Every product-led growth business understands that having the right metrics in place at every stage of the product lifecycle is vital in measuring progress, pinpointing areas that need work, and ultimately accomplishing continuous growth. Product led growth metrics serve as a good communication touch point amongst all disparate teams through enabling common goals to be resolved by data reasoning. For example, encompassing the entire customer journey, from activation and adoption to expansion and advocacy, can provide you with primary indicators concerning your product advocacy, retention and revenue generation.
In this article, we will focus on 11 such product-led growth metrics that every SaaS company should monitor. Said metrics cut across the whole length of the customer lifecycle and provide a well rounded assessment of your product. They are useful metrics irrespective of whether you are starting off with a PLG centric approach or have an existing one which you would like to improve upon.
1. Product stickiness
Definition: Product stickiness measures how frequently users return to your product over a given time period. It's calculated by dividing Daily Active Users (DAU) by Monthly Active Users (MAU).
Formula: Stickiness = DAU / MAU
- DAU: Number of unique users who engage with your product on a given day
- MAU: Number of unique users who engage with your product within a 30-day window
Importance: Stickiness indicates how engaged and loyal your user base is. High stickiness means users are deriving consistent value from your product and are more likely to convert to paid plans or upgrade their subscriptions.
Benchmark: Aim for a stickiness ratio of 20% or higher. Top-performing products can achieve 50%+ stickiness.
2. Churn rate
Definition: Churn rate is the percentage of customers who stop using your product or cancel their subscription within a given time frame, usually measured monthly or annually.
Formula: Monthly churn rate = (Churned customers in the last 30 days / Total customers 30 days ago) x 100
Importance: Churn directly impacts your revenue and growth. High churn rates indicate issues with your product, pricing, or customer experience that need to be addressed. Reducing churn is critical for long-term success.
Benchmark: Acceptable monthly churn rates vary by industry and business model, but generally aim for 3-5% or lower. For annual contracts, 10% or less annual churn is considered good.
3. Time to Value
Definition: Time to Value (TTV) measures how quickly new users reach their first "aha moment" or activation event after signing up. It's the time it takes for users to realize your product's value.
Importance: Reducing TTV is crucial for user retention and conversion. The faster users experience your product's benefits, the more likely they are to stick around and become paying customers.
Benchmark: TTV benchmarks vary widely depending on your product's complexity and target audience. Aim to minimize TTV as much as possible through effective onboarding, in-app guidance, and feature design.
4. Product adoption rate
Definition: Product adoption rate is the percentage of users who actively use your product's core features within a specified time period.
Formula: Product adoption rate = (Number of active users of a feature / Total number of users) x 100
Importance: Adoption rate measures how successfully your users are incorporating your product into their workflows. High adoption rates indicate that your product is providing real value and becoming an essential tool for your users.
Benchmark: Adoption rate benchmarks depend on your product and industry. Generally, aim for an adoption rate of 40% or higher for your core features.
5. Retention rate
Definition: Retention rate is the percentage of users who continue using your product over a given time period, typically measured at 30, 90, and 180 days after signup.
Formula: Retention rate = (Number of active users at the end of a time period / Number of users at the start of that time period) x 100
Importance: Retention rate is a key indicator of your product's stickiness and user satisfaction. High retention rates lead to more opportunities for expansion revenue and reduced churn.
Benchmark: 30-day retention rates of 40% or higher are considered good for most SaaS products. 90-day retention above 20% is a strong indicator of product-market fit.
End without a conclusion or summary.
Tracking the right product-led growth metrics is essential for driving sustainable growth and making data-driven decisions. By focusing on these 11 key PLG metrics across the customer lifecycle, you can gain valuable insights into your product's performance and identify areas for optimization. If you're ready to take your PLG strategy to the next level, request a demo with Qquest and let us show you how our platform can help you unlock the full potential of your product-led growth.