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:
There are three primary conversion strategies that you can implement depending on the primary purpose of your product/company.
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 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 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.
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.
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
In terms of a set of questions to ask:
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:
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.
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.
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.
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.
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.
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.
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.
Once onboarding profiling and product onboarding are in place there are two ways in which new users can convert:
Let’s explore both options.
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
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.
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.
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.
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:
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.
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.
“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.
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
Basically, Pay it forward. Enable high density conversations between peers.
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).
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.
Finally, acquire an established community. Several examples are below, compiled by Kyle Poyar that you can peruse at your own pace.
“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