PLG
Product-led growth
A growth model where product usage drives adoption, expansion, and retention before sales-led handoff.
Definition
Product-Led Growth (PLG) is a go-to-market strategy where the product itself drives acquisition, conversion, and expansion. Instead of traditional sales-led approaches, PLG companies let users experience value before purchasing through free tiers, trials, or freemium models.
PLG vs Sales-Led Growth
| Aspect | PLG | Sales-Led |
|---|---|---|
| First contact | Self-serve signup | Sales outreach |
| Conversion | In-product upgrade | Sales close |
| Expansion | Usage-based upsells | Account management |
| CAC | Lower (self-serve) | Higher (sales team) |
| Deal size | Smaller initially | Larger upfront |
PLG Metrics
Key metrics for PLG companies:
| Metric | What It Measures |
|---|---|
| Time-to-value | How fast users reach “aha moment” |
| Activation rate | % of signups who complete key actions |
| Product-qualified leads (PQLs) | Users showing buying signals through usage |
| Expansion revenue | Revenue from existing user upgrades |
Tools That Enable PLG
PLG companies rely on specific tool categories:
- Product analytics - Mixpanel, Amplitude, PostHog to understand user behavior
- Onboarding - Userpilot for in-app guidance
- Feedback - Canny for feature requests
- Session recording - Hotjar to see user friction
PLG Examples
Companies known for PLG approaches:
- Slack - Free tier, team virality
- Dropbox - Freemium with referrals
- Calendly - Free scheduling, viral booking links
- Notion - Free tier, workspace expansion
Frequently Asked Questions
Is PLG right for every company?
No. PLG works best when users can self-serve and experience value quickly. Complex enterprise products with long implementation cycles often need sales-led approaches, though many combine both.
What’s a Product-Qualified Lead (PQL)?
A PQL is a user whose product usage indicates buying intent - like using a feature heavily, hitting usage limits, or adding team members. PQLs convert better than marketing-qualified leads.
How do I measure PLG success?
Focus on activation rate (users reaching key milestones), time-to-value (how quickly), and self-serve conversion rate (free to paid without sales). Track expansion revenue from existing users.