The Ultimate Guide of SaaS Growth Metrics for PLG: Framework, Tech Stack & Challenges

 

In the intricate dance of Product-Led Growth (PLG), tracking growth metrics is not just about following the rhythm but mastering the nuances. While the importance of metrics in the PLG landscape is undeniable, the path to effective tracking is riddled with challenges that many seasoned SaaS professionals grapple with:

 

• The Siloed Data Dilemma: As businesses adopt many tools, data becomes trapped in silos, making holistic, integrated analysis a challenging task. How do you unify data from marketing automation tools, CRMs, product analytics platforms, and more into a single source of truth with shared metric definitions?

 

• The Real-time Paradox: In a world that demands real-time insights for swift decision-making, many find themselves navigating through a lag of data updates. How do you ensure your decisions are based on the freshest data slices?

 

• The Metric Evolution Challenge: Yesterday's key metric might be today's vanity metric. As user behaviors and market dynamics shift, how do you ensure that you're staying on current and relevant metrics? Not to mention the challenges of understanding the vital set of user behaviors that drive sustainable growth.

 

• The Alignment Maze: With multiple departments, from product to sales, from marketing to customer success, all relying on growth metrics, ensuring a unified interpretation and action plan can be a daunting task. How do you ensure everyone reads from the same playbook and interprets data accurately?

 

• The Depth vs. Breadth Conundrum: With many metrics available, striking a balance between a comprehensive overview (breadth) and a deep dive into specific metrics (depth) is a tightrope walk. How do you decide where to zoom in and where to zoom out?

 

Diving into these challenges, this guide outlines not just the 'what' and 'why' of growth metrics in a PLG framework but also the 'how' – offering solutions, tools, and strategies to navigate the intricate maze of PLG metrics. Whether you're just starting or are a seasoned PLG practitioner, this guide promises insights that will refine your metric-tracking strategy and drive your SaaS growth story forward.

 

Why Track Growth Metrics?

 

In the evolving landscape of Product-Led Growth (PLG), the way users discover and engage with solutions has significantly shifted from traditional lead generation cycles, making it imperative to track growth metrics. In a PLG model, the marketing and product experiences work hand-in-hand from initially acquiring a customer, activating and engaging that customer in the product, and eventually creating a product advocate. At each stage of the funnel, there is a different set of KPIs to optimize to drive product-led growth.

 

By monitoring these metrics, businesses can not only understand user interactions and preferences, but also refine their strategies for enhanced market positioning and revenue generation. In a PLG framework, growth metrics serve as a compass, guiding companies towards efficient and scalable growth by aligning product functionality with user satisfaction and business objectives.

 

Understanding the New User Journey in a PLG Framework

 

Understanding the user's journey is pivotal in a PLG framework. Let's break down this journey into its core stages. In the Product-Led Growth (PLG) framework, the user journey is meticulously structured into five distinct stages as outlined in the OpenView 2023 Product Benchmarks Report.

 

 

• Discover Stage:
  • Users typically learn about the product through word of mouth, product invites, social media, and online search for solutions.
  • Goal: Drive relevant, high-intent traffic to the website while keeping Customer Acquisition Cost (CAC) as low as possible.

 

• Start Stage:
  • Users see the potential value in the product and decide to sign up and try it.
  • Goal: Educate website visitors on the value of the product and convert traffic to create free/trial accounts.

 

• Activate Stage:
  • Users realize the promised value, their usage grows into a habit, and they become engaged users.
  • Goal: Shorten time-to-value and guide users to their “aha” moment.

 

• Convert Stage:
  • Users decide to take the relationship to the next level by becoming paying customers.
  • Goal: Generate revenue efficiently and prioritize sales outreach on high-potential accounts.

 

• Scale Stage:
  • Users deepen their relationship with the product by expanding use cases, inviting their team, growing their usage, or becoming public advocates for the product.
  • Goal: Facilitate deeper product usage, expand revenue at high-potential accounts (generating PQLs, product-qualified leads), and create viral loops for organic product growth.

 

With a clear understanding of the user journey, let's delve into the specific metrics that businesses should track at each stage.

 

What Growth Metrics to Track

 

Following the delineation of the user journey in the Product-Led Growth (PLG) framework, it's imperative to track certain metrics at each stage to gauge the effectiveness of the strategies employed and to understand user behavior and conversion rates. Here's a breakdown of key metrics to monitor at each stage:

 

• Discover Stage:
  • The major metric tracked at this stage is website traffic.
  • The key metrics are User Visits (UV), and the sources of these visits (e.g., direct, organic search, referral, organic social) are crucial to understanding the initial user engagement and the effectiveness of different channels in driving traffic.

 

• Start Stage:
  • Tracking User Sign-ups and the User Visits to Sign-up Rate provides insight into the ability of the website to convert visitors into potential users.

 

• Activate Stage:
  • Metrics like User Activation, North Star Metrics (which capture the 'aha moments' and 'habit' moments), and the User Sign-up to Activation Rate are vital to measuring how well users are realizing the value of the product.
  • The definition of user activation varies from product to product. And Activation rates are highly dependent on how users enter and interact with your product, and the frequency of those interactions.
  • When you have multiple channels to track users, it is also vital to break down user activation rates by acquisition channels to identify the effectiveness of each channel.

 

• Convert Stage:
  • Monitoring the number of Paid Users and the Sign-ups to the Paid Rate helps in evaluating the conversion efficiency and the willingness of users to invest in the product.

 

• Scale Stage:
  • Metrics such as Net Dollar Retention, Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), Customer Acquisition Cost (CAC), and Return on Investment (ROI) are essential to assess the scalability of the product and the return on marketing and sales investments.

   

You may also find more benchmark data points for key metrics in each stage in the OpenView 2023 Product Benchmarks Report.

 

Having identified the metrics, it's equally important to understand who within the organization should be responsible for them.

 

What Teams are Involved in Tracking Growth Metrics?

 

Having delineated the essential growth metrics to track at each stage of the user journey, it's pivotal to understand the ownership of these KPIs to ensure a coherent and effective growth strategy. According to an insightful piece by Kyle Poyar on Growth Unhinged, the ownership of growth KPIs varies between traditional SaaS and PLG companies.

 

In traditional SaaS setups, the sales team is a major player owning sales-assisted revenue, while customer success takes charge of retention, and marketing primarily handles new sign-ups or leads. On the other hand, in PLG companies, the product management team steps up as a powerhouse, owning product activation and self-serve revenue, while also influencing other KPIs like retention and free-to-paid conversion. The growth teams in PLG companies, although sometimes not the primary owner of any single KPI, play a significant role and tend to report to either the product leader, CMO, or CEO. This delineation of KPI ownership underscores the collaborative effort required across various teams to drive growth, with each team playing a crucial role in different stages of the user journey, thereby ensuring a well-rounded approach to achieving the overarching growth objectives.

 

With the right teams in place, the next step is to equip them with the right tools. Let's explore the technological stack essential for tracking and analyzing these metrics.

 

Fundamental Tech Stack to Track and Analyze Growth Metrics and KPIs

 

In transitioning towards a Product-Led Growth (PLG) model, the tech stack employed plays a crucial role in facilitating and measuring growth. There are several categories of tech stack essential for running a PLG efficiently.

   

Product Analytics

 

Product analytics tools help you understand user interactions with your product, visualizing their actions as funnel reports. Tools for product analytics include Mixpanel, Amplitude, and Heap.

 

• Amplitude & Mixpanel: Both tools require explicitly tracking events and their related properties before instrumentation.
• Heap: Offers auto-capture, a codeless event-tracking capability that automatically tracks events on websites or apps.

 

User Onboarding

 

Tools enable teams to create customized onboarding flows without code, ensuring a positive first impression and guiding users to the product's value swiftly. Tools for user onboarding include Userflow, Appcues, and Pendo.

 

• Userflow & Appcues: These tools allow teams to create customized onboarding flows without needing to write code. They offer interactive guides, tooltips, and checklists to help users navigate the product and reach their "aha" moments faster.
• Pendo: Another powerful onboarding tool that provides in-app messaging and guides. It also offers product analytics, making it a comprehensive solution for understanding and guiding user behavior.

 

Customer Relationship Management (CRM)

 

CRM tools help businesses manage and analyze customer interactions and data throughout the customer lifecycle. They enhance business relationships, retain customers, and drive sales growth. Tools for CRM include HubSpot, Salesforce, Intercom, and Iterable.

 

• HubSpot: A comprehensive CRM platform that offers tools for marketing, sales, content management, and customer service. It helps businesses attract visitors, convert leads, and close customers.
• Salesforce: A world-renowned CRM solution that provides a wide array of features for sales, service, marketing, and more. Its cloud-based applications for sales, service, marketing, and more don’t require IT experts to set up or manage.
• Intercom: While primarily known for user support, Intercom also offers CRM functionalities, helping businesses track and engage with their users more effectively.
• Iterable: A cross-channel marketing platform that empowers businesses to create, optimize, and measure unified customer experiences. It offers sophisticated segmentation, comprehensive journey capabilities, and integrates various data feeds, enabling businesses to scale their campaigns through automation and personalization.

 

User Support

 

User support tools ensure that users have quick and easy access to assistance when they encounter issues or have questions about the product. These tools enhance user satisfaction and reduce churn. Tools for user support include Intercom, Zendesk, and HubSpot.

 

• Intercom & Zendesk: Both are platforms that provide real-time chat support, ticketing systems, and knowledge bases to address user queries and issues. They also offer features for proactive user engagement.
• HubSpot & ReleaseNotes: While HubSpot offers a suite of tools including CRM, marketing, sales, and service hubs, it also provides features for user support. ReleaseNotes, on the other hand, keeps users informed about the latest feature releases and updates.

 

Website Analytics

 

Website analytics tools are indispensable for understanding user behavior on your website, tracking key performance indicators, and optimizing for better user experience and conversions. Tool for Website Analytics includes Google Analytics, Google Search Console, and Heap.

 

• Google Analytics: A comprehensive tool from Google that tracks and reports website traffic. It offers insights into audience behavior, traffic sources, and user flow, making it invaluable for analyzing marketing campaign effectiveness and identifying high-performing content.
• Google Search Console: This service from Google monitors and troubleshoots a website's presence in search results. It provides data on search queries, click-through rates, and indexing status, helping businesses monitor keyword-driven traffic and improve search visibility.
• Heap: An innovative analytics platform that auto-captures web, mobile, and cloud interactions. Unlike traditional platforms, Heap allows for deep dives into user interactions without the need for manual event setup, making it easier to analyze conversion paths and optimize user experiences.

 

Data Stack

 

Data Warehouse and Data Lake:
Data warehouses and data lakes are storage repositories and processing systems that allow businesses to store structured and unstructured data at scale and analyze it using different analytics and machine learning tools. Tools for data warehouse and data lake include Snowflake, Google BigQuery, AWS S3, and Azure Data Lake Storage.

 

• Snowflake: A cloud-based data warehousing platform that provides fast SQL analytics across large datasets. Its architecture allows multiple other software and tools to connect with it.
• Google BigQuery: A fully-managed, serverless data warehouse that enables super-fast SQL queries using the processing power of Google's infrastructure.
• AWS S3: Amazon Simple Storage Service (S3) is an object storage service that offers scalability, data availability, security, and performance. It's often used as a foundational storage data lake.
• Azure Data Lake Storage: A hyper-scale data lake that allows businesses to run big data analytics and provides massively parallel processing support.

 

Data Analytics:
To understand user behavior and optimize growth strategies, it is necessary to have deep and comprehensive insights. While CRM and product analytics tools provide valuable snapshots of customer relationships and product usage, they often lack the depth and flexibility needed for detailed analysis. Standalone data analytics tools help bridge this gap by integrating data from various sources, offering a unified view essential for quick decision-making and targeted optimizations. Tools for data warehouse and data lake include Kyligence Zen and Tableau.

 

• Kyligence Zen: An AI-powered Metric-driven analytics platform designed to simplify the analysis for business. It works directly on user's data from a SaaS tool, cloud data warehouse, or data lake.
• Tableau: A leading data visualization tool that transforms raw data into understandable, visual formats. It's known for its interactive dashboards that provide deep insights.

 

More Tools for Advanced SaaS Growth

 

While the foundational tools mentioned above are essential for any SaaS business, especially those just starting out, there are additional tools that can be considered "nice to have." These tools are particularly beneficial for products with more intricate features or for those in a later stage of growth. They can provide a deeper understanding, enhance user experience, and drive more sophisticated growth strategies. However, it's crucial to remember that not every SaaS product will need these advanced tools right away. Let's delve into some of these specialized categories and the tools they encompass:

 

Interactive Demos/Guides

 

Interactive demos or guides are instrumental for products with intricate functionalities. These tools provide guided walkthroughs, helping users understand the product's value much faster than if they were to explore on their own. Tools for interactive demos/guides include Reprise, Navattic, and Guidde.

 

• Reprise: A platform that lets businesses craft interactive product demos without coding.
• Navattic: An interactive demo platform that enhances the buying experience, turning products into growth engines.
• Guidde: An AI-powered tool for creating video documentation swiftly, with features like "Magic Capture" and AI-generated voiceovers.

 

Lead Enrichment

 

In the SaaS business landscape, lead enrichment plays a pivotal role. It's the process of collecting, managing, and analyzing data related to a potential customer's interest in a company's product or service. Businesses can tailor their outreach and product offerings more effectively by enhancing the quality and depth of information about leads. Tools for interactive demos/guides include ZoomInfo, Apollo, and AroundDeal.

 

• ZoomInfo: A leading B2B contact database, ZoomInfo provides in-depth business profiles, allowing teams to refine their outreach based on enriched lead details.
• Apollo: More than just a contact database, Apollo offers tools for outreach combined with a rich database of business contacts, making it easier for sales teams to connect with enriched leads.
• AroundDeal: Specializing in B2B data, AroundDeal offers detailed company and contact insights, ensuring that marketing and sales efforts are directed towards well-informed and enriched leads.

 

Product-led Sales

 

Product-led sales is an approach where the product itself becomes the primary driver of sales growth. Instead of relying solely on traditional sales methods, companies leverage the product experience to compel users to upgrade or purchase. This approach requires tools that bridge the gap between product usage and sales efforts. Tools for product-led sales include Endgame, Pocus, and Correlated.

 

• Endgame: Endgame helps sales teams understand user behavior within the product. By offering insights into user actions and milestones, it enables sales reps to engage leads with context and relevance.
• Pocus: This tool provides sales teams with real-time insights into how leads are using the product. With Pocus, sales reps can identify high-intent users and tailor their outreach based on actual product interactions.
• Correlated: Correlated assists sales and customer success teams by providing data on how leads and customers are using the product. Segmenting users based on behavior, it allows for more personalized and timely sales outreach.

 

Optimization

 

Optimization tools enable businesses to test, refine, and enhance their website's user experience and conversion rates. By conducting A/B tests, multivariate tests, and personalization campaigns, these tools provide actionable insights to drive growth. Tools for optimization include VWO, Optimizely, and AB Tasty.

 

• VWO (Visual Website Optimizer): A platform for A/B testing, multivariate testing, and user behavior analysis to improve conversion rates.
• Optimizely: A digital experience optimization tool offering web experimentation, feature experimentation, and AI-powered traffic allocation for better user experiences.
• AB Tasty: An experience optimization solution that provides A/B testing, content personalization, and feature management across digital channels.

 

Closing

 

In conclusion, tracking growth metrics is not just about numbers; it's about understanding the story behind those numbers. It's about gauging user behavior, refining strategies, and ensuring that every team within the organization is aligned towards a common goal - sustainable growth. As we transition into an era dominated by Product-Led Growth, clearly understanding these metrics and the tools to track them will be the linchpin for SaaS businesses aiming for success. Stay tuned for Part II, where I'll delve deeper into the practical implementation of these insights at Kyligence.

 

References

 

1. OpenView Partners. (2023). 2023 Product Benchmarks. https://openviewpartners.com/2023-product-benchmarks/
2. Growth Unhinged. (n.d.). Who Owns Growth? It's Complicated. https://www.growthunhinged.com/p/who-owns-growth-its-complicated
3. OpenView Partners. (n.d.). Product-Led Growth. https://openviewpartners.com/product-led-growth/
4. Amplitude. (n.d.). What is Product-Led Growth? https://amplitude.com/resources/what-is-product-led-growth
5. Mixpanel. (n.d.). Data Analytics for Product-Led Growth. https://mixpanel.com/blog/data-analytics-product-led-growth/
6. Pocus. (n.d.). Product-Led Growth: Tools for Modern Tech Stack. https://www.pocus.com/blog/product-led-growth-tools-for-modern-tech-stack#toc-12
7. Correlated. (n.d.). Product-Led Growth Tech Stack. https://www.getcorrelated.com/blog/product-led-growth-tech-stack#toc-3