Tracking the right product-led growth metrics is like using a compass for your SaaS business—it guides you toward business growth without wandering in circles.

Whether you’re a PLG newbie or a seasoned pro looking to refine your product-led growth strategy, the metrics we’ll dive into today are your roadmap to success.

From customer lifetime value to time to value, these numbers tell the story of your user journey, from free users to loyal paying customers.

Ready to uncover the secrets to a thriving product-led growth motion?

Let’s break it all down—metrics, insights, and actionable tips await!

1. Customer lifetime value (CLV)

What it is and why it’s important

Customer lifetime value is the ultimate “how much revenue can you expect from a single customer” question. It’s a metric that quantifies the total revenue gained from a customer over their entire customer lifecycle.

Think of it as understanding the true value of your customers, not just in the short term but throughout their entire relationship with your product.

💡 Why does CLV matter? Because in a PLG strategy, retaining users is just as critical (if not more) than acquiring new users. A high CLV shows that your product value resonates deeply, creating satisfied users who stick around.

Plus, focusing on customer success can lower customer acquisition costs since users promote your product to potential customers—hello, viral growth!

How to measure it

To calculate CLV, grab your calculator (or a spreadsheet!) and plug in the formula:

CLV = Average revenue per user (ARPU) × Average customer lifespan

For example, if your SaaS company has an ARPU of $50 per month and your customers stay for 24 months, the CLV would be $50 × 24 = $1,200.

For a more nuanced approach, factor in metrics like net revenue churn and customer acquisition cost.

Want even more accuracy? Segment your users into different segments, such as typically activated users, users on different plans, or those with a high net promoter score. This allows for a more thorough understanding of which customers drive the most revenue growth.

How to improve it

Boosting CLV starts with delivering a stellar user experience. Here are some quick wins:

1. Enhance onboarding: Make sure new users find value quickly—this reduces time to value and builds loyalty.
2. Encourage upgrades: Use personalized nudges to convert free users into paying customers or upsell to higher-tier plans.
3. Focus on retention: A happy customer is a loyal customer. Gather feedback, track user behavior, and respond to pain points quickly.

Don’t forget about upgrades and upsells. They’re goldmines for increasing expansion revenue without acquiring new users.

How to interpret different results

• High CLV: Great! Your users love your product and see continuous value. Now double down on expanding their engagement to grow their average revenue generated.
• Low CLV: Uh-oh. This could indicate issues with churn, weak user engagement, or gaps in your product-led motion. Dive into your data to find where users drop off.

Challenges in tracking and common pitfalls

Measuring CLV isn’t always smooth sailing. You might struggle with importing customer data, especially when segmenting by different segments.

Another common pitfall is forgetting to factor in churn, leading to inflated results. Use robust tools and analytics to monitor this metric with accuracy.

2. Net revenue retention (NRR)

What it is and why it’s important

Net revenue retention is a powerful metric that answers a big question: “How much of your monthly recurring revenue (MRR) are you keeping—and growing—from your existing customers?”

Unlike other metrics that focus on customer acquisition, NRR shines a spotlight on your ability to retain and expand revenue within your current user base.

Here’s why it’s critical: A high NRR shows that your product not only retains users but encourages them to spend more over time.

This is vital for SaaS growth, as acquiring new users is often more expensive than nurturing existing users. Plus, NRR highlights the impact of expansion revenue from upsells and account growth—all key drivers of a thriving product-led growth motion.

How to measure it

NRR is calculated using this formula:

NRR = (Starting MRR + Expansion MRR - Churned MRR) ÷ Starting MRR × 100

Let’s break it down:

• Starting MRR: Your total recurring revenue at the start of the period.
• Expansion MRR: Additional revenue from existing customers, like upgrades or add-ons.
• Churned MRR: Revenue lost from cancellations or downgrades.

For example, if your company starts with $100,000 MRR, adds $20,000 in expansion revenue, and loses $5,000 to churn, your NRR is:

($100,000 + $20,000 - $5,000) ÷ $100,000 × 100 = 115%

An NRR above 100% means your business is growing even without acquiring new users, which is a hallmark of strong PLG.

How to improve it

Improving NRR hinges on two main goals: reducing churn and maximizing expansion revenue. Here’s how to get there:

1. Prioritize retention: Focus on customer satisfaction by analyzing feedback and improving the user experience. Address pain points proactively to reduce cancellations.
2. Upsell and cross-sell strategically: Offer tailored recommendations to encourage existing customers to explore higher-tier plans or add-ons. Use segmentation to target valuable user segments.
3. Engage consistently: Regular communication, such as email campaigns, keeps users informed about new features, ensuring they see your product’s value over time.

How to interpret different results

• High NRR (above 100%): Fantastic! Your customers are not only staying but also spending more. Keep this momentum by doubling down on customer success teams and cross-functional teams to align on retention goals.
• Low NRR (below 100%): A red flag. It suggests either high churn or insufficient upselling. Investigate your customer journey to pinpoint where user engagement or product usage drops off.

Challenges in tracking and common pitfalls

Tracking NRR can get tricky if you don’t have clear visibility into expansion revenue and revenue churn. Tools like Mixpanel or Amplitude help streamline this process, ensuring you can measure user activity without manually juggling spreadsheets.

Another pitfall? Overlooking churned revenue from downgrades, which skews results and paints an overly rosy picture.

3. Product qualified leads (PQLs)

What it is and why it’s important

Product-qualified leads (PQLs) are your golden prospects—users who have experienced significant value and are primed to convert into paying customers.

Unlike marketing qualified leads (MQLs), which rely on external interest (like downloading a whitepaper), PQLs are defined by product usage. These users have already engaged with your product, which means they’re further down the funnel and closer to becoming loyal customers.

Why are PQLs so important in a PLG motion? Because they cut through the noise, focusing your sales efforts on users who are more likely to convert.

Plus, PQLs align seamlessly with the product-led approach, where the product itself drives adoption and eventual purchases. Measuring product-led growth with PQLs ensures you’re optimizing for success within the product-led growth flywheel.

How to measure it

Measuring PQLs involves identifying the actions that define when users become “qualified.” This can vary by product but often includes:

• Reaching key milestones (e.g., activating a core feature).
• Meeting specific thresholds, like the number of times a feature is used.
• Upgrading from a free user to a trial or higher plan.

For example, if 500 users sign up in a month and 150 hit your PQL criteria (e.g., sending their first 10 messages in a communication app), your PQL conversion rate is:

PQL Conversion Rate = (Number of PQLs ÷ Total Signups) × 100

Using tools like Segment or Amplitude helps track user behavior and pinpoint the exact moments users qualify. This is crucial for monitoring PLG.

How to improve it

Here are some practical ways to increase your PQLs:

1. Optimize onboarding: Guide new users to the aha moment faster by simplifying their user journey. This reduces friction and accelerates time to value.
2. Nurture free users: Use targeted marketing efforts, like personalized emails or in-app prompts, to encourage these users to engage with premium features.
3. Refine PQL criteria: Work with your cross-functional teams to identify behaviors that best predict conversion and refine your qualification process.

Don’t forget to track progress. Measuring how many users meet your PQL criteria over time can highlight opportunities for further optimization.

How to interpret different results

• High PQL numbers: Excellent! Your product is clearly delivering value, and users are advancing through the funnel. Use this momentum to refine your upselling strategy.
• Low PQL numbers: This could signal a misaligned user experience, unclear onboarding, or a lack of user engagement. Revisit your user journey to identify drop-offs or confusing steps.

Challenges in tracking and common pitfalls

💡 One of the biggest challenges in tracking PQLs is defining qualification criteria too broadly or narrowly. If too broad, you’ll overwhelm your sales reps with low-quality leads. If too narrow, you risk missing out on potential product-qualified leads. Ensure your data tracking is robust, and involve both your sales team and success teams in refining the process.

4. Customer acquisition cost (CAC)

What it is and why it’s important

CAC answers the all-important question: “How much does it cost to acquire a single customer?” This product-led growth metric calculates the total spend on sales and marketing efforts divided by the number of new customers acquired within a given period.

Why does CAC matter? For one, it’s a direct measure of how efficiently your business is scaling. In a PLG strategy, the goal is often to lower CAC by relying on your product to drive conversions.

When CAC is high, you risk spending more than the revenue generated by your customer lifetime value—a scenario that can stunt growth. Keeping CAC under control ensures a balance between acquiring users and growing sustainably.

How to measure it

The formula for CAC is straightforward:

CAC = Total sales and marketing spend ÷ Number of new customers acquired

For example, if you spend $50,000 on campaigns and acquire 500 new customers, your CAC is $100 per customer.

To get a more nuanced understanding, segment by channels or user types. For instance, CAC for users converting into paying customers might differ from those acquired through sales reps––which should only concern users with the highest potential CLV.

Additionally, factoring in metrics like activation rate or net promoter score can give you a deeper view of how well your spending translates into user satisfaction.

How to improve it

Reducing CAC without sacrificing growth requires strategic optimizations:

1. Leverage your product: Invest in your product-led approach by letting your product act as the salesperson. Activated users who find value quickly are likelier to convert with minimal touchpoints.
2. Optimize marketing channels: Focus on high-performing channels that attract valuable customer segments. A data-driven approach ensures you’re not wasting resources on low ROI efforts.
3. Refine user targeting: Use your data to zero in on users most likely to convert. The better your targeting, the lower your CAC.

How to interpret different results

• Low CAC: Fantastic! Your customer journey and acquisition strategies are cost-efficient. Pair this with high average revenue generated to maximize profits.
• High CAC: Not so great. High CAC might indicate inefficiencies in your marketing or sales efforts, or it could mean your product isn’t delivering value fast enough.

Context matters here: A slightly higher CAC might be acceptable if you’re investing in a channel that attracts high average contract value customers who boost your monthly recurring revenue.

Challenges in tracking and common pitfalls

The biggest pitfall? Overlooking hidden costs. CAC isn’t just about ad spend; it includes sales team salaries, tools, and any resources used in customer acquisition.

Miscalculating these can give a false sense of efficiency. Another challenge is segmenting CAC effectively—failing to break it down by acquisition channel can obscure which efforts are truly driving profitable customer hurts.

By monitoring PLG with accurate CAC tracking, you’ll ensure every dollar spent on acquisition delivers meaningful returns.

5. Expansion revenue

What it is and why it’s important

This is the revenue growth that comes from your customers, typically through upsells and add-ons.

Instead of chasing new customers, this metric highlights how much revenue you’re squeezing out of your customer lifecycle by deepening relationships with existing users.

Why does this matter in a PLG strategy? Because it drives growth without adding the high costs of customer acquisition.

💡 For SaaS companies, retaining and expanding revenue within your current user base is often more cost-effective and leads to predictable growth. High expansion indicates that users see continued value, which strengthens their loyalty and boosts customer satisfaction.

How to measure it

The formula for expansion revenue is simple:

Expansion Revenue = (Revenue from Upsells + Cross-Sells + Add-Ons) ÷ Total Revenue

For instance, if your SaaS company earns $50,000 in additional revenue from cross-sells and add-ons during a month and your total monthly recurring revenue (MRR) is $200,000, your expansion rate is:

($50,000 ÷ $200,000) × 100 = 25%

Expansion is also a key part of other product-led growth metrics like NRR, as it directly offsets revenue churn. Tools like Stripe or Salesforce can help track and categorize this data automatically.

How to improve it

Want to boost this metric? Focus on these strategies:

1. Encourage feature adoption: Guide users toward advanced features that solve their pain points, increasing the likelihood of upgrades.
2. Personalize upsell offers: Use customer data to tailor recommendations to specific segments of users.
3. Strengthen customer success: Equip your customer success teams to proactively identify opportunities for upgrades and upsells.
4. Create a feedback loop: Gather user feedback to understand what customers value most—and expand those features.

How to interpret different results

• High expansion: This signals strong satisfaction and a well-executed upsell strategy. It’s a sign that your PLG model is thriving and your product delivers enough value for users to spend more.
• Low expansion: This could mean missed upsell opportunities or a failure to convey the benefits of premium features. Reassess your product usage data and segmentation to identify gaps.

Challenges in tracking and common pitfalls

Tracking this metric isn’t always straightforward. A common challenge is distinguishing expansion revenue from other sources, such as new user growth or billing anomalies.

Additionally, over-relying on a small group of high-value customers for expansion can leave your strategy vulnerable to churn if those users decide to leave.

By accurately monitoring product-led growth metrics, you can ensure your product-led approach creates a steady stream of growth from within your customer base.

6. Time to value (TTV)

What it is and why it’s important

Time to value measures how quickly a user experiences the “aha!” moment—the point where they realize your product’s core value.

In product-led growth metrics, TTV is a critical indicator of how effectively your product delivers on its promise.

Why is TTV so important? For starters, a shorter TTV boosts customer satisfaction and reduces churn. If users don’t see value fast enough, they’re more likely to abandon ship. For SaaS companies, speeding up TTV creates momentum within the product-led growth flywheel—happy users stick around, convert into paying customers, and spread the word to potential customers.

How to measure it

Calculating TTV starts by defining what “value” means for your product. This could be:

• Completing a core action (e.g., publishing a project or setting up an integration).
• Reaching a usage milestone (e.g., sending 10 emails in an email marketing platform).

Once you define value, TTV is simply:

TTV = Time from user signup to first value realization

For example, if a user takes three days from sign-up to send their first invoice in your billing platform, their TTV is three days.

Again, tools like Amplitude and Mixpanel can help track user behavior to pinpoint the exact moment value is achieved.

How to improve it

Shortening TTV requires removing friction and guiding users more effectively through their user journey. Here’s how:

1. Streamline onboarding: Use clear instructions and guided walkthroughs to help new users complete setup faster.
2. Show value early: Highlight features that deliver immediate wins for your users, even if they’re small.
3. Personalize the experience: Segment users into customer segments and customize their onboarding based on their specific needs.

💡 Pro tip: Incorporate user feedback into your onboarding improvements to ensure you’re addressing real pain points.

How to interpret different results

• Short TTV: Congratulations! Your users are experiencing value quickly, which likely leads to higher activation and retention rates.
• Long TTV: Uh-oh. A lengthy TTV might indicate a confusing product-led user experience or an onboarding process that’s too complex. Review your customer journey for bottlenecks.

Challenges in tracking and common pitfalls

💡 Tracking TTV can be tricky if you haven’t defined “value” clearly. If your definition is too broad, you risk muddying your data; too narrow, and you miss out on key insights.

Another common mistake is ignoring TTV for free users, even though they’re a massive part of the product-led growth model.

By improving TTV, you’re not just optimizing a metric—you’re accelerating the momentum of your entire product-led strategy and driving stronger growth.

7. Customer churn

What it is and why it’s important

Customer churn measures the percentage of users who stop using your product within a given time frame. It’s the dreaded number that tells you how many users are slipping through your fingers.

High churn undermines all the effort you’ve put into acquiring and retaining existing customers, cutting into your revenue growth and inflating customer acquisition costs.

For product-led growth companies, churn is a direct reflection of customer satisfaction and how well your product delivers ongoing value. Keeping churn low ensures a healthy product-led growth model and maintains the momentum of your product-led growth flywheel.

How to measure it

The formula for churn is:

Churn Rate = (Number of churned customers ÷ Total customers at the beginning of the period) × 100

For instance, if you start the month with 1,000 customers and lose 50, your churn rate is:

(50 ÷ 1,000) × 100 = 5%

You can also measure revenue churn, which focuses on lost revenue instead of customers. This is especially relevant for SaaS products with multiple pricing tiers.

Tracking churn by customer segments or cohorts (e.g., different personas, company size, etc.) offers deeper insights into user behavior.

How to improve it

Reducing churn is all about enhancing the product-led user experience and keeping users engaged. Here are actionable tips:

1. Improve onboarding: Simplify the first steps of your user journey to ensure users achieve time to value quickly.
2. Analyze churn drivers: Dive into user feedback and data to identify pain points that lead to drop-offs.
3. Proactively engage: Use retention campaigns, personalized emails, and in-app nudges to keep users active and aware of your product value.

Collaborating with your customer success team helps align efforts to combat churn effectively.

How to interpret different results

• Low churn: Fantastic! This indicates strong satisfaction, a solid product-led approach, and effective retention strategies. Pair this with high NRR for an unstoppable combo.
• High churn: A clear warning sign. High churn suggests your product isn’t meeting expectations or delivering consistent value. Review your product usage data to identify trends, such as whether users drop off after a specific point.

Challenges in tracking and common pitfalls

One common pitfall is failing to account for involuntary churn, such as failed payments, which can inflate your churn rate.

Additionally, overlooking differences between voluntary churn (users leaving by choice) and involuntary churn (due to external factors) can skew your analysis.

By accurately monitoring product-led growth metrics, you can minimize churn, retain more existing users, and turn dissatisfied customers into lifelong advocates.

A Metrics-Driven Future for Your SaaS Success

The journey to mastering product-led growth begins with the right numbers. These seven product-led growth metrics are more than just data points—they’re your business’s guiding stars, showing you where you’re excelling and where there’s room for improvement.

By understanding and optimizing key metrics like CLV, NRR, and TTV, you can align your product-led growth strategy with real-world results.

In today’s fast-paced SaaS landscape, staying ahead means constantly fine-tuning your approach. Product-led growth metrics like churn and expansion revenue reveal the health of your existing customer base, while product-qualified leads and customer acquisition cost highlight how efficiently you’re attracting users.

Together, these metrics fuel the product-led growth flywheel, creating a self-sustaining business growth system.

Remember, growth isn’t static—it’s a dynamic process that thrives on continuous improvement. Your SaaS company can stay competitive and resilient by keeping a close eye on your metrics, leveraging user feedback, and fostering collaboration across cross-functional teams. These metrics don’t just measure product-led growth—they drive it. So embrace them, and you'll be on the right path to success.

Optimize Your PLG Strategy with Digi Storms

Tracking product-led growth metrics is essential, but transforming them into actionable strategies is where the magic happens—and that’s where Digi Storms comes in. As experts in product-led growth, we help SaaS companies turn insights into engagement, retention, and revenue expansion.

Our tailored email strategies are designed to activate users, guide them through their user journey, and keep them engaged long after they’ve started. By focusing on specific segments and boosting user satisfaction, we ensure your customers stay loyal and your product-led growth flywheel spins stronger than ever.

Not sure where to begin? Let us help you audit your current lifecycle strategy, fine-tune your user activation efforts, and optimize metrics like customer lifetime value and net revenue retention. Together, we’ll build an engagement strategy that’s as unique as your product.

Growth starts with a conversation. Reach out to us today, and let’s take your product-led growth strategy to the next level.