Today’s market is saturated with choice. As end users, we have multiple options to choose from and expect near-instant gratification whenever we use a product or service. If we don’t get it, we trash it. It’s that simple.
This level of expectation presents a ton of pressure for businesses to hit the mark early on. But impressing from the get-go is easier said than done. Traditional sales and marketing models often fall short because they rely heavily on human intervention, meaning customers can have a negative experience. What if there was a different way to drive growth?
Enter Product-Led Growth (PLG): a strategy that prioritizes product usage as the driving force behind customer acquisition, retention, and monetization. In other words, an approach where the product sells itself— not sales or marketing.
In this blog post, we'll explore the two most common PLG motions: self-serve and sales-assisted. We’ll also cover the metrics used to measure PLG success, including activation, acquisition, engagement, and monetization as well as your guiding north star metrics: retention rates and resurrection rates.
PLG motions: self-serve vs. sales-assisted
When we talk about product-led growth, it’s important to know that it’s not a one-size-fits-all solution. It all depends on the type of product you have and the stage you’re at with your business or category growth.
For example, there are products where users can go throughout the entire journey without any interaction. Think about purchasing Google products–easy, automated, and no need to talk to anyone.
Now compare that with products sold by enterprises that pose a more complex and customized POC and purchase process. For this type of product and business, users will need to have some level of human interaction and support.
To help you navigate the PLG landscape and find the right GTM motion for your needs, we’ve broken down the two most common PLG motions for you.
Self-serve is a PLG motion where users are able to discover, signup for, and use a product or service with minimal friction or assistance from your support, sales, or success representatives. If you opt for self-serve, you should already have a product that is intuitive and easy to use, so users can figure it out with minimal guidance.
Self-serve has been typically used by SaaS start-ups that want to disrupt the market by offering an easier, leaner, and more cost-effective solution. Since they can’t compete with larger companies for paid acquisition or sales, start-ups have automated and productized many aspects of their GTM strategies that were previously done manually.
Companies started to offer free trials or low-cost versions of their products so users can experience the value before committing to a paid subscription. These products are built with self-serve distribution, adoption, and monetization in mind. As such, start-ups usually start by optimizing one growth lever and then experiment with others to learn if their GTM motion can be completely self-serve.
A self-assisted PLG motion is a more hands-on approach, where users can discover and use your product with some guidance from your company. This might be where users can sign up for a free trial, and then get onboarded by a sales rep to set up the implementation quickly. If your product is easy enough for your target audience, you can choose to automate the entire free trial journey through tutorials, email campaigns, or live chat support.
Sales-assisted PLG motions are often used by larger enterprises or Enterprise sales teams–those who are selling complex products or paid plans that might need training and customization to fit the users' needs. By providing some level of guidance, these motions enjoy significant self-serve top-of-funnel (TOFU) demand generation. They can also utilize their sales team's expertise when the prospects and customers are ready to discuss setting up POC projects, discussing customization, pricing, or expansion.
Drivers and contributors to both PLG motions
With each PLG motion, there are drivers and contributors:
Drivers are the owners of given levers and the decision-makers. They lead the strategic planning process and manage the cross-functional execution of initiatives that drive these metrics up.
In a self-serve PLG motion, the product team drives user acquisition by designing the user experience and flow, and then collaborating with marketing and sales (as contributors) on execution.
Contributors are adjacent teams that own different touch points in the customer journey. They collaborate with the drivers and help them carry out their strategy.
In a self-serve PLG motion, the marketing team collaborates with the product team to identify the Ideal Customer Profile (ICP), positioning, and messaging. Together they build a coherent and effective end-to-end self-serve acquisition flow.
Here’s how different teams play their roles in self-serve and sales-assisted PLG motions (note: for explanations of each metric, see below the table):
Top PLG metrics and analysis types
These metrics help you track progress and identify areas for improvement in your PLG strategies. Let’s take a look at some of the key metrics out there.
1. Set-up rate: This metric measures how quickly users are able to complete onboarding and get into your product.
Number of users who completed setup steps / Total sign-ups per time period
Here are two examples of how that might look:
SaaS Project Management Platform
Number of accounts that completed free trial sign-up / Number of accounts that completed first action such as creating first project or assigning one collaborator
Number of accounts that completed registration / Number of accounts who completed first action such as entering payment details
2. Activation rate (Aha Moment): This metric measures the first time the user experiences the core value proposition of your product.
To calculate your baseline and monitor your progress, use this formula:
Total users who experienced Aha / Total users who completed setup
3. Product adoption rate: This metric monitors the creation of habitual users for newly activated users (in both free and paid accounts).
To calculate this, use the below formula:
Amount of users who meet habitual use criteria / Amount of users who reached Aha
4. Acquisition rate: This metric explores the most cost-effective ways to acquire new customers and optimize these efforts to drive growth. It is the lever that covers your efforts around awareness investment, and driving traffic to your site or app.
To track acquisition rates, you must measure conversion across two main funnels:
Lead or website visit → Sign-up or free trial
Free trial → Paid account
5. Engagement rate: While retention is a binary metric (because an account is either retained or not), engagement is a metric that captures data across the spectrum.
As the above table illustrates, it is one of the primary input metrics to retention.
6. Monetization: The ultimate goal of acquiring, activating, and retaining customers is to earn revenue from them. Ideally, you want to earn more revenue from each customer over time, which is referred to as increasing lifetime value (LTV).
This growth lever focuses on the mission of earning more money from your existing customer base (paying or not paying). It takes into account the entire customer lifecycle from paid conversion to expansion to inactive account resurrection.
Input metrics for this lever are:
Conversion to paid, renewal, up/cross-sell (expansion), and resurrection
7. A North Star Metric is used as a leading indicator for growth, and may change over time to reflect your company and teams’ focus.
The North Star Metric is often broken into several smaller metrics that describe how well you are driving the user behavior that will align with your target outcome.
8. Retention is the deciding factor in achieving strong profitability for any kind of subscription-based company. It can also be useful for usage and transaction-based companies.
It is not a standalone metric, but rather an output of:
Activation, adoption, ongoing product engagement, and resurrection performance
9. Resurrection is a way to drive growth by identifying opportunities within a group of users that are no longer active or engaged. These users have indicators that show they could be inclined to return based on a specific offering at the right time.
Resurrection metrics can refer to product engagement as well as successful new monetization efforts following the users’ re-engagement.
If you are considering building a go-to-market motion for your product, then this blog post will help you to map the different growth levers you can test, as well as the way to assemble your initial cross-functional teams to support specific user flows.
You can discuss with your team which efforts and initiatives are expected to move which metric, so they can align with your overall company strategy and investments.
Remember, there is no one-size fits all. Not all products can be taken to market in a completely self-serve way. It is up to you and your team to research and test what combination is right for your product and company, and what is the best way to start.
Visit our comprehensive article on PLG if you’d like to learn more.