Product-Led Growth 101: A Glossary of Essential Terms

In 2023, according to Open View Partners, only one-fifth of SaaS companies have seen a growth rate of at least 75% year-on-year. However, PLG leaders have still managed to grow at twice the rate of traditional SaaS companies. The adoption of PLG has expanded across the software landscape, and tracking product-qualified leads (PQLs) or accounts (PQAs) has boosted the likelihood of fast growth by 61%.

By now, you’re likely familiar with the concept of product-led growth (PLG), which was extensively covered in a past article. But to truly master the verbiage of product-led growth and effectively implement its principles, it’s quite essential to be well-versed in the associated terminology.

Although you may already know some bits about PLG, a little guidance to catch up with the intricacies of product-led growth might help:

Understanding the Market

• Addressable Market : The specific segment or group of potential customers that a product or service can effectively target and serve.
• Blue Ocean Companies: Innovative organizations that create new markets and demand, making the competition irrelevant.
• Red Ocean Companies : Businesses in saturated markets aiming to outperform competitors.
• Total Addressable Market (TAM): The total revenue opportunity for a product, accounting for potential future expansion.

User Engagement & Experience

• Activation Barriers: Obstacles or hurdles that prevent users from fully adopting and engaging with a product or service.
• ‘A-Ha’ Moment: The point at which a user realizes the value and benefits of a product or service, often leading to increased engagement and continued usage.
• User Experience (UX): Users’ overall experience and satisfaction when interacting with a product or service.
• User Journey: The path or stages users go through when interacting with a product, often involving steps like activation, discovery, conversion, and scaling.
• Stickiness: Refers to the degree of engagement and loyalty that users have towards a product.
• Time To Value (TTV): The amount of time it takes for a user to derive value or achieve their desired outcome from using the product.
• Self-Serve: A model that allows users to onboard and use a product or service independently, without assistance.

Product Development & Features

• Enterprise Product Development (EPD): The comprehensive process of bringing a product from its conceptualization to its launch within a company.
• Feature Adoption Rate: The rate at which users adopt and utilize specific features of a product.
• Workflow: The sequence of tasks and processes an organization follows to complete a specific project or achieve specific goals.
• Product-Market Fit: The alignment between a product and its target market.

Growth Strategies & Models

• Bottom-Up Selling: Emphasizes simplicity and fast acceptance.
• Marketing-Led Growth: Focuses on acquisition through marketing efforts.
• Sales-Led Growth: Relies on sales teams and human intervention for growth.
• Growth Loops: A framework for driving growth by creating a cyclical process for continuously engaging users.
• Freemium Model: A pricing model with free basic features, but advanced features require payment.
• Go-To-Market (GTM): Launching and promoting a new product to customers.
• Value Metric: A measurement companies use to assess the value generated in exchange for their product.
• Value-Based Pricing: A pricing strategy largely relying on the customer’s perceived product value.
• Channel: The marketing and distribution channels that are scalable and cost-effective for product-led growth, such as word-of-mouth, content marketing, or low-cost CPC advertising.
• Sales Cycles: The time it takes for a customer to move through the sales process, from initial contact to making a purchase.
  

Customer Metrics & Analytics

• Advanced Analytics: Tools that uncover insights through data analysis.
• Average Revenue Per User (ARPU): The average amount of revenue generated per user or customer.
• Churn Rate: The rate at which customers or users discontinue or unsubscribe from a product or service.
• Customer Lifetime Value (CLV): The predicted revenue a customer will generate over their relationship with the company.
• Effort Analysis: Quantitative method to understand users’ difficulty navigating through each step of a digital experience.
• Net Promoter Score (NPS): A metric used to measure customer satisfaction and loyalty.
• Product Qualified Leads (PQL): Leads that have demonstrated an interest and derived value from the product,  suggesting a higher likelihood of becoming customers.
• Product Qualified Accounts (PQA): Accounts that have actively used and gained substantial benefit from the product, signaling a potential for conversion or growth.
• Segment Analysis: Grouping users based on their behaviors to identify patterns.
• Time-Based Cohort Analysis: Examines user behavior and engagement patterns over different time periods.

Models & Frameworks

• Fogg’s Behavior Model: States that Motivation, Ability, and a Prompt must converge simultaneously for a behavior to occur.
• Hook Model: Focuses on creating strong user habits through triggers, actions, rewards, and investments.
• RICE Framework: A framework used to prioritize projects or initiatives based on their potential impact, effort required, confidence level, and resources available.
• Customer-Centric: A strategy prioritizing exceptional customer experiences by placing the customer at the core of products, ideas, philosophy, and operations.
• SaaS (Software-as-a-Service): Software delivery model where applications are accessed through the internet and provided on a subscription basis.