. Use this data to continuously optimize this critical first step in your SaaS product experience.

Many businesses overlook the importance of this step and jump directly to some measure of value. Big mistake. Accounts that don’t activate are dead.

There is a whole segment of tools to help you instrument and understand this stage of the funnel: Pendo, AppCues, WalkMe, Intercom, Drift, HotJar, FullStory, CrazyEgg, etc. 

Retention

Key B2B SaaS Metrics

  • Key Feature Adoption
  • Daily Active Users
  • Value


This is not about retaining revenue (we’ll get there later) this is about your product retaining a user for an extended period of time. We’re still in a free trial or free version of your product at this stage of the funnel – and you’re still in the courting phase of the customer <> product relationship.

Focus on customer experience – help your customer use your product. Easy, right!?

​You can leverage many of the same tools suggested in the activation section to help people move through your product and use it successfully. 

You’ll want to be sure to instrument key in-app events (think feature adoption, inviting new team members, etc) and define some logic for counting daily active users (beyond just logging in). Again, don’t over complicate things. Give yourself enough data to feel good about making decisions, but not so much that you’re chasing your tail.

One other word of caution.

A key part of delivering an exceptional product experience is your ability to properly set and deliver upon expectations. If you find your B2B SaaS product churning users consider adjusting your website messaging to better meet product expectations, and attempt to talk to some of those users to understand their experience and what you could have done better.

Referral

Key B2B SaaS Metrics

  • Accounts with > X Users
  • Advocates
  • External referrals


I like this stage to live in front of the revenue stage because it is such a critical factor in building and sustaining momentum. If you deliver on your promises throughout the first 3 stages of the funnel your users will show you the love. It doesn’t matter whether we’re talking about paid or free accounts – it’s ALL ABOUT PRODUCT EXPERIENCE.

If your customers love your product, growth will happen. If they don’t, you’ll be fighting an uphill battle and will struggle to keep things moving in a positive direction.

Depending on your model you may choose to incentivize people to share by giving away swag, credits, or some other thing of value to drive external referrals.

I suggest you focus on the first two metrics listed above: Accounts with > X Users and Advocates. You want your product to be fully adopted by teams or whole companies. You should have some understanding of the size of the team that your product typically serves or is best suited for. Set a threshold and measure your progress.

Advocates are users that have agreed to participate in a case study, be a guest on your podcast or webinar, wrote a blog, agreed to a testimonial, are willing to speak on your behalf at a trade show, or simply showed you some love on social.

If you’re successful in the first 3 stages of the SaaS product led growth funnel then this one will almost certainly take care of itself. So, don’t worry too much about it until the engine is purring.

Revenue

Key B2B SaaS Metrics

  • Paid Accounts
  • % Free to Paid
  • MRR


Finally, we’re making some money! Again, if your product is doing its job there should be natural growth to paid accounts. This is not to say you shouldn’t proactively work to move free accounts to paid, you absolutely should. Your goal throughout this entire funnel is to deliver value and to exceed expectations – grow accounts from free to paid.

Identify the levers you can use to drive revenue and work out a strategy to move free accounts to paid. This is getting back to the core of your business strategy, so by the time users get to this stage, you should have a good handle on the activity that leads to paid accounts and have programs in place to help users there as efficiently as possible.

As you convert accounts to paid try to understand the activity that got them there, and where the value is for them, and then use that data to improve your free to paid conversion rate.

Product led growth is all about your product experience, having a clear path to value, and keeping your promises to your customers. If you take care to understand your customers and deliver them a product that helps them be more successful, this will in turn make you more successful.

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

Chapter 5: Tracking and Analytics: Collecting and Visualizing Data to Enable Product Led Growth​

Product Led Growth​ Data and Visualization


Ok, here’s the deal. Tracking and analytics is a bit of a black box, so rather than trying to tell you which tools you should use, how you should define and code events, how to connect data,  and how to visualize your data, I’m going to keep this more general and talk more about tracking and analytics strategy and planning.

In this chapter we’ll cover:

  1. Why you need to plan tracking and analytics from the beginning
     
  2. Defining a tracking and analytics plan for your B2B SaaS business
     
  3. Collecting and visualizing data
     
  4. How to keep your analytics simple
     
  5. Using data to guide decisions​


Why you need to plan tracking and analytics from the beginning

You’re building a business and you need to be able to measure it and the sooner you start, the sooner you can start improving. Your business is going to go through a number of different iterations as it grows and matures, the one thing you can count on not changing is that you’re going to rely on data to help guide you through each stage in your businesses evolution.

My product is still in beta, do I really need to setup tracking and analytics?

Yes, I recommend you spend some time instrumenting event tracking in your app prior to launching your beta, and ideally you’d have event tracking live during your alpha.

In order to successfully operate a product led business strategy, you need to understand how your customers are interacting with your product. In some way, the data you collect in your alpha/beta is the most important data and customer interactions you will record.

These early experiences will define the product you bring to market for general availability.​


What should I be tracking during alpha and beta?

You don’t have to make this more complicated than it needs to be, in fact, the best tracking and analytics plans are minimalist, making them easy to derive insights and take action.

  • You likely have some areas of concern, build tracking here to understand how your users interact with this area of your product; alternatively set up a tool that records user sessions so you can watch the interaction
     
  • You’ll want to come out of beta feeling confident about the first impression your product leaves with your user, ensure you have tracking set up so you can understand activation, and any friction leading up to it
     
  • Are you delivering value? Define value and set up tracking to ensure your users are able to get there
     
  • Add event tracking for key features to measure usage (or lack thereof)


You’ll want to take some time to plan your tracking and analytics, don’t just ask one of your developers to instrument analytics in your app. The tracking you put in place now is going to be the foundation for all future tracking and analytics to come. Spend the time to properly define a tracking plan, naming convention, and overall strategy for leveraging the data.


Defining a tracking and analytics plan for your B2B SaaS business

Spending the time to think through and properly define a tracking plan will save you the frustration of trying to decipher your event tracking down the road when you’re trying to make use of the data you’ve been collecting. Trust me, if not properly defined it will take on a life of its own, and before you know it you’ll have duplicate events and dozens of naming structures making the data difficult to consume and trust.


Define business objectives

What are your business goals for the current year? You could be focused on customer acquisition, brand awareness, product engagement, revenue growth, key account expansion, referrals, and reviews, or some combination of these things.​

Defining a business objective is the first step to outlining the events that will be needed to understand and optimize the business for the desired outcome.

Let’s break one down as an example to how you might approach this exercise.​

Business Objective: Product Engagement

What are the steps or actions your customers complete that define this objective?

  1. Customers log into your app on a regular basis (daily, weekly, monthly)
    • Trigger event each time a user completes the login
       
  2. Customers have completed all of the steps needed to be fully activated
    • Trigger an event when the user has completed all activities associated with activation
       
  3. Customers have achieved value and continue to engage with the product
    • Trigger an event when the user has achieved your definition of value
       
  4. Customers engage with product features on a regular basis (daily, weekly, monthly)
    • This one’s a bit more complicated, you’re basically measuring that your customer is regularly engaging with your product, indicating that they have fully adopted it, and are relying on it to do their job. You want to be sure you’re not simply counting customers that log in, rather customers that log in AND complete some number of other meaningful events that indicate they are using your product. Tools like MixPanel make it easy to define this type of filter once the events are instrumented.
       
  5. Customers level of usage is low, medium, high compared to ALL customers
    • Trigger events for feature usage and other engagement points within your app, from there a simple way you bucket your customers (high, medium, low) is to count the total number of events and group accordingly.

This is the basic idea:

Identify a business objective and then break it down into measurable components that can be instrumented via event tracking within your app or website. My advice is to take a minimalist approach and build events you know will be meaningful, rather than adding an event for every possible item. This approach will reduce noise and make it easier to analyze and take action on your data.​

Defining a naming convention

This one is pretty straightforward and there are a number of existing resources out there to help guide you through this process. Segment has defined a nice list of things to keep in mind when defining a naming convention.


Collecting and visualizing data

Here is where things get tricky, and/or expensive. In order to visualize data across the full funnel, you’re going to need to invest significant capital into tools/services, expertise, and people. The challenges are not in the collections of the data, but in connecting the data and making it usable. There are a number of business intelligence solutions out there if you have the appetite and expertise to leverage them, if not here is an outline to collect and visualize your data taking a minimalist approach, with a  focus on actioning your data.

Select a service to build your event tracking

This is a business decision. Will you use Segment, Google Tag Manager, MixPanel, or some other service to instrument your event tracking. Pick one, and use it for all event tracking.


Clearly Define the events you are tracking

One of the main reasons we go through the planning exercise outlined above it to ensure we are collecting data that is meaningful to the business. It’s like adding salt to a recipe when cooking … you add it a little at a time because you can always add more, but once it’s in there it’s difficult to get out. 

You want to limit your tracking plan to only the most critical set of metrics that you know for sure are meaningful to the business.

It goes something like this:

  1. Define the action to be tracked
     
  2. Describe why the action is meaningful to the business
     
  3. Define what the desired outcome looks like
     
  4. Name the Event following the pre-defined naming convention
     
  5. Identify all data to be collected at the time of the event
     
  6. Instrument the Event
     
  7. Test that the Event is firing properly
     
  8. Ship it


Track only the most important events

When you first get started with instrumenting event tracking in your app and website, if you’re not sure if the data will be useful, don’t track it. You can always add it in if questions arise. 

You really want to focus on defining a core set of metrics that are critical to the business. Trim the fat and get clear on the most critical data that you will use to inform decisions and take action.​

I have all this data, how do I visualize it?

A solid foundation here is Google Analytics and MixPanel. Google Analytics will get you very comprehensive anonymous data across all of your web properties, and MixPanel is the leader in product analytics.

For anything product related where you’re trying to understand how users are engaging with your product if they are achieving key milestones like activation and value default to MixPanel.

Where you’re trying to understand channels, campaign performance, awareness, reach, etc. default to Google Analytics​

These two services are powerful and will take you pretty far. You’ll inevitably find limitations, and at that point can reassess your needs and stack. The foundation you’ve built should transfer to any new solution you decide to adopt.


Using data to guide decisions

If there is an overarching theme to this chapter I would have to say it’s keeping it simple. I can’t emphasize this enough. You don’t need 1,000 data point to inform a decision, what you’re looking for is feedback from your customers in the form of product engagement:

  • Are customers having success with your product?
     
  • Is there friction that can be eliminated?
     
  • Are there features that are not being used?
     
  • What are the most used features?
     
  • Are we attracting the right customers?
     
  • Are we delivering value efficiently?
     
  • Are our customers fully adopting our product into their daily routine?
     
  • Do we have enough top of funnel interest to achieve our business goals?

You get the point. Before you even begin instrumenting your event tracking and analytics you should have a list of questions similar to the list above that you expect the data to provide answers to.

Start with why, and the tracking plan you put in place and execute is much more likely to deliver the results you’re looking for.

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

6: The Product Led Growth Sales Motion: A Dream Come True for Savvy Sales Reps​

Introduction

First of all, there is no one-size-fits-all sales motion. The best we can do is take the techniques and fundamentals, in this case, rooted in customer experience and apply them to our unique situations. Every business is unique, and every business will face different challenges. 

My advice is to read the guide and then reevaluate your existing sales motion for opportunities to build in some of the techniques and ideas you learn here. 

It may turn out that following a product led model is not right for your business. That’s fine. There are other ways to sell. My objective here is to help you understand some of the benefits and techniques of PLG, and provide some guidance on how you can build some of these techniques into your existing process.

I’ve decided to write this chapter of The Beginners Guide to Product Led Growth as questions and answers. There’s a lot of confusion around what PLG is and is not, and this format is intended to help you get some answers without trying to force a new process on you.

Here we go…I hope you find the guide to be helpful!


What exactly is a Product Led Sales Motion?

We’re jumping right in here. This is a tough question to answer because product led growth means something different to every organization. In its purest form customers sign up for your product or service, achieve value and pay you money 🙂 This is magical.

In its purest form PLG suggests customers sign up for your product or service, achieve value, and pay you money 🙂 This is magical.

In this scenario your product needs to be easy to be:​

  1. Easy to use
     
  2. Have a clear path to value
     
  3. Efficiently progress free or trial customers to paid

Notice there is no sales function in the diagram. Your product is selling itself here. This is rare, and difficult to achieve, but not impossible. Typically these are products that serve a specific and very targeted service, that is a need not a want.

Some services that are in this category include: 
 

  • Stripe – If you’re building an online business you need a payment gateway.
     
  • Github – If there is a dev shop out there not using GitHub I have yet to come across it. It’s become the norm for a collaborative developer environment.
     
  • Jira – Software teams need to plan, track, and release software and Jira has been leading this space for a number of years now.​

Yes, I know. These businesses all have some sort of sales function today, along with different product lines, but it wasn’t always that way and a large portion of their new business is still no-touch.

Ok, so what is a Product Led Sales Motion?

A product led sales motion relies on your product as the primary driver of growth. Essentially what we’re trying to accomplish is a predictable path to revenue with as little outside influence as possible.

You want your product to convert prospects to revenue by delivering value in a clear and concise manner.

When outside influence is needed in the form of customer success or sales, the approach is greatly influenced by product usage data. Meaning:

  1. You’ve defined the key activities that lead to revenue-generating customers
     
  2. You’ve instrumented these analytics in your application
     
  3. You’re tracking these key metrics
     
  4. You’ve made this data available across the business
     
  5. You’ve developed best practices for interpreting and acting on this data

For now, let’s define a product led sales motion as a sales methodology that positions your product as the primary driver of growth and relies on customer usage data to drive the interactions that help progress customers towards achieving value.


How do I know if my product is right for a Product Led Sales Motion?

This is more of a business strategy, so you make a choice to be product led. If you’re already in-market and having success selling, perhaps the best course of action if to understand the drivers and techniques that fuel a PLG Sales Motion and adopt the ones that you believe can improve upon your existing motion.

It’s not all or nothing, you know your business better than an outsider preaching about a better way to sell, or that the future of selling is PLG.

The truth is, you should do what works best for you.

My objective here is to help you understand what makes a PLG Sales Motion so compelling so that you can take that information and use it as you see fit.

So is a Product Led Growth Sales Motion right for your product or business?

I don’t know.

What I can tell you is that by going through the steps above to make product usage data available to your teams and teach them how to use it you will make them better at selling your product.

Start there and see where it takes you.


What Data Do I need to run PLG Sales effectively?

A good place to start when it comes to identifying the customers that are progressing towards revenue and the ones that are hung up somewhere in the process is with retention metrics. 

For context check out this blog post: Measuring User Retention In SaaS Products

Key Feature Adoption –  are your customers finding and using your core set of features. Simple. If they’re not, figure out why.
 

Active Users (daily, weekly, monthly) – the number of users that are active in your product. This should be trending up, if it’s going down you have a problem. Dig in and figure out where the disconnect is.
 

Value – This is where many B2B SaaS businesses lose track and/or overcomplicate things. Value represents the point when your product is giving more than its taking.

Remember product led growth is about the relationship your user has with your product.

In the beginning, there is a lot of strain on the user to setup and configure things, learn the UX, etc. There eventually comes a point where the heavy lifting is over and your product starts to give back.

This shift is the moment when value is first achieved.


My product sells itself. Do I Still need sales?

This is totally your call. If you’re satisfied with your business as it currently operates, then the answer is no. If you believe there is some revenue being left on the table that you can capture by adding a sales function, then go for it.

There is no recipe that you can apply to every business that is guaranteed to grow them. The best advice I can give you it to always be learning and to apply the techniques and tactics that make sense for your business.


This sounds like the way my team is already selling?

Awesome. Keep doing what you’re doing:)

How do I measure my teams performance in a Product Led Sales Motion?

Overall performance is measured the same way. Sales will have a quota to hit and you measure your team’s ability to hit the number.

Where you can have a positive impact is by defining sales activity goals that encourage a product led sales motion, and by framing the conversations you have with sales reps around customer engagement and product usage as much as possible.

Great sales organizations are able to develop a sales methodology that is teachable and provides repeatable and predictable results. This is how sales teams have been able to scale businesses with such great success.

If you take that same framework, but apply it to your product, what you’re trying to do is create a process that leads customers to experience the value your product has to offer in the most efficient way possible. So the motion would be around driving success with key areas of the product that have been proven to drive customer engagement and retention.

Use your data to your advantage. Understand customer usage and drive growth by keying in on the factors that are most likely to lead to revenue.

What tools are best for enabling a product led sales motion?

Well, you need data and your team needs to be able to consume that data with ease. For the majority of sales organizations, this means you need to make product data available to your sales reps in SFDC – not always an easy task.

Other alternatives are all going to require your sales team to leave your CRM and go to a tool like MixPanel to understand engagement.

The best advice I can give you regarding tooling is to talk to your head on engineering or systems and let them know you need to make product engagement data available to your sales reps.

It’s not a nice to have.

This is a priority for the business and the two of you along with any other stakeholders need to put your heads together to figure out the best way to make this happen within your organization.

There are hundreds of options to make this work. Pick the one that best for your business.

Check out Chapter 7: PLG Tools and Services, for a more comprehensive overview of some of the most popular PLG tools.

My team sells into the Enterprise. How can I apply PLG sales tactics to Enterprise sales?

Enterprise Sales Motion typically involves cold leads, a heavy focus on outbound, lengthy POC’s, and lots of red tape. Sales reps are typically very hands-on and spend incredible amounts of time working deals…

Much of your process is going to remain the same, where you can get more thoughtful in your approach and maybe find some value in PLG techniques is when you get into POC’s or releasing trial accounts to your enterprise prospects.

Here you can fall back on the data:

  • Are they using the product on a regular basis?
     
  • Have they reach key milestones (Activation, Value, Key Feature Usage)
     
  • Have they invited other team members? Are they fully engaged?

Use engagement data in the same way described above in earlier questions to frame the conversation and the action taken by those involved in the deal and take the same approach – make your customer successful.

Wrapping up Product Led Growth Sales

It’s all about your customer and the relationship they have with your product. That said, your business is unique and you’ll need to determine what the best recipe is for you and your customers.

Hopefully, after reading this guide you have a better understanding of how to incorporate product led methodologies into your existing processes and don’t feel like you have to turn your whole or upside down in order to be prepared for the future of sales.

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

7: Product Led Growth Tools and Services: Tools and Services to Help you Build and Run a PLG Business Strategy​

Google Analytics

This one is obvious. Google Analytics has been the go-to source for web analytics for 20+ years now. It’s free, easy to use, and provides a wealth of information for websites and apps.

Key Features:

  1. Free – Not much more to say. You get access to comprehensive web analytics, for free.
  2. Ease of use – Just create an account and add a simple JS Snippet to your website and you’ll start collecting usage data.
  3. Tons of free help online – You can pretty much google anything you’re trying to do in google analytics and you’ll find someone has published a tutorial explaining it.
  4. Robust ecosystem – Because Google Analytics is so widely used there is a robust ecosystem of integration partners.

How Google Analytics Enables Product Led Growth:

In order to successfully implement a Product Led Growth model, you need to attract people to your website and get them excited about your product. Google Analytics provides visibility into a ton of information that can help you optimize the top of the funnel, understand acquisition channels and user behavior, measure key events, and more.

When to Add Google Analytics to Your Product Led Growth Stack:

Don’t waste any time adding Google Analytics to your website and app. The sooner you start collecting usage data the sooner you can start improving your user experience.

MixPanel

MixPanel is a customer experience platform that is useful in understanding how your users are interacting with you app or website. With MixPanel you instrument events that are important to your user experience and then use this data to improve your user experience. MixPanel enables more advanced analysis and segmentation, and the ability to send messages and run experiments targeting specific segments of users.

Key Features​

  1. Behavior Analytics – MixPanel makes it easy to gain access to and analyze user behavior
  2. Cohort Analysis – Conduct analysis of different groups of users that are important to your business
  3. Event Tracking – Instrument events for key feature usage, and/or engagements points
  4. Alerts – Set up alerts and be notified when key metrics change suddenly
  5. Free Version – a free version of the tool makes it easy to get started

How MixPanel Enables Product Led Growth:

MixPanel enables you to continuously improve your user experience, which is a critical component to achieving product led growth.

When to Add MixPanel to Your Product Led Growth Stack:

Add MixPanel to your app as soon as you start testing your product with real users.

HotJar

HotJar is a suite of tools that offers a number of different growth capabilities. You can use HotJar for everything from heat maps and funnel visualization, to onsite polls and surveys. Because this tool includes features that impact every stage of the funnel it makes it ideal for early-stage businesses, and for those looking to minimize the number of tools that need to be managed.

Key Features​

  1. Heat Maps – generate heat maps for key landing pages
  2. Surveys and Polls – present surveys and/or polls to users that visit your website or app
  3. Funnels – build-out and visualize funnels
  4. Forms – build forms and embed them on your website to collect feedback and leads
  5. Many Tools, One Subscription – having all of these capabilities in a single subscription is perhaps HotJars most valuable feature
  6. Free Version – a free version of the tool makes it easy to get started

How HotJar Enables Product Led Growth:

HotJar contains tools to help you optimize your digital properties, conduct research, generate leads, and visualize funnels.

When to Add HotJar to Your Product Led Growth Stack:

Add HotJar to your website right away. The free tier allows you to gain access to a lot of functionality that can help you learn and iterate more quickly.​

Appcues

Appcues presents themselves as the product led growth platform. And there is some truth to that statement. They have created a very powerful tool that can help you both understand and impact user behavior.

Key Features:

  1. On-boarding – create personalized onboarding experiences to help deliver positive experiences that lead to more engaged users
  2. Collect In-app feedback – collect user data in the app while they are “in the moment”
  3. In-app Announcements – deliver timely, in-app announcements to users

How Appcues Enables Product Led Growth:

Appcues can help improve onboarding and feature adoption, this is the product’s core value. They are focused on helping businesses improve product experience to drive growth.

When to Add Appcues to Your Product Led Growth Stack:

Appcues can be expensive depending on how many monthly active users you have, and it requires upfront investment and ongoing management, so be sure you are ready to leverage the platform before jumping in. That said … onboarding, activating, and getting new users to value is critical, so get this up and running as soon as you have an internal champion to own it​.

FullStory

FullStory records user sessions and collects a lot of additional interaction data. Their website is a bit confusing and difficult to get to the bottom of what they actually do, but I can tell you from experience that the session recording capabilities are powerful, and while there is quite a bit of manual work involved in viewing large numbers or user sessions, the data is invaluable.

Key Features:

  1. Record user sessions in your app and website
  2. Built-in intelligence to help you identify areas of interest (they call these signals), things like slow pages, errors, areas of friction, bugs, etc.

How FullStory Enables Product Led Growth:

Product led growth is all about the relationship your customers have with your product. FullStory give you full visibility to this interaction so you can make decisions based on the actual experience that occurred. This is powerful. Difficult to scale, but powerful.

When to Add FullStory to Your Product Led Growth Stack:

You can definitely benefit from having FullStory in place early. If you can, add it while you’re in alpha and/or beta because you’re doing a lot of UX research and this data will help your product team make good decisions that have the customer experience in mind.​

Segment

Segment is a customer data platform that helps teams collect, standardize, and sync first-party user data to tools like Mixpanel, Google Ads, Redshift, and hundreds more. In other words, Segment makes it easy to instrument your analytics across a large ecosystem of tools and services, sync data between services, and pipe your data to a warehouse, if you choose to.

Key Features:

  1. Instrument event tracking and behavioral analytics once, and then manage your destinations through Segment. Basically, instead of adding each individual tool’s tracking code to your website and app, you add Segment code and then manage the integrations in Segment.
  2. Scaling is not a problem with Segment. They are built for scale, so if you implement Segment early, and are willing to dish out the cash (it gets pricey) you can scale with Segment and feed all of your online customer data into your Business Intelligence stack … if this is the route you choose to go.
  3. Segment is a powerful customer data platform, with advanced features like identity tracking and persona targeting.​

How Segment Enables Product Led Growth:

For starters, you can use Segment to instrument all of your event tracking and then pass that data to MixPanel and other tools and services you’re using. This is just scratching the surface of what Segment is capable of, you should check out their website for more detail as its too complicated to describe here.​

When to Add Segment to Your Product Led Growth Stack:

Consider Segment early. Meaning, get a demo, and evaluate the tool. Be sure to have you engineers weigh-in, and be sure you do some forecasting around your customer growth and how that will impact the cost of using Segment … it gets expensive, but does have some really nice benefits.​

MeetEdgar​

MeetEdgar is an automated social media platform. You feed it content and it will generate posts for you, and/or you can write your own posts (I prefer this method) and then schedule them. MeetEdgar will build a queue from the content you create and post on your schedule, and the best part, it will automatically repost your content when your queue runs dry giving you an endless stream of social content.

Key Features:

  1. Import content, build a queue, set a schedule, and set your social media on autopilot
  2. Post to LinkedIn, Twitter, Facebook, and Instagram from a single account

How MeetEdgar Enables Product Led Growth:

You need to build awareness and interest, and you’re almost certain to be running a content marketing program to build demand and promote your product features. MeetEdgar makes it easy to amplify your content effort through organic social channels so you can build credibility and interest for your business and product.

When to Add MeetEdgar to Your Product Led Growth Stack:

When you stand up your blog and setup your social media accounts do yourself a favor and add MeetEdgar. It’ll make your social media much easier to manage.

UberSuggest

For $10 /month Ubersuggest provides all the SEO intelligence you need to research and continuously optimize your b2b content marketing strategy. It’s almost as good as MOZ and SEMRUSH (not quite as full-feature) and it’s 1/10th of the price. It truly is an amazing SEO tool.

Key Features:

  1. All the SEO intelligence you need to operate your content strategy. Keyword suggestions, content ideas, backlink data, and of course the opportunity to learn from Neil Patel himself.
  2. Competitive intelligence tools help you stay ahead of your competitors

How UberSuggest Enables Product Led Growth:

You need to rank in Google. UberSuggest will help you maximize your content effort, and out rank your competition.​

When to Add UberSuggest to Your Product Led Growth Stack:

When you stand up your blog and website add UberSuggest.

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

8. The Product Led Growth Glossary: Understanding Key Terms and Phrases​

Annual Recurring Revenue

Annual Recurring Revenue (ARR) is the assumed value of the recurring revenue for a SaaS business subscription, normalized for a single calendar year. If your monthly subscription is $99 your basic ARR calculation for a single user would be ($99*12)=$1,188.

B2B (Business to Business)

B2B or Business to Business refers to a commerce transaction that occurs between two businesses. When discussing B2B businesses within the context of Product Led Growth (PLG) we are typically referring to SaaS (Software as a Service) businesses.

Churn

In a B2B SaaS business churn occurs when your existing subscribers cancel, resulting in the loss of revenue. Churn is an important metric in measuring customer happiness and the ability of your product to continuously deliver value to your customers. Churn kills momentum and makes it infinitely more difficult to scale a B2B SaaS business.

Customer Acquisition

Simply put, customer acquisition is the act of acquiring new customers. Depending on the business, customer acquisition could refer to website visits, free trial accounts, or paid accounts. In all scenarios, we are measuring net new additions to your customer universe.

Customer Acquisition Cost

The amount of money you need to spend to acquire a new customer. Different businesses measure this in different ways, but the basic calculation is (Sum of all sales and marketing expenses/# of new customers added).

Customer Activation

Within the context of B2B SaaS, Customer Activation refers to the point in the customer experience when your customer completes the bare minimum requirements to begin using your product. Think of this as the basic setup and config. These are typically required steps in order to begin using a product and occur before customers begin working towards achieving value. This measure is important for B2B businesses because if your customers are having trouble activating they will never achieve value.

This is a key milestone in the B2B SaaS PLG funnel and an area to watch for unwanted friction.

Customer Experience

In B2B SaaS customer experience refers to the interaction between your product and your customer. Customer experience has become more important in recent years as SaaS has lowered the barrier to entry for new products, increasing the competition and providing consumers with more choice than ever when it comes to selecting business software. Customer experience has a direct impact on your ability to retain customers for your B2B SaaS business.

Customer Retention

In the context of B2B SaaS and PLG we are talking about a product’s ability to retain a customer for an extended period of time. These can be both paying and non-paying customers. The idea is that your product is delivering enough value to keep your customer engaged long enough to experience value, and ideally to work its way into the everyday routine of your customer.

Daily Active Users

Daily Active Users (DAU) is a term used to refer to the number of users that engage with your product in a given 24 hour period. Businesses have different ways of defining “active” but the intent of the metric is to measure the ability of your product to drive regular usage e.g. become a service your customer is reliant on to do their job.

Freemium

Freemium is a term used to describe a business model that consists of both a free version of a product and a paid (or premium) version of the product. Typically there is considerable value-added incentive to progress free customers to paid customers.

Lifetime Value

Lifetime Value (LTV) is the predicted net profit attributed to the entire future relationship of a customer.

Monthly Active Users

Monthly Active Users (MAU) is a term used to refer to the number of users that engage with your product in a given 30-day period. Businesses have different ways of defining “active” but the intent of the metric is to measure the ability of your product to drive regular usage e.g. become a service your customer is reliant on to do their job.

Monthly Recurring Revenue

Monthly Recurring Revenue (MRR) is the income a SaaS business can count on receiving every month. To calculate your MRR you multiply your total number of paid subscriptions by the cost of the subscription.

Onboarding

The process of helping your customer through the learning curve associated with using your product.

Product Led Growth

Product Led Growth (PLG) is a business strategy that is dependent on the relationship between your customer and your product. In a PLG business strategy, your product is at the center of your growth initiatives.

Product Led Growth Flywheel

The PLG Flywheel is a re-imagining of the traditional funnel intended to put added emphasis on the importance of product experience in driving growth.

Product Led Growth Funnel

The Product Led Growth Funnel is a series of steps that customers progress through that ultimately leads to referrals and revenue. The steps of the funnel are Acquisition, Activation, Retention, Referral, Revenue. This funnel is focused on delivering amazing product experiences that drive continued engagement and turn customers into advocates (feeding the top of the funnel) on the way to revenue.

SaaS

Software As A Service (SaaS) is a software licensing model where software is hosted in the cloud and offered to consumers on a subscription basis.

User Experience

In SaaS user experience refers to the interaction between your product and your customer. Customer experience has become more important in recent years as SaaS has lowered the barrier to entry for new products, increasing the competition and providing consumers with more choice than ever when it comes to selecting business software. User experience has a direct impact on a SaaS business’s ability to retain customers.

Value

In SaaS, Value represents the point in the customer’s relationship with your product when your product is giving more than its taking. Your customer is getting value from your product.

Weekly Active Users

Weekly Active Users (WAU) is a term used to refer to the number of users that engage with your product in a given 7-day period. Businesses have different ways of defining “active” but the intent of the metric is to measure the ability of your product to drive regular usage e.g. become a service your customer is reliant on to do their job.

This Product Led Growth Guide is broken down into 8 Chapters:

  1. What is Product Led Growth
  2. Understanding Your Customer
  3. Eliminating Product Friction
  4. The Product Led Growth Funnel
  5. Tracking and Analytics for PLG
  6. The Product Led Growth Sales Motion
  7. Product Led Growth Tools and Services
  8. Product Led Growth Glossary

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