PLG Growth Flywheel

January 24, 2022
Fred Melanson
10 min
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It supposedly took Slack 8 months to reach unicorn status and a $1B market cap. Eight months! And this was long before product-led growth ever became a thing.

Users have dramatically changed how they want to buy software.

Businesses need to react.

If someone once to jump in your product before they interact with your marketing, or talk to a sales rep, they should be able to.

This means you need to forget the old ways to structure your growth model.

Your straight-line funnel will bring your linear growth if you're attempting product-led growth.

Your growth flywheel will bring you exponential growth.

Although folks at Appcues, Reforge and ProductLed have already done a great job on PLG growth flywheels, I thought something was missing. That the existing concepts weren’t showing the full picture of the Product-Led flywheel, and how to build it.

So this article will uncover a new and improved Product-Led Growth Flywheel, why you should ABSOLUTELY have one for your product-led company and how to build a Product-Led Growth Flywheel that works. With examples and advice from world-class PLG experts.

Let’s dive in 🪂 👇

1.Why PLG Growth Flywheels Are Gaining Popularity?

2.What Is PLG Growth Flywheel?

3.PLG Growth Flywheel Examples

4.How to Optimize Your Growth Flywheel?

5.Conclusion

Why PLG Growth Flywheels are gaining popularity?

1. PLG growth flywheels unlock exponential growth and revenue sustainability.

Traditional funnels need a lot of investment outside the product itself in order to provide rapid growth, like:

plg growth flywheel


Growth flywheels, on the other hand, help generate new users through the product itself, which compounds exponentially.

2. More seamless customer experience.

Sometimes buying a solution feels like the buyer is a product in a factory line. Patiently going through steps of the buying process in order to get to the finish line.

First, let’s engage with marketing. Once you’re qualified, marketing shoots you to sales.

Then, discovery call, demo, and purchase. Once that’s done, sales transfer you to customer success.

Then onboarding call, integration support, etc.

And finally, you’re set up in the product...

What if that’s not what’s best for YOU, the buyer.

In the product-led growth flywheel, customers don’t feel like they’re in specific parts of your funnel anymore.

THEY chose in which part of your funnel they are.

Altogether, it provides a MUCH better customer experience and greatly improves customer acquisition,  retention and customer satisfaction.

3. Alignment across the entire company

Since having a strong flywheel in your product-led growth model makes for a more holistic customer journey, it also provides company-wide alignment.

Mainly because teams will converge towards

Now that I’ve piqued your interest, what the heck is a product-led growth flywheel?

What Is PLG Growth Flywheel?

The product-led growth flywheel is a model for creating a customer experience that delivers sustainable growth from people using your product.

what is plg growth flywheel

It aligns all your business functions across one goal: scalable business growth.

Inner loops of the product-led growth flywheel

Inner loops represent the forcing functions in your product’s experience that drive users to progress through activation, adoption, adoration and advocacy (aka the outer circle).

inner loops of plg growth flywheel

In other words, it’s because of inner loops that you acquire and retain customers as a product-led business.

They’re comprised of the growth loop (from Reforge) and the retention loop (from Hooked).

Both are linked based on the main action(s) in your product, and feed off each other.

The growth loop

The growth loop demonstrates how existing users taking actions in your product can generate new users.

growth loop


The growth loop greatly impacts the Activate & Advocate parts of the outer loop of the flywheel.

The retention loop

The retention loop is the Hooked model from Nir Eyal’s book Hooked. It shows what motivates users to take actions in your product and adopt your product as part of their regular workflows and habits.

retention loop


The retention loop greatly impacts the Adopt & Adore parts of the outer loop of the flywheel.

Outer loop of the Flywheel

The outer loop represents the different stages that users will go through during their customer journeys with your product.

outer loop of the flywheel

Activation

Activation is different but every company, but in general terms it means getting your user to take the key actions that deliver on the promise of your product, getting them excited about its value.

It’s also known as the “aha moment”.

Example for Slack (the darling of product-led growth): Inviting at least 2 colleagues and sending your first message.

Adopt

Adoption is when your users start using your solution as part of their core workflows. It is directly linked to retention. In general terms, users get to fully adopt a solution when they’ve taken a series of key actions and have received the reward from those actions a few times.

It’s also widely recognized as “Product qualified users”.

You’ll see a lot of users turn into paying customers at the Adopt stage.

Example for Slack: Exchanging 2000 messages.

Related: The simplest way to define Product Qualified Leads (PQLs) for your SaaS


Adore

Getting users to adore your product is about having them go past the basic use case of your solution.

People who adore your product don’t just use it, then enjoy using it and try to use every once of your features.

They’re the best people for your customer advisory board, user testing, product feedback and roadmap suggestions. Don't initiate product management efforts until you talk to your Adore users.

People in this stage are often called “Champions”.

You’ll see a lot of upsells into higher-paid plans at the Adore stage.

Advocate

Advocates are your company's ultimate fans. They adore your product but also share their appreciation, which brings in new customers. They drive word-of-mouth, write reviews, post on social, tell their colleagues, etc.

Advocates can also be called “Champions”, but they’re the ones whose outputs in the growth loop will drive the sign-ups and paying customers.

You’ll see a lot of cross-sells and referrals from people at the Advocate stage.


PLG Growth Flywheel Examples

There are 2 types of PLG growth flywheels. I’ll provide a real example for both.

The external product-led growth flywheel (viral).

The output of your user’s actions creates awareness for prospects at other companies.

Classic example: Calendly.

calendly growth loop

As a Calendly user, when I send my Calendly link to someone else to book a meeting, they experience the great experience of booking with Calendly. At the end of the process, they’re prompted to sign up themselves to Calendly.

Other examples: Docusign, Typeform, Zoom, Superhuman, Loom.

The internal product-led growth flywheel (land-and-expand).

The output of your user’s actions creates awareness for your colleagues.

Classic example: Slack.

slack growth loop

As a Slack user, the more I invite my colleagues into the app and start sending them messages, the more value I get from the app. This creates an organic land-and-expand flywheel for Slack, as they can go from one user to the whole company using Slack really quickly.

Other examples: Miro, Figma, Asana, Notion, Monday.com

Note that some companies have both a viral product-led growth flywheel and a land-and-expand one. So it’s possible to embed both in your product’s experience.

The hybrid PLG growth wheel (viral + land-and-expand).

The output of your users' actions creates awareness for new prospects and for colleagues.

A good example: Pitch

pith plg flywheel

As a Pitch user, I get more value from inviting colleagues to collaborate with me on presentations. Furthermore, every time I share a presentation, whether with someone outside my company or a colleague, they experience the value of Pitch presentations and are tempted to sign up.

Other examples: Notion, Dropbox, Airtable.


You forgot the persona loop?

PLG pros reading this might have flagged that I’ve removed the inner circle (user segments) of Eric Keating’s PLG flywheel.

persona loop


The reason is I believe that users can contribute to each of the 4 stages of the outer loop, independent of the user segments they fall into (Evaluators, Beginners, Regulars, Champions).

I would use the four user segments to know which parts of the growth and retention loops I should emphasize with existing users, based on which segment they fit into.

For example, having sales focus on a paying customer in the "Beginners" segment. My customer success team provides in-product support to "Regulars" trying out advanced features. Or customer marketing setting user expectations by showcasing product features.

So it’s crucial that your customer-facing teams' track which users fit which segments, and engage them accordingly, but it’s not part of the growth flywheel itself. At least in my opinion.

How to use the persona loop for the sales process

Combining how users behave in your product with some firmographics on their company (size, industry, location) can give you a very good understanding of revenue opportunities in your existing customers and freemium users.

How?

You can use Bliinx's dashboard to easily track and identify where your users are in the personal journey. This way, your sales team will have the visibility needed to act on the very best revenue opportunities.

bliinx dashboard

How to use the persona loop for marketing

When crafting product marketing experiences, you might want to send different in-app messages to the four user segments.

For example, help docs to Beginners, new features to Regulars, and co-promotion prompts to Champions.

On the content marketing side, it's ideal to retarget Evaluators and Beginners with content that will help them get to value quicker.

plg persona loop

How to use the persona loop for customer success

Similarly to using the persona loop for sales, you can track users and accounts who represent a churn risk or an expansion opportunity in Bliinx, so that your CS reps know which users to engage to improve recurring revenue and business growth.

For users at risk, qualified support representatives can offer customers access to help videos, support docs and custom product features training.

For users representing an expansion opportunity, they can help discover additional benefits with advanced usage of the product.

If your users at a risk of churning or representing an opportunity for an expansion, Bliinx's signaling system will send a slack notification to you so that you can engage with the right accounts.

Is my business eligible for a flywheel?

Can your product create an internal (land-and-expand) or external (viral) growth loop?

Then yes. 100% yes. Read this below and get started 👇 💪

How to Optimize Your Growth Flywheel?

1. Drive your users to take key action as soon as possible

“Having a seamless onboarding experience is important but most people get the purpose of user onboarding wrong”. Vukasin Vukosavljevic - Head of Growth of Lemlist explains.

“Having seamless onboarding is not about giving a random product tour to your users, it's all about understanding the goals of your users and designing an onboarding flow that will take your users to take key action asap”

So how do you create a seamless onboarding experience?

“Know your persona and define what success means for your user personas. Don’t have the same onboarding flow for everyone segment your users based on their goals and design onboarding flow that will take them to success in the shortest amount of time”

Vukasin is right that most SaaS companies use onboarding flows to give complete tours of their product and it's not the right approach to prompt users to take key actions in your product.

The takeaway here is simple: Don’t use your onboarding flow to give a complete product tour.

Identify the success of your user personas, and design an onboarding flow that will take them to get what they want in the shortest amount of time.  

2. Know when you should ask the user to invite others

“Think about what is the right moment to invite people to perform your core growth action. This could be sending an invite, a referral code, or asking them to publish content. Henrique Cruz, Head of Growth of Rows explains.

“I see many products prompting the user to invite someone right at the start of the onboarding, much before the user experienced any value.”

When you are building your referral system you need to identify where users experience the value in the journey and embed the referral option right after the user experiences the value from the product.

If you put the referral system to the beginning of your onboarding journey, no one will invite another user before they know if the product delivers value or not

Henrique also mentioned two more tips on increasing the share-ability of your product:

“Add a social snippet (with an image, description, and logo) when a link to your product is shared.”

“Make your customers feel like they own the product. Give your customers the ability to customize the look and feel of the product. This can mean colours, covers, or other UI elements. Notion is a great example to this”

3. Don’t guess the user journey

To create an effective PLG flywheel you need to have a clear understanding of the user journey.

Aggelos Mouzakitis from Growth Sandwich says: “Most of the B2B SaaS I am working on do not know what are the stages of their user journey, therefore it is impossible for us to design onboarding interventions that lead the user to the ideal state, to become a power user.”

To understand the user journey, you need to start asking questions to your users.

According to Aggelos, the questions below are a good starting point.

What does ‘power user’ mean for you from a qualitative and quantitative perspective? Do you see any demographics, jobs-to-be-done, expectations, problems, needs, fears that seem to correlate with power users?
What does ‘failed user’ mean for you, again, from a qualitative and quantitative perspective? Do you see any demographics, jobs-to-be-done, expectations, problems, needs, fears that seem to correlate with failed users?
What is the path of a power user and what is the path of a failed user within your app? Can you break it into stages following the pirate funnel paradigm (AARRR)?

“If you perform such an analysis, mixing product engagement, financial data and user interviews, you will gain a very rounded understanding of what is your user journey. Your next step then becomes almost straightforward: what actions do seem appropriate to push the user to the next stage of the user journey? That should be your concern, just moving the user one step further.”

4. Adjust your user's experience with product data

For Nikko Georgantonis, Director of Growth at Hightouch, it's all about using product data to create more contextual and value-add user experiences. Mainly through:

Nikko shared how they're thinking about it at Hightouch:  

"I think one big thing to take away from that is the idea of having more granularity in product data for user prioritization. If you look at  a typical PLG model, we would want to say for example, in terms of prioritization solely based on behavioural events, who should our teams focus on?."

"We would probably want to prioritize somebody that tried to connect a source or got an error rather than someone that didn't even click out of source, right? Yeah. Something as simple as that makes a huge difference for retention."

"We would want to prioritize that person and we would want either automated or human touchpoints to be more proactive in those accounts because if they don't do anything for two weeks then it's game over. So it's really just about product usage context for prioritization."

Conclusion

Your company won’t become the next Slack just because you switch to product-led growth as your main business strategy.

You first have to build an amazing product.

Only then can you start using product-led growth to spin the flywheel and grow customers exponentially.

But growth flywheels are a crucial piece to the puzzle.

And it starts from understanding various parts of the product-led growth flywheel and how you can craft a customer experience that makes them stronger.

Armed with a great product and an efficient product-led growth flywheel for your future growth, you might well very be the next Slack 🦄

That’s all for today. I truly hope this piece will help you get to more potential customers, faster user acquisition, more successful users and generate customer advocacy.

✌️ out,

Fred