PLG Funnel or Flywheel: Which is Better for Your Growth?

What is a product-led growth (PLG) funnel?

A product-led growth funnel is essentially a redesigned version of the traditional sales funnel.

The main advantage of this PLG-fueled framework is that it makes the customer an active part of the process by inserting the product experience inside the funnel. This way, the top of the funnel works the same way, while the bottom of the funnel brings self-service to the equation.

‎We can also see two distinctions from the traditional funnel:

• In the traditional funnel, product experience is a separate occurrence that can take place before or after without affecting the funnel itself. In the PLG funnel, it becomes a part of the process and actually plays a role in the conversion.
• The traditional funnel has two buyer types, while the PLG funnel introduces PQLs by including product experience.

Stages of the PLG Funnel

To understand the stages of a PLG funnel, we first need to understand the traditional sales funnel. It goes:

Lead: The Unaware Phase

At the top of the funnel, we have the Lead stage, AKA the Inquiries stage, where your audience is a potential buyer with the least awareness and/or interest in your solution.

The motion in this stage is to move the audience to the next stage by checking whether they are qualified to potentially be customers.

MQL: The Interested Phase

This stage is triggered once the lead at hand is positively interested and can be marketed to.

Then, we can call these leads MQLs or marketing-qualified leads.

To move to the next stage here, you need to use marketing efforts until you know for sure you can sell to these leads. Which makes them... ⬇️

SQL: The Convincing Stage

And SQL or sales-qualified lead is a lead you can now nurture a little more until you can lay the business on the table and actually talk pricing and needs.

Be careful, though. These are still leads, and until the funnel is complete—and afterward, as customers—they will need nurturing.

Opportunity: The Sales Stage

The opportunity stage quite literally marks the time when you can treat the lead like an "opportunity", an actual potential customer.

This is where you make offers and discuss how to make the pricing and the product optimal for the buyer.

Naturally, to move to the next stage, you will need to make the sale and then...

Customer: Acquired

Once you reach the customer stage, you have successfully converted your lead to a customer by making the sale.

But it is not over yet.

The sales funnel might be over, but from here on out, you will need to nurture your customers through different business stages. Remember, customer acquisition is once; customer retention is forever.

Now, how does the PLG Funnel differ?

It is essentially the exact same funnel but with the insertion of product experience, which was completely separate before, right in the middle.

Here's a look at that stage:

Product Experience (PQL)

The product experience stage often comes right after the MQL and right before the SQL stages and coincides with the transition stage, where leads get interested enough to buy.

Now, where does that interest come from?

In the traditional funnel, your sales team works day and night to display your product's benefits in a white-glove environment. And that often happens without even fully showcasing the product.

The PLG funnel makes sure that this interest is organic with the product experience stage.

It fully promotes your product's availability to leads early on so that they can try it and decide for themselves if it works for them. And when done right, this approach can be more successful than a high-touch approach.

How and why?

Because in the process of product experience, you create PQLs.

PQLs, or product-qualified leads, are great matches for your product, as you can see from the depth and breadth of these users' use of it.

Now, this PQL creation is an especially important process because, contrary to SQL and MQL, it gives you the chance to invest in retention in the long run.

And that is how the PLG funnel is different from the traditional sales funnel.

But how does it compare with other frameworks?

Benefits of the PLG Funnel Model

The PLG Funnel is a great framework, especially during the early acquisition stages. And this is for 3 reasons:

1- Better optimization in each stage with a structured approach

Like many business frameworks, the PLG funnel has a fixed structure that helps visualize an otherwise complex process clearly and sequentially.

Because of this sequential fashion, optimizing each stage is easier, too.

2- Easy to measure with designated metrics

The clear structure then becomes a bigger benefit since, in the PLG funnel, specific metrics can be attributed to different stages.

For example, email open rates can be especially important during the MQL stage, while engagement metrics like completion and satisfaction rates can accompany the product experience stage.

Thus, targeted strategies for each stage can be planned ahead, as well.

3- Clearer goals thanks to overall simplicity

The overall simplicity of the PLG funnel is also noteworthy.

Because the funnel is linear and straightforward, it is easier for teams other than the sales team to adopt it.

That then contributes to clear communication of goals among all teams.

Limitations of the PLG Funnel Model

No framework is ever perfect.

Naturally, the PLG funnel model has its drawbacks as well, the main 3 being:

1- Rigid in more sophisticated operations

While the PLG funnel's simplicity is a pro for most, it can easily turn into a con for others.

The main issue here is that such a linear framework can miss the non-linear and iterative nature of customer interactions with your product.

And that can lead to practically wearing horse blinders.

You can focus on moving users through these stages and lose them because you turned a blind eye to the overall user experience.

2- Short-term focus

Talking about focus, the PLG funnel also notoriously focuses on a very short-term relationship, the customer acquisition process.

While this process typically takes months, a well-retained customer can stay with you for years, so it is important to consider the longer process as well.

This quality of the PLG funnel makes it especially ineffective when it comes to customer retention operations.

3- Limited Feedback Loop

Lastly, because it is such a linear framework, any sort of loop, especially a feedback loop, is hard to create.

The PLG funnel is not one that naturally incorporates feedback mechanisms for a better product, mostly because of the whole acquisition mission.

Customer feedback becomes more relevant in frameworks that function on different levels and seek to undertake different missions at once.

And that framework surely isn't the PLG funnel.

What is a product-led growth (PLG) flywheel?

The product-led growth flywheel is a growth framework that focuses on continuous and iterative processes. The PLG flywheel gains momentum via satisfaction, engagement, and customer advocacy and its main goal is to keep that momentum going.

‎The PLG Flywheel has a few different versions, but ProductLed features one of the most common ones, with 4 user segments and 4 user actions ⬇️

Stages of the PLG Flywheel

Being a flywheel, the PLG Flywheel states are continuous in a loop, with user segments:

1- Evaluators

The evaluators are the ones looking for a solution and exploring your product.

These are the leads in the funnel at the MQL-SQL stages; they are not quite ready to buy but are also excited about what you offer.

At this stage, users are:

• Trying out your product via a trial or going through a demo period,
• Looking for a different product at the same time,
• Not using the product in their workflow

The next stage comes along once the evaluators find their aha moment and they are ready for activation. Though the activation process is different for different products, it often signals purchase and becoming a customer.

Then comes...

2- Beginners

As the name suggests, beginners are excited about your product. This stage is the counterpart of the customers stage in the PLG funnel, but it doesn't fully cover the whole of that stage; rather, it covers the beginning of it.

Beginners will typically:

• Take time to use and explore your product actively and often daily,
• Start using your product in their workflows,
• Mostly use the most fundamental features and require a nudge to go further

At this stage, it is important to remember that these users are excited about your product but aren't well-versed in using it yet.

The best approach here is to let them explore freely in the spirit of PLG but also run to help when they signal frustration.

The main goal here is to get them to start adopting your product.

And that happens when a user is fully aware of your product's value and starts regularly using it.

You might come up with strategies for full product adoption, but you can also try out a product adoption solution, like UserGuiding.

👉 Try UserGuiding free today 👈

When that happens, they become...

3- Regulars

Much like any other business, the regulars are one of the most important parts of your business, as they enable the whole operation.

These are the folks you've managed to retain through adoption and engagement, and they are likely to:

• Use your product regularly, relying on it for a good chunk of their workflows,
• Discover new functions for your product to make their job easier,
• Get frustrated if or when your new updates likely disrupt their regular workflow

Now, the most crucial thing to remember about your regulars is that they rely on your product more and more each day.

And that means they are likely on the brink of more intense emotions.

If your product takes a turn for what they don't appreciate, it is highly costly for them to switch to another product.

But if you improve it to their liking, they can finally become...

4- Champions

Champions are the users that adore your product.

This is to the point that they want to promote your product for you. In fact, in a well-functioning PLG flywheel, your champions are the ones bringing in the evaluators, as the flywheel does a great job illustrating.

Your champions are very likely:

• Scoring 10s on NPS surveys,
• Using your product for new use cases, giving you more to discover and implement in the future
• Not only using your product every day but also actively taking part in how it will develop in the future

The key action here to protect the flywheel's momentum is to remember: your champions are your biggest fans, and that gets your business going.

👉 You need to be their biggest fan as well.

These are the people who take pleasure in being a part of your brand, so let them be: Give them recognition with incentives and shoutouts, offer exclusive help, and invite them to advisory boards.

With these actions, you can easily enable the 4 key user actions of the PLG Flywheel:

Activate, Adopt, Adore, Advocate.

But those are only the stages; let's take a look at the benefits and the drawbacks of a PLG Flywheel.

Benefits of the PLG Flywheel Model

1- Continuous Loop Powers Constant Improvement

The most important benefit of the PLG Flywheel is that it focuses on being continuous, which is something you cannot overlook in any business model.

Rather than a linear nature like the PLG funnel, the flywheel emphasizes constant improvement and engagement.

This, in turn, encourages ongoing interaction and relationship-building with users.

2- Holistic Approach Considers the Entire Customer Journey

Another important benefit is that the flywheel model doesn't stop at acquisition.

It considers the entire customer journey and promotes interconnecting different touchpoints.

This leads to better retention and loyalty, as there is a focus on delivering value and satisfaction every step of the way.

3- Strong Feedback Mechanism Brings in Real-Time Insights

The PLG flywheel is naturally open to user feedback as it depends heavily on users' behavior.

This allows for adaptive strategies based on real-time user insights and further keeps the momentum of the flywheel.

4- Long-term Growth Contributes to the Making of Brand Advocates

The PLG flywheel model is great for long-term growth and satisfaction since it prioritizes a holistic view rather than immediate conversions.

This is one of the main ingredients that creates product advocates and champions since users are still inside the framework after acquisition.

Limitations of the PLG FlyWheel Model

Now, even the PLG flywheel isn't perfect. It has some drawbacks that can be hard to manage for certain business models, especially at the start of their run.

Here's top 3:

1- Complexity Affects Implementation

The PLG Flywheel is naturally a more complex framework compared to similar growth models like the PLG funnel.

It requires a more sophisticated tracking system and analysis to ensure maximum efficiency and may even fail unless its complexity is fully understood.

2- Might Require More Resources

Much like its complexity, a PLG flywheel may also demand more resources and time to continuously iterate and improve the product.

It involves a more comprehensive approach to user engagement and feedback integration, which can also require separate products and teams.

3- Less Focus on Immediate Conversions

Now, though it is a benefit of the framework that the flywheel has a holistic approach, it can also be hard to manage for those looking to focus on immediate conversions.

That may result in slower initial growth due to the emphasis on long-term engagement and satisfaction. And balancing the need for immediate results with the long-term vision can also be challenging.

But we can't decide on the best framework for you before we compare the two. Let's take a look ⬇️

PLG Funnel vs. PLG Flywheel: What are the Key Differences?

A PLG funnel and PLG flywheel essentially serve the same main goal:

Contributing to growth with product-led strategies.

While both these frameworks work wonders in this mission, they also differ a lot, which alters the choice for many companies greatly.

Here are the key differences:

Simplicity vs. Complexity

The main difference between the flywheel and the funnel boils down to a matter of complexity.

The PLG funnel has a very linear, clear, and quite simple structure. It has a start and an end with clearly separated stages.

The PLG flywheel, on the other hand, offers a more sophisticated structure that is essentially a loop with no start and end. It is continuous and iterative to achieve continuous growth.

Short-Term vs. Long-Term Focus

There is also a focus difference between the two models.

The PLG Funnel offers a sort of a one-time approach, where it focuses on the short-term growth of business via acquisition.

Meanwhile, the PLG flywheel is all about a holistic approach to business, and it takes great care to invest in your product's future growth.

Acquisition-Oriented vs Retention-Oriented

A closer look at both models reveals an ultimate truth:

The PLG funnel works mainly for customer acquisition, the PLG flywheel works for customer retention —and acquisition via retention.

The stages of the PLG funnel come to an end once the lead is acquired and becomes a customer.

The PLG flywheel does not have an end, but it has a focus on customer satisfaction and advocacy that is fuelled by that satisfaction. This makes the flywheel perfect for retention and, in a way, acquisition as well.

Now, these differences show us that these frameworks aren't too different in their end goal, but they are completely different in how they achieve it.

But the real question is... ⬇️

Which one is for you: PLG Funnel or PLG Flywheel

As we can draw upon the differences between the two frameworks, the PLG funnel and the PLG flywheel work best for quite different projects.

But thanks to that, we can easily tell which works best for whom.

Use a PLG Funnel if...

• You are just beginning to go product-led and/or prefer a hybrid growth model,
• Your focus is on customer acquisition,
• You have a largely enterprise-based customer base that appreciates high-touch sales
• Your resources are limited,
• Your teams aren't aligned enough to undertake more complex processes together

Imagine you have a complicated product that needs high-touch sales, and your customers are big companies going for annual contracts. Then, the PLG funnel makes perfect sense.

If more than 2 apply for you, a PLG funnel might work better than a PLG flywheel in your case.

Use a PLG Flywheel if...

• You're perfecting your PLG approach, and your product is aligned with this,
• Your focus is on customer retention and advocacy,
• You have a largely small to mid-market customer base that is too crowded for high touch,
• You have enough resources for a more complex approach,
• Your sales, product, success, and marketing teams are aligned enough to undertake a continuously collaborative project

Imagine you have a product that is a good match for the PLG approach, and you don't need to bring in customers one by one. Then the PLG flywheel makes perfect sense.

If more than 2 apply to you, a PLG flywheel might work better than a PLG funnel in your case.

Use both if...

Now, if you thought these two don't go together, you're wrong.

Both the funnel and the flywheel can be useful, especially in more hybrid cases, such as product-led sales or PLG accompanied by high-touch sales.

Imagine Slack.

‎You can try the product for free and start using it without much inclusion from sales.

However, Slack does have bigger customers that need to be convinced and accommodated according to their very specific needs. That's where Slack's high-touch sales team comes into play.

That means in a case like Slack's, you can use the flywheel for the PLG customers while your sales team can use the funnel.

Wrapping Up

While the growth models differ, they do meet at one point, and that is growth.

Growth can be intricate and, very candidly, hard.

But with the right approach to it, growth can exceed expectations. It is up to you to pick the right model for you, depending on your needs.

Good luck in advance 🍀

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