Product Led Growth Metrics: Everything You Need To Track in 2024

If your SaaS operates on zero interactions with users, it’s quite tricky for you to understand their challenges and fix them. 

That’s why you need product-led growth metrics to track your progress and amplify your company’s growth over time. 

But the problem? You don’t really have the idea of the right metrics apart from the churn rate and retention rate. 

In this article, we list down the best product led growth metrics you need to track and accelerate to make your product-led growth company a rising ninja! 

What Are Product-Led Growth Metrics?

So you have developed a PLG strategy for your product-led business. Yay!🥳

But does that mean your responsibility is over? Nope. You need to track product-led growth metrics.

Product-led growth metrics measure the impact and success of your product-led growth strategy. These key metrics can measure progress, reveal areas of improvement, and amplify SaaS growth.

For example, Kissmetrics’s sales team noticed that Google Analytics users doubled their demo requests. Digging further, they realized that these folks who scheduled the demo visited the Kissmetrics vs Google Analytics page before scheduling the demo.  

The Importance of Measuring the Right Product Led Growth Metrics

Measuring the right product led growth metrics keeps your PLG strategy on track.

• Cross-functional teams — Cross-functional teams succeed by optimizing their tasks and responsibilities based on metrics.
• Growth aspects — It helps you understand different aspects of growth—user engagement, customer satisfaction, net revenue retention, and more.
• Growth targets — It allows you to track progress against growth targets and optimize the PLG strategy accordingly.

For example, when you track lower customer acquisition costs, you’ll know customer growth comes from word-of-mouth referrals—which means attracting new customers is cost-effective for your business.

Also Read: Low Touch Sales: The Future of Product-Led Growth

Who Owns Product Led Growth Metrics?

Here’s the thing: sales, marketing, customer success teams, product, and engineering—each function contributes to PLG strategy in one way or the other. 

Here’s an example of what Atlassian’s GTM team looks like.

• In the marketing team, product marketers are responsible for generating new leads to enter the pipeline; growth marketers are responsible for revenue growth and onboarding.
• In the product team, product managers are responsible for engagement within the product—dedicated to trial and user experience
• In the sales team, sales reps respond to inbound customer requests and track what kind of customers come in from different campaigns.

You see? Each function has something to offer to the PLG strategy of your organization, which means each department owns the product led growth metrics.

Best Product Led Growth Metrics to Track in 2024

Here are the key product led growth metrics you need to track and optimize your product-led growth model:

Product Stickiness

Product stickiness measures how many users find value in your product and return regularly. 

The product stickiness ratio signifies the number of users who have used your product regularly and integrated it into their workflow. 

Measuring product stickiness will help you:

• Visualize your product value and usage
• Understand what makes users stick to your product
• Map the differences in product usage among different user personas

For example, when a user started using Wordtune and liked how the product helps rephrase sentences but also offers features like expanding their ideas, they came back to the product and started using it frequently.  

Here’s the formula to calculate product stickiness:

Churn Rate

Churn rate measures the number of users who leave your product to never return—leading to revenue churn. Customer churn happens when the user is unhappy with your product, doesn’t find value in your product, has found a better solution, or realizes their changing needs that don’t match your product. 

By measuring the churn rate, you can:

• Identify product drop-off points to optimize your product experience
• Collect user feedback to identify product changes for different user personas

For example, a user who was actively using Calendly for booking appointments switched to 3veta. They found it to be a 3-in-1 solution where they could book appointments, view shared team calendars and conduct video calls with their team.

Here’s the formula to calculate the churn rate:

Time To Value

Picture this: You go to Puma’s outlet, look through the range of sports shoes, select three options, and try each one—and ask yourself:

• Does this shoe color look good on me?
• Are the shoes comfortable?
• Do the shoes have a strong grip?

While asking these questions to yourself, you try the first two options. And when you try the third option, there’s the instant bell, “Oh, this is exactly what I was looking for ”, and BOOM. You have found the right pair of shoes for you.

That’s exactly what happens when companies measure the time to value (TTV) metric. It determines the user's ability to gain value from the product or reach their aha moment. 

By calculating the time to value metric, you can:

• Identify areas of friction in the initial customer journey
• Enhance and simplify the user onboarding experience
• Create proactive support to guide new users

‍💡Pro tip: Having an interactive demo embedded on your website helps visitors get to the aha moments sooner, thereby reducing the TTV

Here’s the formula to calculate the time-to-value metric:

Product Adoption Rate

Product adoption rate indicates the percentage of users who have become your regular users—to the extent that they have integrated your product into their workflow and won’t easily switch to other software in the future. 

By measuring product adoption rates, you can:

• Maximize customer delight and retention
• Build relevant resources to educate customers
• Change your product roadmap based on customer feedback

For example, content writers integrate Grammarly into their writing workflow even when products like ProWriting Aid offer similar benefits.

Here’s the formula to calculate the product adoption rate:

Retention Rate

Retention rate is just like a best friend who sticks by you even when several other friends chose to leave🥺

Retention rate indicates how happy your customer is with your product to stick by it. Simply put, the retention rate measures customer loyalty to your product. 

Customer retention rate is a critical product led growth metric as it indicates that users who find value in your product stick by for the longest time. 

By calculating the retention rate, you can:

• Identify the key points to retain users and leverage them more
• Invest more resources in retention
• Understand how well your product delivers

Here’s the formula to calculate the retention rate:

Natural Rate of Growth

Natural rate of growth is a valuable product led growth metric for SaaS companies. It measures the speed at which a company grows without any efforts—in the form of marketing and sales—or external investments. 

It determines what percentage of the company’s recurring revenue comes from organic channels and begins with the product. 

With natural rate of growth, you can:

• Measure a company’s growth potential
• Set realistic growth goals for organizations
• Track company progress over time and optimize it

For example, if a company does not use its sales and marketing function yet gets product signups through referrals.

Here’s the formula to calculate natural rate of growth:

Expansion Revenue

Expansion revenue measures the revenue from existing customers beyond regular payments. Usually, this revenue comes from upgrades and add-ons the existing customer uses for your product. 

Measuring the expansion revenue helps you:

• Measure the impact of upselling and cross-selling
• Understand how invested the user is in your product to upgrade their plan
• Increase revenue beyond regular payments

For example, if an existing user using Storylane’s Starter plan decides to upgrade to the Growth plan, the revenue Storylane generates from this user is expansion revenue.

Here’s the formula for expansion revenue:

Also Read: How Quorum Closed Enterprise Deals With Storylane

Net Promoter Score

Net promoter score measures customer satisfaction and loyalty. It helps you understand whether the user is happy, enthusiastic, neutral, dissatisfied, or unlikely to recommend your product to others. 

To leverage this metric, you can send out an NPS survey to users—which usually consists of a series of questions and scores the user gives you. Here are a few questions you can use to track this metric:

• What is the primary reason for your score?
• What’s one thing we could do to make it better?
• What could we do to improve your user experience?
• Which features do you like the most?
• What should we do to WOW you?

Answering these questions gives you an understanding of your product's after-effect on the customer.

For example, Hotjar asks its customers this question: “What should we do to WOW you?” to understand what every single customer want in their product. 

Here’s the formula to calculate the net promoter score:

Trial Conversion Rate

Here’s the thing: not every user who opts for your product’s free trial converts. That’s why you need to track how many users complete their journey from free trial to paying customers. 

Trial conversion rate metric indicates the number of free users that get converted to paying customers. The converted free users usually come from free trial or are freemium users.

By calculating the trial conversion rate, you can understand:

• Number of users who found value in your product and switched to paid plans
• How well users understand your product
• The effectiveness of offering a free trial and its overall impact

For example, if a user using ClickUp’s freemium plan decides to opt for their Starter plan, it will be called a trial conversion rate. 

Here’s the formula to calculate the trial conversion rate:

Also Read: 5 Awesome Interactive Demo Examples 

Feature Adoption Rate

Feature adoption measures which feature of your product the user values and enables product stickiness. With this metric, you analyze each product feature individually to identify your SaaS's valuable features.

By measuring the feature adoption rate, you can:

• Identify the most and least used product features
• Identify the gaps in the market for new feature development
• Reshape your product positioning based on the most liked features

For example, Mixmax’s most liked features include shared calendar scheduling, templates, and Salesforce integration—which count as feature adoption metrics.

Here’s how to calculate the feature adoption rate:

Product Qualified Leads

Product-qualified leads have reached their aha moment and so they’re likely to buy your product. In short, they are your potential customers.

To identify product-qualified leads, you need to take into account the demographics, actions taken, source, etc., and use a point system. The higher these points, the more qualified they are. 

By tracking product-qualified leads, you can:

• Measure how effective your product-led growth strategy is
• Understand what features or actions lead to product activation
• Align your product, marketing, customer success, and engineering teams at different stages of the customer journey.

For example, a user uses xTiles because of their tile format. This makes it easy to view everything organized right in front of them instead of constantly scrolling. The user had their aha moment with xTiles, and hence they are product-qualified leads.

Here’s the formula to calculate product qualified leads:

Customer Lifetime Value

Ever got excited about calculating your fictional salary for your dream company? Well, that's customer lifetime value. But the only tweak? The calculations you do are real.

Customer lifetime value (LTV) shows how much revenue you can expect from a prospective customer. 

By measuring the customer lifetime value of your product, you can:

• Monetize the timeline and tell the worth of the prospective customer 
• Track your growth and optimize for better performance
• Analyze the ROI of your marketing efforts.

Here's the formula to calculate customer lifetime value:

CAC Payback Period

CAC payback period measures the time it takes for a company to earn back their spending on new customer acquisition—mostly made through marketing and sales like paid ad campaigns.

Most SaaS companies have CAC payback periods shorter than 12 months. Companies should ideally have a lower CAC payback period.

• If your company has a lower CAC payback period, it has longer profitability
• If your company has a higher CAC payback period, it is likely to lose profits

Measuring the CAC payback period helps you:

• Identify the key areas where you’re overspending
• Find out where you experience churn and retention
• Create the right pricing strategy

Here’s the formula to calculate CAC Payback Period:

Burn Multiple

‍Burn multiple measures the company's efficiency and sustainability. If a company has a high burn multiple, it burns through the capital to grow. If a company has a lower burn multiple, it indicates more efficient growth. So, aim for a lower burn multiple. 

By measuring the burn multiple, you can:

• Determine where the money is coming from and where it is going—helping you improve your SaaS company’s cash management
• Create a well-defined budget and allocate resources efficiently
• Helps you make informed decisions about several aspects of your business that require allocating resources like marketing, product development, and hiring

Here’s how you can calculate burn multiple:

Activation Rate

Activation rate measures the percentage of individual users who have successfully completed a certain milestone in the onboarding journey. This milestone differs for each SaaS company—it could be booking the first appointment for appointment software, creating the first workspace in project management software, etc.

Measuring the activation rate helps you:

• Determine how quickly new users achieve value from your product
• Find the number of users who have performed a specific action with your product in a certain timeframe

Here’s the formula to calculate the activation rate:

Activation Velocity

‍Activation velocity shows how and when the user reaches their activation stage. Measuring the activation velocity of your product indicates the speed and efficiency of a company’s onboarding and activation experience.

Sure, the time to value metric applies to SaaS companies in the world of onboarding experience, but it provides incomplete information. It gives ample information on how long users take to progress from onboarding to activation. 

But, it fails to give you an overview of onboarding performance or impact on customers. 

When you know the activation velocity metrics for your product, you can answer a few questions:

• Number of monthly activation events forecasted
• Impact on revenue growth
• Leading indicators to improve onboarding activation

By measuring the activation velocity, you can:

• Find blockers in the onboarding journey
• Revise your activation definition based on the user journey

Here’s how to calculate the activation velocity formula: 

Also, check out: How to perform a successful product demo

How to Measure Product Led Growth Metrics

So now you know the product led growth metrics you need to track. But how will you track them?

Well, you need tools to get the job done!

Here’s a list of tools that measure product led growth metrics:

Mixpanel

Mixpanel captures how users interact with your product. It lets you analyze product data with interactive reports and visualize it. It provides you with enough data to track and analyze user behavior on websites and identify key areas of improvement. 

Mixpanel offers three tools: segmentation, engagement, and retention analysis, which provide in-depth insights into user behavior.  

Baremetrics

Whether you want to track signups, churned users, and metrics like LTV, ARR, or ASP, Baremetrics pulls all your revenue data into one easy-to-view dashboard. It offers plenty of features like forecasting, trial insights, cancellation insights, and augmentation that help you improve and drive more growth for your business.

Storylane

If you want to understand whether visitors to your website are moving forward in their journey, you need to get demo analytics.

• With Storylane’s demo performance analytics, you can calculate CTA percent and final step completion percent. These two metrics will help you understand how close or far visitors are from getting the free trial or freemium version of your product.
• With Storylane’s demo usage analytics, you can gather insights for each demo like impressions, CTAs clicked, time spent, completion, and more. 

Also Read: How Toplyne Boosted Their Product-Led Growth With Storylane

Wrapping Up

It’s easy to get lost in the plethora of metrics floating around but the most crucial product led growth metrics include:

• Natural rate of growth
• Burn multiple
• Product adoption rate
• Feature adoption rate
• Time to value
• Activation velocity

Track these metrics to know *just* find how your product is performing and how the user behaves but also to keep a bird’s eye on the overall business growth.