Product-led growth metrics
Product-led growth metrics
The Product-Led Growth Flywheel
Revisiting the Pirate Metrics framework
In our framework, the pirate metrics are:
- Acquisition: the number of users who sign up for your free trial or freemium plan
- Activation: expressed as the percent of users who have achieved value, out of total acquired users
- Revenue: can be measured by average contract value (ACV), monthly recurring revenue (MRR), average revenue per user (ARPU), etc.
- Retention: the number of users who continue using or paying for your product (typically month over month)
- Referral: the percentage of current users who successfully recruit new users to your product
How to measure product-led growth
Time to value
Time to value Time-to-Value Time to value (TTV) is the amount of time it takes new users to reach their first aha moment or activation event. Time to value can be further broken down into immediate (or short) time to value, and long time to value.
- Immediate or short time to value: If it’s raining and you duck into a nearby store to buy an umbrella, the time to value is immediate—you’re no longer getting soaked and can see the value of the umbrella straight away.
- Long time to value: Many SaaS products fall into this category. Buying or signing up for your product doesn’t automatically provide value—some further action is required.
Product-qualified leads
Product-qualified leads Product Qualified Lead are typically activated users—folks who have completed a key action within your product, had their aha moment, and have seen the value that your product can offer first-hand.
To find your product’s activation event and define what a PQL looks like at your company, you’ll want to use a combination of user interviews, session recordings, and A/B tests to identify the user behaviors that correlate with conversion and retention.
Expansion MRR
It’s roughly 2X cheaper to upsell to an existing customer than it is to acquire a new one—and over 3X cheaper to generate expansion revenue than new customer CAC.