Updated: October 31, 2024- 9 min read
If you’re serious about product-led growth, then you already know metrics are everything. The odds are you’re probably looking at analytics dashboards, charts, and graphics daily.
But which ones truly drive success? Needless to say, it’s easy to get distracted by numbers that don’t actually move the needle. The real challenge doesn’t just lie in measuring — it’s knowing what to measure.
To make meaningful progress, you need to focus on the metrics that give you actionable insights into user behavior, retention, and revenue growth. In this piece, we’re diving deep into the metrics that matter most for product-led growth, the ones that go beyond basic analytics and directly inform strategic decisions.
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Why Measuring Product-Led Growth Is Crucial
Product-led Growth (PLG) is more than a strategy; it’s a mindset where the product itself drives user acquisition, engagement, and retention. For this approach to truly succeed, it can’t rely on assumptions or gut feelings. Measurement is essential — you need data product strategy to understand how users are engaging with the product, where they’re finding value, and where there might be friction.
PLG depends on knowing which features drive adoption, what keeps users engaged, and what converts them into loyal customers. Without accurate product analytics, it’s impossible to identify what’s working — or what’s holding growth back.
Product-led growth thrives on data, but it can be easy to fall into the trap of using surface-level metrics that don’t reveal much about the user flow. Instead, it’s essential to dive into metrics that capture the nuances of user behavior, such as activation rates, time-to-value, or feature engagement. These metrics offer insights that guide strategic decisions, improve the product experience, and drive sustainable growth.
If you’re interested in learning more about crafting an effective Product-led Growth Strategy, understanding the role of Growth Product Managers, or exploring real-world examples of PLG, check out these detailed guides. If you want to step it up a notch, then checking this Product Growth Certification may be just the thing you need.
14 Key Product Growth Metrics to Track for Product-Led Success
To monitor product health, it’s all about tracking the right metrics. The list below offers metrics that provide insights into how users engage, convert, and find value in your product. Here’s a breakdown of the most impactful product metric examples you need to understand and optimize for better results.
1. Activation Rate
“We tend to isolate metrics on new users, not just average across all of our customers because we find that their needs are different from the customers that started using our product four or five years ago. ”
— Daniel Danker, CPO at Instacart, on The Product Podcast
Activation Rate measures how many users experience the product’s core value early on — like completing onboarding or engaging with a key feature. It’s a critical metric because it reveals whether users can quickly understand and benefit from the product.
A strong activation rate suggests that users are getting value early, which increases their likelihood of converting to long-term users. Low activation rates often indicate friction points in onboarding or a mismatch between user expectations and the product’s initial experience.
2. Time-to-Value (TTV)
TTV tracks the time it takes for users to experience their first moment of meaningful value. It’s crucial for PLG because the faster users realize value, the more likely they are to continue using and paying for the product.
Shortening TTV can improve user satisfaction, increase retention, and even boost conversion rates. It also highlights potential onboarding inefficiencies or gaps in the product’s learning curve that need to be addressed.
3. Product Qualified Lead (PQL) Rate
PQLs are users who have experienced enough value to become potential paying customers. Unlike traditional SQLs (Sales Qualified Leads), PQLs are based on actual product usage, making them a better predictor of conversion.
PQLs help prioritize leads that are more likely to upgrade. In doing so, sales efforts are more effective and aligned with user needs. This metric provides insights into which features drive conversions and how user behavior correlates with purchasing decisions and product experience.
4. Customer Retention Rate
Retention Rate measures the percentage of users who continue to use the product over a given period. It’s one of the most important metrics in Product-led Growth because it shows whether users are finding ongoing value.
High retention rates indicate a strong product-market fit and user satisfaction, while low rates signal issues with engagement or value delivery. By analyzing this metric, teams can identify when and why users drop off, guiding improvements in product features or user experience.
5. Net Promoter Score (NPS)
NPS gauges user loyalty by asking how likely users are to recommend the product to others. It’s a leading indicator of growth potential — satisfied users are more likely to advocate for the product, drive referrals, and contribute to organic growth.
High NPS scores often align with high retention and engagement, while low scores can help pinpoint dissatisfaction, offering insights into areas of improvement. NPS is an important metric for companies that are implementing Kano model — a framework used by Product Managers to prioritize features based on customer needs and satisfaction.
6. Feature Adoption Rate
Feature Adoption Rate tracks how often users are engaging with specific features. It’s essential to understand which product aspects drive the most engagement and which features may need better promotion, usability improvements, or added value.
High adoption rates suggest that users find certain features valuable. This can guide product prioritization for future developments. Low rates may indicate that features aren’t as useful as expected or that users aren’t aware of them.
7. Churn Rate
The Churn Rate shows the percentage of users who stop using the product over a specific timeframe. It’s critical to identify where the product is failing to deliver value or meet user needs.
High churn rates can highlight problems with the product’s usability, feature set, or customer support, while low churn rates suggest that users are satisfied and likely to stick around. Analyzing churn can reveal the exact stages in the user flow where drop-offs occur, guiding targeted improvements.
8. Monthly Active Users (MAUs) / Daily Active Users (DAUs)
These metrics measure overall user engagement, showing how many users actively interact with the product within a given period. High MAUs or DAUs suggest strong user interest, frequent usage, and product stickiness.
They’re often used to track engagement trends. They reveal whether user activity is increasing, stable, or declining. A higher DAU-to-MAU ratio, or “stickiness,” indicates that users are coming back regularly, which is a strong sign of good product experience and value.
9. Expansion Revenue
Expansion Revenue measures additional revenue generated from existing users like upsells, cross-sells, or add-on purchases. It reflects how well the product retains and further monetizes users, offering insights into customer satisfaction and long-term value.
High expansion revenue suggests that users find enough value to invest more deeply in the product. Low expansion revenue indicates potential for product improvements or new feature opportunities.
10. Customer Acquisition Cost (CAC)
CAC measures the average expense involved in acquiring a new user, including marketing, sales, and other outreach costs. This metric is essential for understanding the cost-effectiveness of acquisition efforts and how well they align with revenue generated from each user.
Low CAC suggests efficient acquisition strategies and indicates that new users are being reached cost-effectively. High CAC, on the other hand, can signal a need to refine marketing strategies or optimize acquisition channels to better balance cost and return.
11. Customer Lifetime Value (CLTV)
CLTV estimates the total revenue a company can expect from a user over their entire relationship with the product. It’s crucial for understanding the long-term financial impact of each user and helps inform acquisition strategies.
High CLTV indicates a strong product-market fit, effective monetization, and user loyalty. Low CLTV can suggest gaps in retention, monetization, or product value that need addressing.
12. Average Revenue Per User (ARPU)
ARPU measures the average revenue generated per user. It provides insights into how effectively the product is monetizing its user base. High ARPU indicates that users see significant value and are willing to pay for it, while low ARPU may highlight the need for better product pricing strategies or additional features that drive monetization.
13. Free-to-Paid Conversion Rate
This metric indicates the percentage of users who upgrade from free trials or freemium plans to paid plans. It’s a direct measure of the product’s ability to demonstrate value and drive users to invest.
High conversion rates suggest that users find the product compelling enough to pay for, while low rates may indicate a need for better onboarding, better product positioning, or pricing adjustments.
14. Referral Rate
Referral Rate measures how often existing users refer new users to the product. High referral rates indicate strong user satisfaction, making this a powerful driver of organic growth.
It also suggests a high likelihood of users becoming advocates, which is a positive indicator of the product’s perceived value and potential for viral growth.
15. Support Requests or Ticket Volume
This metric tracks the number of support tickets or help requests from users. It’s useful for identifying friction points in the product experience, with high support volumes often signaling usability issues, confusing features, or gaps in onboarding. Reducing support requests usually aligns with improved user experience and higher retention.
Bonus: What Is a Product-led Growth Flywheel?
The Product-Led Growth Flywheel is a model that focuses on using your product to drive user acquisition, activation, retention, and expansion. It’s called a “flywheel” because, once set in motion, it gains momentum as users become advocates who attract more users, creating a self-sustaining growth loop.
Instead of relying on traditional marketing and sales, this approach puts the product at the center of the growth strategy.
It’s important for this topic because the flywheel isn’t just about getting users in the door; it’s about continuously delivering value so they stick around and bring others along. The product metrics you track, like activation rates, retention rates, and expansion revenue, are key to keeping the flywheel turning.
Product Growth Metrics Drive Long-Term Success
Product growth metrics are the heartbeat of product-led growth — a roadmap to building value, engagement, and loyalty. The metrics you choose to focus on will either accelerate your growth flywheel or slow it down.
So, don’t just measure — optimize, learn, and iterate. Remember, successful growth isn’t a sprint; it’s a series of well-informed, data-driven steps forward.
The better you understand and track this, the more you empower your product to not only meet user needs but exceed them.
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Updated: October 31, 2024
