How to Get Started with PLG

Once you employ any of these tactics, you’ll want to know if they’re working—and quantify their impact. Enter product metrics, which show how users interact with your product. Your team can use these metrics to better understand what users find helpful, what keeps them coming back, and the best way to take them on a successful journey to becoming loyal customers.

These metrics align with the customer journey stages: acquisition, retention (activation and engagement), and monetization.

• Acquisition metrics, such as the number of new signups and qualified leads, cost of acquisition, and payback period, measure when someone starts using your product or service.

• Activation metrics, including the activation rate and time to activate, show you how well you are moving users from acquisition through that critical “aha” moment, where they discover why your product is valuable to them and, in turn, provide value to your business.

• Engagement metrics, like monthly active users and feature usage, measure how (and how often) users interact with your product. Those interactions might include sharing a song or editing their profile. Users who engage with your product are considered active users. Increasing the number of daily, weekly, and monthly active users is important for company growth—but only if you measure them right.

• Retention metrics, such as retention rate, free-to-paid conversions, and churn rate, gauge how many users return to your product over a certain period. These are critical metrics for your company’s growth. It doesn’t matter how fast you fill the top of your funnel if users are leaking out the bottom just as fast.
• Monetization metrics—net revenue retention, monthly recurring revenue, and average revenue per user—capture how well your product is turning engagement into revenue.

PLG at Amplitude

How we use metrics for growth

Franciska Dethlefsen, Amplitude Head of Growth Marketing, has aligned her team around the following metrics:

• Acquisition: New relevant signups
  • Defined as the number of new signups (i.e., accounts created from business domains)
• Retention (activation and engagement): Number of activated accounts
  • Set up moment: defined as a successfully connected data source and the creation of a chart
  • “Aha” moment: defined as the saving or sharing of a chart
• Monetization: Free-to-paid conversion rate
  • Defined as the number of new paying customers divided by active free accounts during a rolling 28-day window

A Funnel Analysis chart showing Amplitude’s set up rate