I recently heard something from Calendly’s product team that made my jaw drop. Their product is being used to schedule millions of meetings per month. Many, many millions.
Lots of companies have vanity metrics in the millions. But they are called vanity metrics for a reason — they don’t go deeper than the surface level.
But for Calendly, scheduling meetings is what they do for a living. Meetings are inherently viral, so by extension, Calendly is inherently viral. The only reason you sign up for Calendly is to send the scheduling link to other people. There is no single player use case for the product.
By simply using the product, you are also promoting the product. Thousands and thousands of link recipients then become converts and sign up for Calendly on the spot. Every damn day.
Must be nice.
Quantifying product-led growth
Yes, it’s true that an inherent viral loop is a beautiful thing. There are many beautiful things that come when you embrace product-led growth.
But it’s not all sunshine, rainbows, and virality. PLG also comes with its own unique challenges and frustrations. A big one for Calendly was knowing how to evaluate their own performance on things like viral sign-up rate (k-factor), activation, conversion, and other user-level metrics in their consumer-like freemium funnel.
Most B2B companies can leverage a plethora of public SaaS benchmarks, laws, and events to know if they are on the right track. Need to know best-in-class CAC payback or net retention rates? How about MQL to SQL conversion rates? A quick Google search will return more data and more reports than you know what to do with.
But what about product?
Product benchmarks are a different story. Even though modern growth and product teams live and breathe data analysis and rapid experimentation, they often can only turn to their own data for guidance. Is our conversion rate today better than it was last year? If yes, that’s good. But is it merely a local maximum? What if Slack or Atlassian are seeing a conversion rate that is 3x higher than ours? What if our direct competitors have much higher rates? Perhaps we’re way behind the industry average for key metrics.
You just don’t know, and it’s enough to keep you up at night.
Thankfully, the good people over at Pendo heard this pain expressed time and again from the product community and did something about it. They created product benchmarks to help companies like Calendly understand how they stack up against other best-in-class products. For example, did you know that if your product has a 45% DAU/MAU ratio or a feature adoption rate of 30%, you are in the 90th percentile? I didn’t!
There is a veritable gold mine of helpful product stats and benchmarks in this report. Plus, you can segment the statistics by company size and industry to get the numbers most relevant to your organization. One metric I found particularly intriguing was “product engagement score,” or PES. To calculate PES, you average stickiness, app retention, and feature adoption to get a more holistic view of your product’s performance. Engagement can be notoriously tricky to quantify, and this method is one way of solving that problem.
Shifting from SaaS metrics
A few decades ago, tracking just sales and marketing metrics might have been enough to grow your product’s market share and put you on the path to real success. As software moves into the End User Era, however, companies need to adapt by aligning both their product and their distribution to the end user. As this happens, the underlying systems and processes need to evolve as well. For example, user-level behavior is more important than account-level behavior, which means we need to move from SaaS metrics to product metrics to guide our growth decisions.
The End User Era is here. Product led growth is how you adapt. The only way to know if you’re on the right track is by consistently measuring your performance, not just against yourself but against peer products in your industry.
Will product benchmarks magically create a Calendly-like viral loop in your product? No. But they will at least help you assess your PLG performance against best-in-class companies like Calendly, Slack, and many others.