If you’re considering implementing—or have already implemented—a product-led growth (PLG) strategy, one of the first things you should determine are the metrics you’ll need to measure success.
Without the right data and cross-functional agreement on key performance indicators (KPIs), you risk spending your resources in the wrong place and missing the opportunity to capture and quantify your product-led efforts. After all, it’s impossible to improve if you’re not measuring your enhancements. Even more importantly, you might miss the chance to achieve what your PLG strategy was designed for—enhanced user experiences, product adoption, and overall business growth.
Want to learn what data to start keeping track of for PLG? Here’s how to pick out the perfect metrics for product-led growth.
How do product-led strategies contribute to business growth?
Product-led growth is a strategy that centers your entire operation—including customer acquisition, onboarding, adoption, retention, expansion, and everything in between—around your product.
Like customer success, product-led growth strategies were born out of a need to optimize SaaS companies. According to Forrester research, product-led growth companies have sparked more than $208 billion in market value so far. Since January 2020, PLG companies have outperformed standard SaaS growth by 2x.
Moreover, product-led growth focuses all your efforts on improving your users’ experiences. That means you can stand out in a saturated SaaS market, reduce customer acquisition costs, and drive more recurring revenue.
What are the foundations of measuring product-led growth success?
Before assembling the building blocks of a masterful product-led growth tech stack and strategy, it’s important to anchor your plans in a few things. First, you’ll need to gather baseline data on your overall usage and user behaviors. Your PLG strategy should influence user activity and improve adoption and stickiness. You will also need this data to measure changes over time.
Second, you’ll want to determine what metrics and KPIs you’ll be focused on improving as an organization. There are a lot of options when it comes to these metrics, but picking one north star will help you keep a close eye on progress and quickly demonstrate the impact of your efforts. Your north star metric should unite your Product teams and Customer Success teams toward bigger-picture outcomes, such as user retention or expansion.
With those two foundational elements in mind, here are a few key PLG data points to measure as you craft your product-led strategy:
In-product analytics are essential to any strong product-led growth strategy because they hand you the blueprints for growth. By examining in-product analytics, you’ll know exactly what actions your users are taking, what they need, and what you need to do to improve their experience. That means you’ll have the raw materials to build a product roadmap that improves your product and impresses everyone around you.
Moreover, in-product analytics hold a mirror up to your decisions. So if you launch a new feature or make an adjustment within your product, you can see if those changes are turning into better experiences. That means you can constantly review, adjust, perfect your plan, and pave a path to rapid growth.
Your product-led growth strategy hinges on your ability to understand and improve your users’ experiences. That’s why it’s critical for you to gather user path insights, such as path analysis and funnel analysis. These tools show how users are journeying through your product and the steps they take as they move through workflows.
User paths can help product leaders and managers see where users are running into friction. With that info in hand, you can add in-app engagements or make product tweaks to redirect users toward the action you want them to take. Then, you can measure if users are taking the new expected pathways.
User Sentiment and Feedback
While raw data is critical to any product-led strategy, measuring user sentiment (how they feel about their experience) is key to making holistic, informed roadmap and feature decisions. Incorporating in-app surveys to measure how users feel about features, functions, and the overall product is key data to measure over time.
Using a Net Promoter Score (NPS), for example, to measure overall sentiment can help inform retention efforts. Translating these scores to action by improving common issues can improve your NPS and overall outcomes. You can also use these scores to measure whether experiences improve as PLG strategies progress.
If you want to secure more buy-in from stakeholders and gather insights that inform your decisions, it’s necessary to ensure advanced product-led growth reports are built into your strategy. With clear reports at your fingertips, you can see what’s working, what isn’t, and what it will take to boost your product’s value. Just be sure to create in-depth reports that drill down deeper than basic surface-level metrics.
Overall Product-Led Growth Metrics
Once you are aligned on a north star metric, it’ll be integral to take your product analytics, user sentiment, and behavioral data and use these data points to calculate your KPI progress. Choose a primary metric that relates to what your overall organization is focused on; it may vary if your larger focus is on acquisition, expansion, or retention. Choosing the right metric will be valuable to generate buy-in to your PLG strategies as well.
When choosing your metrics, beware: Not all metrics will promote product-led growth. If you rely on vanity metrics to show off superficial accomplishments, it can distract from your team’s true goal. Instead, product leaders should map out their North Star vision and create KPIs that work toward reaching the company’s mission. By anchoring your product-led growth strategy in KPIs, you’ll have the tools to measure progress and identify new needs.
Fine-tune your measurements for product-led growth success.
With the correct data, you can capture how effectively a product-led growth strategy can lift your entire company to new heights. But to succeed, you’ll need to track the right data points over time and make sure they align with your overall PLG focus, putting the user at the center of the product experience. Download “Product-Led Success: The Professional’s Handbook” now to learn more.