Head of Product
Product led growth can be a pretty powerful business model for SaaS companies, if you work it right.
But how do you know if what you’re doing is actually working in a product led growth model? We have you covered, down to the specific product engagement metrics you and your sales team should be tracking — and how to track them.
Let’s get into all of it.
What is product led growth for SaaS?
Product led growth is a growth model (including for SaaS companies) that focuses on the end user and relies on the product and user experience of that product as the driver of acquisition. This approach is a huge contrast from previous growth models, which relied more heavily on outbound sales and marketing initiatives to secure client acquisitions.
In the simplest terms, a product led growth strategy focuses on making sure the person who uses the product can easily take it for a test drive — and will love the experience. Previously, the SaaS industry focused less on end users and more on CEOs, decision-makers and marketing campaigns.
Product features, ease of use and tangible value took a back seat to pitching ROI and potential for customer success. While some SaaS leaders still lean on the old approach, it’s clear the industry is at a highly competitive inflection point, especially when it comes to possible customer retention.
Today, the end users (the employees) try products and recommend them to their higher-ups. End users want software that provides immediate value to their daily lives — so products really have to be laser-focused and quick to deliver.
And in such a saturated landscape, products also have to be financially accessible to the average end user in addition to being elegant and easy-to-use. These are all the reasons why many SaaS companies that employ a product led growth strategy do so with a freemium model or free-trial period.
But, creating great products and offering them for free isn’t the end of the road for any SaaS company. Like any new strategy, product led growth requires new ways to measure effectiveness and success.
So, what should you be measuring with this product led approach?
What product engagement metrics should you be tracking?
To be successful with a product led growth strategy, tracking metrics is a must. Sure, this is true with any SaaS business, as the whole business model itself is built on retention. Without data and product led growth metrics, you don’t know which actions to take to improve your business.
With product led growth specifically, though, two main metrics must be on your radar. They are:
(1) Product engagement
Engagement is always a critical aspect of SaaS products. When studying product led growth metrics, you want to be able to measure how engaged users are with your product. This is about tracking specific behaviors that indicate engagement — but not just for the purpose of informing product development. This data is essential for driving the behavior of your go-to-market teams. For example, how often is a user on a cloud design platform creating and downloading new designs? How frequently are they sharing their designs outside of the platform? The exact behaviors during the user experience will be unique to your product and the specific use cases that your app is designed for (sending bulk emails, creating documents, sharing content in a group, etc.).
Once you track these engagement behaviors for your product led growth strategy, it becomes easy to combine them into an aggregate score that represents how engaged the user is at any given moment.
(2) Activation rate
The other big metric to track is the activation rate. It’s easy to get engagement and activation confused since they sound similar at the outset. But activation rate and engagement are two totally different metrics that should be studied when implementing product led growth strategies. While engagement measures how much a user is using a product in a given time period, activation measures how far along a new user is on their journey to finding that all-important “first value.”
Here’s the gist: anytime a person begins using a new product, they need to get through several steps to arrive at that “ah-ha” moment during the customer journey. For example, they might sign up for your freemium software, but if they don’t ever log in or try the features, they aren’t convinced they need your product; meaning they aren’t likely to buy, or talk to your sales team yet.
Product led growth for SaaS is all about creating a product that serves the end user and allows them to follow their own journey of product discovery until they’re ready to talk to you — or not. It’s a total shift from the outbound sales approach of the past, so it’s pivotal to track their activation progress throughout this product led approach to know exactly when each user becomes a qualified lead.
Both product engagement behavior and activation rate require the tracking and compilation of several metrics. And once you begin tracking them, there are many ways to use these metrics when using product led growth strategies.
Turning product engagement data into actionable insights
To track all this data, you can try using general analytics software. But it can be hard to get as granular as needed to really nail your product led growth strategy. That’s where product engagement analytics tools like Sherlock come in.
Sherlock tracks both activation rate and engagement score. You simply weigh key product events between a score of 1-10. For example, logging in might be worth one point, whereas adding additional users might be worth seven.
Then, Sherlock does the rest. You get tons of great, easy-to-digest insights about the customer experience like:
- Users ranked by their engagement levels: making it easy to identify top users in seconds.
- Account-level engagement stats: allowing you to get insight into the entire account versus a single user at a time.
- Product engagement over time: giving you insight into the long-term value, retention rates, areas for improvement and more. This metric also allows you to identify those accounts that are about to churn and save them before they do.
- Segment engagement comparison: giving you insight into each group and allowing you to compare segments against each other.
- Engagement-driving event: allowing you to locate the activities from your product that lead to driving more engagement.
You can even see precise activation rates in percentages. For example, a person who has completed two out of five activation tasks is 20% activated. This helps marketing and sales see where people are in the activation process while identifying potential problem spots in their approach.
Getting product data into your CRM: Sherlock + Copper
Product led growth is the way forward for SaaS companies, but you need solid product engagement metrics for your strategy to be successful, and continue to create a wonderful customer journey. That’s why we acquired Sherlock.
We’re all about building meaningful relationships with prospects and customers, and we understand that first-party data is a significant part of the equation. Sherlock fits perfectly into this philosophy with software that allows you to easily identify your best accounts, understand why they’re great, and apply these insights to develop more accounts just like them.
When used together, Sherlock and Copper elevate your CRM beyond relationship management into a highly intuitive asset for understanding where each account or contact is in the product journey.
You not only know exactly who to contact next, but you also better understand their needs, which helps you strengthen the customer experience. That’s the power of getting your product data into your CRM. With our integrated platforms, the hard work is already done for you.
Which means you have more time to focus on the product and relationship-building that are crucial to customer success and customer retention and at the heart of scaling your vision.
Try Copper for free today (and tell us how we’re doing on our product led growth strategy!)