The Definitive Guide to PLG Conversion Strategies

PLG Conversion  Strategies

Lauryn Isford provides a great framework when it comes to how to think about PLG conversion. She is the Head of Growth at Notion and was previously at Airtable for a number of years.

She says that there are typically two competing north star metrics for a PLG company one around number of users (weekly actives, monthly actives, or number of accounts) and one around revenue.

Growth teams can drive or contribute to one or both of these north stars, but the strategies differ:

1. User growth: Get as many people as possible using the product and finding value.
2. Revenue: Generate business by monetizing the user base.

There are three primary conversion strategies that you can implement depending on the primary purpose of your product/company.

Free Trial

In a Product Led Growth (PLG) company, a trial refers to a period of time during which users can try out the product's features and functionality before deciding whether to purchase or subscribe to a paid plan.

A trial is a key component of the customer acquisition strategy for PLG companies as it allows users to experience the value of the product firsthand and make an informed decision about whether it meets their needs. By offering a trial, PLG companies can reduce the risk and friction associated with purchasing a new product, making it easier for users to try out the product without a significant financial commitment. Offering a free version of your product should be the primary strategy when user growth is the primary focus.

During the trial period, users typically have access to the full range of features and functionality offered by the product. It creates urgency for the user to deeply explore the product over a short time frame and make a decision. However, during a free trial (commonly ~14 days), your users are working against the clock to understand the full extent of possibilities from your product. If they don’t understand the deep value your product can offer them in those 14 days, you may see otherwise avoidable churn at the end of their trial.

PLG companies often use various tactics to encourage users to convert to paid plans at the end of the trial period, such as providing reminders, offering discounts, or highlighting the benefits of upgrading. The goal is to convert trial users into paying customers by demonstrating the value of the product and creating a compelling reason to continue using it.

Overall, trials are an essential component of the PLG model, enabling companies to leverage the product's value and user experience to drive customer acquisition and retention.

A free version widens the funnel substantially, giving more people more time to try out the product and understand the value. This creates a longer, but often more comfortable or natural, sales cycle for the user. It also creates space for you to set aside the payment conversation and focus on helping the user get started.

Getting started is where you lose most of your customers. At Creative Cloud, users spend an average of 180 minutes in the first three days researching how to utilize the product and then there is an exponential drop off. This is typical of almost every PLG product.

In contrast, offering a free version can make less sense when revenue is top priority. It may create an expectation that the product shouldn’t be ‘expensive’, or anchor users on a lower price point. It also creates substantially more work for you to win your customer: it’s not sufficient to just get users to love your product and stick around. They must also be convinced to spend money for additional value on top of that core free experience.

Freemium

Freemium refers to a business model where a company offers a basic version of its product for free while charging for access to premium features or functionality.

Under the freemium model, users can try the product for free and get a sense of its value before deciding whether to upgrade to a paid plan. The free version typically has limited features, but it is fully functional and allows users to experience the product's core value proposition.

The goal of the freemium model is to encourage users to try the product and become engaged with its features and functionality. By providing a free version, PLG companies can attract a large number of users and create a user base that is familiar with the product. This user base can then be leveraged to drive user acquisition, retention, and expansion.

To generate revenue, PLG companies offer premium features or functionality that are not available in the free version. Premium features may include advanced functionality, additional storage or bandwidth, or access to premium support. Users who require these additional features can upgrade to a paid plan, which typically offers a higher level of functionality and support

Freemium is also best aligned with a strategy where user growth is the primary focus.

Freemium and free trial allow you to showcase product functionality without requiring a user to pay upfront. They both support users in first mile exploration and seeking early value from the product. You can get as many people as possible into the product and understand its value, even if they’re only using basic functionality.

The only difference between free trial and freemium is that after a free trial ends the user has no access to any product feature whereas in a freemium model the user continues to have access to the product and its features.

Reverse Trials

Reverse trial refers to the process of giving users access to premium or paid features for a limited time and then taking those features away, leaving the user with the basic, free version of the product. The idea is that users will miss the premium features and decide to upgrade to a paid plan to regain access to them.

The reverse trial strategy is based on the principle of loss aversion, which suggests that people are more motivated to avoid losing something they already have than to gain something new. By giving users access to premium features and then taking them away, PLG companies can create a sense of loss that motivates users to upgrade to a paid plan.

However, it's important to use this strategy judiciously as it could backfire if users feel deceived or manipulated. It's essential to communicate the terms of the reverse trial upfront and ensure that users have a clear understanding of what they will lose if they don't upgrade. Additionally, the product must be compelling enough to retain users even if they lose access to premium features.

Overall, reverse trial is a useful strategy for PLG companies looking to improve user engagement and drive conversions, but it should be used carefully and with a deep understanding of the user experience.

Reverse trials are becoming more common. It’s mutually beneficial for you and your users to have a conversion conversation without the risk of losing them altogether. The reverse trial provides space upfront to explore the full potential of the product, but also keeps the door open for you to nurture your relationship with users over a longer time horizon.

Airtable offers a reverse trial: a 14 day free trial of the Pro Plan (top-tier self-serve offering), and then default users to the Free Plan if the user chooses not to upgrade.

The reverse trial is more generous than a free trial, and more nuanced than freemium alone. This strikes the best balance of giving value away freely, while helping users understand what’s possible with the premium offerings.

A reverse trial works well when you are most focused on user growth. It’s important to remember that while a trial experience can be short, your relationship with a user should hopefully be quite long, lasting many months or years. In that case, orienting toward a user’s success and long-term value should remain the highest priority. You build up trust with a user over many months, but you can lose them in one conversion conversation.

“The reverse trial is a great option for fostering that longer-term user relationship. It gives users time to get to know your product, including a short window to explore the most advanced features available to them, but holds space for them to re-engage with you about conversion when they’re ready. Additionally, a reverse trial will only work well when there is a compelling reason to convert later on (sounds obvious, but hard to get right!). “ Lauryn

In summary, we started with there being two north star metrics and three conversion strategies. In PLG the bias is always towards user growth because you learn about and from your users and keep building a bigger base. The revenue growth is carefully weaved into these user growth strategies.

Companies can always move from one conversion strategy to another and it depends on how you want to balance user growth and revenue growth. In the beginning it will always be about user growth and then you want to layer in revenue growth as well.

Onboarding Profiling

To maximize your conversion rate, every sign up should be understood to gain a comprehensive understanding of how they interact with the product. Knowing these details can provide you the guidance needed for efficient growth.

1. Who are they? (Demographics)
2. Why did they come to you? (Persona, more on this later)
3. What are they trying to accomplish? (Jobs to be done, more on this later)

It's important to ask relevant questions during the sign-up process, as it allows users to feel a sense of accomplishment and success in completing their onboarding experience. This helps move them further along their activation journey while making sure they're getting meaningful value out of your platform.

When it comes to onboarding profiling, there are some three things to keep in mind

1. Apply the rule of three; Three questions, three screens.
2. Make sure all options provided require a multiple choice response as opposed to open ended inquiries that don't make users think too much.
3. Ask only what will be useful further down the line during user engagement, also if possible provide context surrounding why these specific queries were chosen in order to give users more understanding while completing them.

In terms of a set of questions to ask:

1. Questions regarding role within an organization and seniority work wonders for buyer persona identification purposes;
2. Showcasing the use case that brings the user in is always a good sign of competence on your part.
3. Company size is always good to have when they may be logging in with a non company email address.
4. Current tools utilized are great factors when attempting integration or proper automation settings configuration.
5. Today you can safely assume that there is no green field opportunity, this means that your target user is using an alternative product. Your product is going to help them do something better or faster. So it might serve you well if you can get an estimate of how much they are using this alternative product/method. For example, the number of records (range) in their CRM.

PLG Conversion Starts with Product Led Onboarding

Whether you’re implementing a PLG strategy for the first time or optimizing from a strong foundation, odds are you’re thinking about product-led onboarding. You might have questions like:

• How do you get new users to see value as fast as possible?
• How do you enable users to try and buy via self-service rather than through a rep?
• Which experiments should you run to improve product activation and conversion?

To this day, most SaaS pre-and post-sales onboarding occurs via human interaction, such as meetings or emails. But this kind of onboarding adds friction and can be expensive to scale. With product-led onboarding, you use your product as the primary vehicle for customer onboarding.

Below are some key points to consider while building onboarding some of these are inspired by Userflow’s Chief Growth Officer Esben Friis-Jensen who are written a more extensive blog.

Know your ideal customer profile(s)

Knowing your ideal customer is key to creating a successful onboarding process. A well-defined profile ensures that the content you create speaks directly to prospects, fosters their interest and leads them down the path of conversion and retention - all cornerstones of an effective strategy.

Understanding where the marketing team is spending their dollars to acquire users, whether its paid ads, SEO and SEM strategies is a good place to start to understanding your sign up user profiles.

Welcome and understand your users

Give your users the best first impression by providing an intuitive product-led onboarding experience. In order to ensure that your onboarding process is successful, it's important for the copy you write to be aligned with and enhance existing messaging. Additionally, make sure users receive clear value propositions along with direction on which steps they need to take next - all without overwhelming them. Keeping guides concise will help encourage engagement and prevent undesired abandonment of the processes at hand.

Merge is a great example of onboarding that shows us that guiding users to their get started page featuring clear call-to-actions and relevant information will make them eager to start exploring.

Remove unnecessary friction

Eliminating all user difficulty during onboarding isn't always the smartest choice. You want users to be able to recognize your product's value on their own, the best practices for which are described above in the onboarding profiling section.

One suggestion at sign up is to implement a one-click Social Sign up the most common is Google Sign up. This method allows easy verification while providing an intuitive experience right from first use.

One company to look into implementing easy sign up and permissions flow is www.descope.com They allow users to drag and drop new security features such as Apple fingerprint or face identification on app users without writing any code.

Don’t forget about support

Product-led onboarding (PLG) is more than just reducing support tickets, it's about creating a quality and human connection with the user. Through integrative avenues like website chat, email addresses or knowledge bases customers are able to receive the assistance they need beyond PLG. This opportunity for conversational engagement encourages trust between you and your customer during their journey - that extra touch of security will assist in successfully guiding them through to conversion completion.

Combine in-product onboarding with email onboarding

An effective onboarding doesn't have to be limited to in-product experiences. Using emails as another touchpoint can help drive users back into your product and ensure they're getting maximum value from it. For example, Superhuman's CEO Rahul Vohra regularly sends out email tips tailored towards helping customers get the most of their experience with the product - further enhancing user engagement beyond initial setup.

Never stop onboarding

To ensure a positive customer experience, it's essential to keep onboarding at the forefront of your business. Offering customers easy access to checklists and guidance even after their initial welcome can help them understand new features or remind existing users about an ever-evolving product offering. Reassuring returns visitors by providing options for retaking guided walkthroughs means that you are always creating meaningful first impressions - from initiation through every stage thereafter.

Conversion Motions

Once onboarding profiling and product onboarding are in place there are two ways in which new users can convert:

1. Self-service conversion
2. Product-qualified leads (PQLs)

Let’s explore both options.

Option 1. Self-service conversion Strategies

A self-service purchase happens when free users convert to paid customers or upgrade to a higher tier of product via the in-product self-service checkout flow, without talking with sales.

Let's look at some best practices for getting higher conversion rates

1. Embrace Simplicity: Ease of use from the get-go / short time to value: Given the absence of human touch, products should be optimized for adoption and self-onboarding. Carefully optimize your wording for comprehension. Highlight table stakes functionality.
2. Be meticulous about optimizing the pricing page & checkout flow. Clarity and Transparency in the pricing page, clear feature benefits are critical for explaining the value users will get. Almost all pricing for PLG companies is based on usage of some metric, make sure that you have identified the right metric. Pricing is a stand alone topic and please refer to the PLA Masters Certification on Pricing by Sagar Thakur at Outreach.
3. Demo Mode: Demo mode is a useful feature in most cases and critical for products with a high activation bar, such as Amplitude or Stripe. For example, Stripe provides a test mode where you can connect your api’s and see if the transactions are going through properly before you connect real data.
4. Getting Started Checklist: We have covered Product-led onboarding in detail earlier in this module so you should refer to it if you need to remind yourself of the details. But calling it out here that the focus of the onboarding checklist should be on the user taking one action at a time, with a clear call-to-action (CTA). Each action should be limited to only a few steps to avoid overwhelming the user, which could potentially demotivate them.In addition to a getting started checklist, an onboarding wizard can also be useful. The wizard should require as little data entry as possible and allow the user to achieve a desired outcome quickly and easily.
5. Experiment and improve checkout flow. Improve the checkout flow and therefore your conversion rate through new experiments continuously.
6. Identify the right paywalls. Identify the high value actions and gate them appropriately to create the right paywalls. PLG companies often start with a very generous free plan to gain market share, but they also need to have the limit control and upgrade path in mind. Some examples include:
7. Zoom’s 40-minute meeting duration limit for free users
8. Miro’s limit of 3 editable boards in its free plan
9. Slack’s 90-day limit of searchable messages in its free plan
10. Paywall: In-App Trial An in-app trial of a higher-tier plan can be an effective way to drive expansion revenue. By offering a 14-day self-service trial of a higher-tier plan, you can entice users to upgrade and generate more revenue. This strategy has been proven to be a successful conversion paywall and is an effective way to increase monthly expansion revenue.
11. Improve the discoverability of the purchase path: For example, Hila Qi points out that “At Gitlab a significant percentage of users didn’t know where to purchase a paid plan. This is more common than you might think among B2B products.”
12. Integrations: More and more tools require you to move data from and to them. A simple and comprehensive list of supported integrations are a must have. This increases trust for a user trying to visualize eventual success.
13. Documentation: Clear documentation is always required. There are some examples of great documentation like Segment that are a good point of reference.

It is important to remember that In the self service flow Sign-ups that do a core action are superior to total sign-ups

One important metric to track in a product-led growth (PLG) business is activated sign-ups, these are users that have done a core action which are even more valuable than total sign-ups.

In a PLG GTM motion, it can take a while for a user to convert to a paying customer or generate significant annual contract value (ACV). Waiting for 3, 6, or 9+ months to see if a user converts can slow down your growth. But activation happens quickly, usually within 1-2 days after sign-up, and can give you a quick read on whether your test had the desired impact.

Finally, Marketing plays a huge role in getting non-activated users to activate and do the core action and should not be overlooked.

Before we leave this section I want to provide some context on the concept of the core action.

Core action was popularized by Sarah Tavel, a partner at Greylock, who offers a valuable framework for understanding where to focus user conversion with her ‘Hierarchy of Engagement’.

In her blog post, she answers the question of how to build an enduring $1B+ company by emphasizing the importance of maximizing engagement.  At the core of this strategy is a focus on growing users who complete the core action. What is a core action? The action that is the very foundation and essence of your product.

Here are some examples of core actions for different popular products.

• Pinterest would not exist without pinning.
• Twitter would not exist without tweeting.
• What’s YouTube be if people didn’t upload videos?
• Social networks like Facebook and LinkedIn would not exist if their users weren’t connecting with each other.

She says for any business, it's not just about overall growth in users--what really matters is the number of those who complete the core action. Unfortunately, without this focus there can be a false sense of success that ends up being damaging to long-term progress. Don't forget: spending marketing dollars on prospects that don’t complete a core action is waste-ful.

PQL is built based on this concept of a core action. Every product, as you can imagine, has a different set of core actions. We will cover how to identify these core actions for your product in Module 4 Personas.

Option 2. Product-qualified leads (PQLs) Conversion

When free customers demonstrate certain behaviors, hit certain usage thresholds, or fit certain firmographic criteria, they are qualified into PQL status and generally sent to the sales team to follow up.

If your company has already accumulated a good amount of free active users, then it might make sense for you to set up a PQL motion, because it’s possible that a segment of your free users aren’t interacting with marketing campaigns (thus not qualifying to MQL) but happily use the free product and are ripe for a sales conversation.

As one example, GitLab had a large free user base and its developer audience didn’t like to read marketing emails. They started from hand-raising PQLs, where customers submit a sales contact form directly inside the product, and saw a 3x higher conversion rate than with typical MQLs. Then they expanded into usage-based PQLs, where we identified high potential prospects via usage patterns and routed them right into Salesforce.

Types of PQL’s

To maximize the benefits of a PQL strategy, it's important to segment PQLs into at least three categories based on their needs and behaviors:

Hand-raiser PQLs: These are high-intent users who are actively seeking a conversation with your sales team. To ensure that your sales team's time is used efficiently, it's advisable to screen these prospects based on their fit with your ideal customer profile (ICP).

Usage-based PQLs: These are high-engagement users who have taken specific product actions that are known to correlate with conversion. For example, they may have hit a usage limit but haven't yet converted. Usage-based PQLs are typically assigned a score (similar to MQLs), and you may want to prioritize following up with those who have the highest PQL score.

Needs-help PQLs: These are high-value accounts where there's a good uptake of product-led , but where the buying cycle is likely to be more complex. Users in this category may get stuck without assistance. Needs-help PQLs may also represent expansion opportunities after a small self-service purchase. Calculating the PQL score for these prospects requires a combination of their PQL score and ICP score.

In order to identify PQLs across these three buckets, operators look at several different signals:

• Product attainment (usage frequency, adoption of high-value features, usage growth WoW / MoM, completed Y activation steps, multi-product usage, etc.)
• Firmographic information (company size, user title, location, etc.; often enriched with 3rd party tools like Clearbit or ZoomInfo)
• Call-to-action response (clicks to request a demo, asks to talk to support, replies to an onboarding email, views the pricing page but doesn’t buy, etc.)

What’s most effective to convert free users to paid customers?

Let's say you have lots of users in each of your pricing tiers because you’ve done a really good job of first building a product and then optimizing the conversion.

The next step is to optimize the paywalls structure so that you can monetize better.

Lauryn Isford, Head of Growth at Airtable and Notion recommends to  “Start with the 80:20 rule. If you are trying to figure out ‘how much value’ to give away for free, draw a line on feature usage where roughly 80% of users will stick to the plan they have and 20% will want to upgrade. You can first look at the adoption of your core features today, see which ones are broadly used, and start to draw lines from there.”

Lauryn explains further that at Airtable, extensions are a much-loved premium feature among the user base. Airtable gave everyone the chance to try extensions for free (limit of 1 in the free plan), and unlock more extensions as users progress through the paid offerings.

Most users may have been happy with the free extension, but they were banking on the fact that some (20%) would want to unlock even more when they saw the value. Plus, when users were able to see all of the extensions, but only able to try one for free, the fear of missing out on other features could draw them into higher paid plans.

Experimentation

In cases where there is minimal risk, it can be beneficial to take action immediately.

“..small adjustments such as tweaks in microcopy or user experience improvements should not require an AB test if the potential for loss of a customer base is low. This approach can be especially helpful for early-stage companies with limited resources - they may want to focus on ideas and changes that have strong conviction across their team while deploying those updates quickly without having to run any tests at all.” Priya Bhatia

Experimentation is not a topic that I can do justice in this module so will not be covering in any more detail here.

Building a Community

“Community is an incredible multiplier on a PLG strategy.” Kyle Poyar, Operating Partner at Openview.  OpenView has built a 5 step framework to develop a community in the PLG space. In the graphic from Openview you will see several examples for each step in the framework, please investigate the ones that apply at your own pace. I will highlight one example in each to elaborate on the difference.

Amplify community creators

Your best users find new and creative ways of using your product to power their own working lives. After spending hours on their creations, these users are often excited to share their work back with others.

This community sharing tends to happen organically and seemingly spontaneously. You can amplify it to reach new users and inspire existing users to do more with your product.

Here are some things that Notion did

• Build out the Template Gallery on Notion’s website, this is great for top-of-funnel SEO.
• Start an Ambassador program to connect superfans with the company and each other.
• Encourage the community to create their own spaces to connect and learn from each other. Notion’s community run groups (all started by Ambassadors) reach hundreds of thousands of users (ex: Notion Vietnam has 200k members).
• Sponsor social media influencers who have large followings on YouTube, Instagram and TikTok and are keen to share what they’ve made.

Connect users with their peers

Basically, Pay it forward. Enable high density conversations between peers.

Be active within existing communities

Before launching your own peer community from scratch, you may want to lean on existing communities where your users hang out.

Let's take the example of Klaviyo, a customer data and marketing automation platform valued at over $9B, is one Shopify-adjacent success story.

First, Klaviyo has made significant investments into its presence on Shopify’s App Store, generating nearly 1,500 reviews and making it free to install for a Shopify’s merchant’s first 250 contacts. They also invested in an extremely detailed help center and content around connecting Shopify and Klaviyo. Meanwhile Klaviyo has partnered with Shopify influencers to promote how to use the products together (one YouTube video alone has generated over 53,000 views).

Build a content community

Another underrated community strategy: technical content.

A content community helps attract and engage with an audience, which is an important foundation for any broader community strategy. It also establishes your brand as a trusted voice in your industry and genuinely adds value for your target users. Plus it’s something you can both measure and connect back to your product itself, creating a tighter attribution between investment and impact compared to other community strategies.

For example, DigitalOcean, the developer cloud company valued at $6B+, has built a content community and has attracted >1 million developers in the process.

Acquire an established community

Finally, acquire an established community. Several examples are below, compiled by Kyle Poyar that you can peruse at your own pace.

• Pendo acquiring Mind the Product
• HubSpot acquiring The Hustle

“It may be tempting to pursue an acquisition first and foremost, however it's often more prudent for SaaS companies to build partnerships with independent media entities that have succeeded in building engaged audiences. This can help them successfully monetize their own audience while avoiding the risk associated with unfamiliar acquisitions.” Kyle