Understanding the Product-Led Growth Flywheel - A Comprehensive Guide

What is the PLG Flywheel?

The PLG Flywheel is a popular visualization of the customer journey in a product-led business.

Here's what it looks like:

The inner ring of the wheel contains various segments that correspond to five common stages in the user journey, while the outer wheel depicts the actions users need to take to move between each stage.

Product-led companies use the PLG Flywheel because it's a more accurate representation of what goes on in their business than a traditional funnel like this:

‎The traditional funnel is linear, with a large amount of prospects at the top in the awareness stage, and a smaller number that actually convert into paying customers.

To be clear, this model isn't a bad one, but it's an inadequate representation of what goes on in a product-led business because:

• PLG is an ongoing, cyclical process – not a linear one.
• The traditional funnel doesn't show the action needed to move from stage to stage.
• A big part of PLG is the evangelism between the people who love your product and those who don't know about it yet, and this isn't illustrated in a typical marketing funnel.
• The traditional funnel doesn't convey the sense of momentum or snowballing that's a core part of the PLG business model.

Let's explore the individual parts of the flywheel in more detail.

The Inner Wheel: User Segments

Strangers: Users in the early stage of discovery

Strangers are in the earliest stages of discovering your product.

They may have found you from your marketing or have been referred by one of your champions (more on that later).

If they're been to your website at all, it's to

• poke around a bit,
• see how much your product costs and
• compare your solution against competitors.

Explorers: Suspicious and curious users

Explorers are taking baby steps towards using your product.

They're aware of a specific problem that they have that your product can solve, and they're evaluating your product to see if it's a good fit.

They're probably on a free trial, and they might also be doing free trials with your competitors at the same time. They may have experienced the Aha Moment, but they haven't activated yet.

Beginners: Activated users in the product

Beginners, on the other hand, have activated, which means they've personally experienced the value your product has to offer.

At this stage, they're still using basic workflows, and your product isn't a big part of their day-to-day.

But they've understood the basics of what your product does, perhaps even to the point of being willing to pay for a simple package. 

Regulars: Active and regular users who get benefit

Regulars are people who use your product on a recurrent basis, as a core part of their workflow.

They're logging in multiple times a week in order to knock out important tasks, which means a certain level of dependency has been created.

They've mastered one product use case and are open to learning about different ones. The majority of your paying users fall into this category. 

Champions: Your power users

They love every aspect of your product, as can be seen in their consistently high NPS scores.

They're willing to spend top dollar to pay for higher subscription levels that give them a range of premium features. Not only do they use your product on a regular basis, the chances are that they're also telling all their friends about you, as well. 

The Outer Wheel: User Actions

Evaluation

Evaluation is the phase in which Strangers turn into Explorers.

This involves doing some basic research to find out what your product does and how much it costs.

During the evaluation phase, a Stranger might poke around your website a bit or ask their friends about your product. This phase ends when the user signs up for a trial account – at which point the Stranger has become an Explorer. 

Activation

Activation is the process by which Explorers become Beginners.

In this phase, a user is going through your onboarding process as part of your free trial. They're trying out the part of your product that's most relevant to them to see how intuitive it is.

Through an intelligent product tour that uses checklists to highlight key actions, you can help your Explorers experience the value of your product first-hand and thereby activate it. 

Adoption

Adoption is the phase in which Beginners turn into Regulars.

To adopt your product, a customer will need to make it a core part of their day-to-day workflow. Part of this occurs through simple repetition.

But you can make the process easier for Beginners by signposting key UI elements with hotspots and tooltips, as well as making help resources available in-app.

This phase is all about demonstrating value over and over while the customer forms a habit out of using your product.

Expansion

Expansion is the process by which Regulars become Champions. The SaaS world sometimes likes to talk about "expansion revenue," which basically means the additional revenue earned when customers upgrade from one package to a higher one in order to use more features.

This is the sense in which we mean expansion here, too. During this phase, customers who use one or two product flows will start to explore and adopt a wider range of more complex features.

Advocation

Advocation is the process by which Champions attract more Strangers to your product.     Champions love everything about your product and are always talking about it with their friends.

Through conversations with Champions, Strangers start to become curious about your product. Sometimes, it may even be the first time they've heard of you. 

Note that the point of the flywheel is that all these user actions are ongoing simultaneously, all of the time.

Variations of the PLG Flywheel

The flywheel described above is the one most commonly used by product-led teams to visualize their customer journey. 

That being said, there are some alternative models to be aware of.

The Four-Segment Wheel

This model simplifies things slightly by cutting out the Strangers – or by grouping them together with the Evaluators, depending on your point of view. Likewise, the Evaluation phase has been merged into one big Activation phase.

Note also that "Expand" has been renamed "Adore." This has the advantage of ensuring that all four words in the outer ring start with "A," but conceptually, it's essentially the same. 

A variant of this model cuts out the segments part of the flywheel and focuses only on the user behaviors:

This makes the model much easier to understand, at the cost of some of the nuance in the original flywheel.

The Three-Process Wheel

This flywheel offers a different take on the original model, in that the user behaviors in the outer ring are removed.

What was the inner ring now becomes the new outer ring, and there's a new inner ring that tells you as a business what you need to do in order to move users from one segment to another.

With the exception of "Strangers," the names of the segments have also changed from both the original model and the alternative we looked at above.

Champions have become Promoters, Regulars have become Customers, and the word "Prospects" is used to cover what was Explorers and Beginners in the original model.

There's also a big red circle in the middle that says "Growth," just to remind you why these models matter!

Combined Four Segments and Three Processes

If you want to be really fancy, you can combine the previous two alternatives into one massive wheel. 

The advantage of this is that you get the user segments, user behaviors and your company actions all together in one wheel.

The disadvantage is that this wheel is now so information-dense that it's difficult to understand, especially for someone new to the topic. 

Fictitious Example of the PLG Flywheel in Action

This is all still a bit theoretical, so let's use an example to illustrate the point.

Nick runs a successful digital agency. One tool he's used to help him scale is SquirrelLine, which helps businesses organize their sales pipeline, visualize their dealflow, and use AI to predict when leads will close or churn.

Nick is a Champion user, going beyond simply visualizing his deals to the point of logging in every day to see what SquirrelLine's sales analytics will predict.

Over coffee, Nick tells his friend, Jess, about SquirrelLine.

Jess' agency is only a year old, but she's starting to get some traction and needs a better way than spreadsheets to manage her sales pipeline.

That evening, a curious Jess pokes around a bit on SquirrelLine's website. She's still a Stranger to SquirrelLine at this point, so she's interested to read about how the product works and see what it costs.

She's won over by SquirrelLine's testimonials section, which has about 20 stories of how digital agency owners used the tool to organize their pipeline.

Jess decides that it can't hurt to start a free trial. At the same time, she starts a trial with WhaleLine, SquirrelLine's main competitor.

Jess has now become an Explorer. She starts comparing the two platforms against each other to see which one is more intuitive to use.

WhaleLine is built for enterprises and requires a lot of technical wizardry to set up. WhaleLine also haven't invested in their user onboarding, so Jess gives up on that option pretty quickly. 

But SquirrelLine intrigues Jess. She goes through their product tour and manages to set up her first Kanban board and add her first deal to it.

At this point, Jess has become a Beginner. She can now use SquirrelLine to manage her sales process.

The switch from spreadsheets to SquirrelLine doesn't happen overnight. At first, Jess is only logging in to SquirrelLine once a week or so, whenever she gets a new deal.

She still uses her spreadsheet to manage all her old deals, plus her referrals.

But little by little, over about 2 months, Jess migrates her entire pipeline into SquirrelLine. She starts to notice that she feels more organized going into sales calls, and she's not scrambling looking for her notes as she used to. She purchases a monthly subscription and becomes a Regular.

Over the next year, Jess' agency goes from strength to strength. All the growth she's experiencing requires her to hire a sales manager because she can't manage the entire dealflow alone.

This, in turn, means that she needs to upgrade to the next SquirrelLine pricing tier in order to get the extra seat. Following another conversation with Nick, she also decides to start using SquirrelLine's AI to predict her monthly revenue.

Before she knows it, Jess' entire sales system has become dependent on SquirrelLine. She's happy to pay for their highest pricing tier because the value to her and her team is so high.

Her sales manager loves the tool as well. Both of them start raving to their friends about SquirrelLine, resulting in more users coming to the platform. The journey has come full circle: now Jess is the Champion, and she'll start to bring in more Strangers to give SquirrelLine a try. 

5 Best Practices to Get The Most Out of The Flywheel

The PLG Flywheel is a mental tool for understanding the customer journey. Most companies will leave their exploration of the flywheel at that, and won't actually implement anything beyond simply understanding the flywheel and perhaps sharing it with their team.

If you want to turn this from an abstract mental model into something actionable, here are some tips to follow:

Evaluation

In the Evaluation phase, Strangers really want to see two things: what does your product do, and how much does it cost? They might also be comparing you against competitors, but you can't control what your competitors put on their websites, so don't worry about that part too much.

Instead, ensure that your value proposition is as easy to understand as possible. This means investing in a good copywriter, together with helpful graphics that complement the copy. Your home page is especially important here.

Your pricing should be transparent, easy to scan, and publicly communicated. Make sure to link to it prominently in your website navigation sections. 

Another good tip is to add testimonials and other social proof elements to your website, especially above the fold on key landing pages. This is a trust signal that will encourage Strangers to keep reading.

Signing up for a free demo or trial account should be a matter of a few clicks. Do whatever you can to reduce the friction in the process, such as allowing people to sign up via Google rather than creating a new account on your site. Put a brightly-colored button in your top navigation that people can't miss.  

Activation

Your most important job in the Activation phase is to give each new user a product tour that walks them through the key steps they need to take in order to activate.

Checklists are a great tool for telling the user how many such steps they've completed, and how many they still have to go.

But don't make the mistake of giving the same product to all your users. Instead, segment your users at the start of their journey using a welcome screen:

On the basis of your users' answers, serve them a product tour that speaks to the unique needs of their particular customer segment. 

Adoption

Once users have activated and become Beginners, the way that you help them make using your product habitual is by ensuring that your product is as intuitive and helpful as possible. 

There are lots of ways to do this, and they all involve customer education.

For example, you can use a hotspot or a tooltip to highlight important features:

You can build a help center into your app so that users can find support resources in the context in which they need it, rather than reaching out to support agents via a different section of your website:

And you can also use a combination of analytics and surveys to see where users are currently spending their time in-app, which features are performing well, and which need to be improved:

Expansion

Even companies that do onboarding well often forget that it's a never-ending process. Put another way, onboarding doesn't end after someone becomes a regular user of your platform.

You should constantly be looking at ways to optimize the product experience, throughout the entire customer lifecycle.

Educating customers in how to use more advanced features is commonly known as "secondary onboarding." Tooltips, modals, and hotspots will all help you here.

You can also consider using announcement modals or in-app product updates to notify users when a new feature that matches their use case gets released. 

To ensure that feature usage turns into expansion revenue, ensure that some of those features are gated behind higher pricing plans. 

Advocation

To encourage Champions to refer you to their friends, look for ways to incentivize referrals. Depending on your user base, this could be by giving them discounts, merchandise or extra perks. 

Gamification is your friend here. Consider creating a leaderboard that tallies the points won by users who refer their friends. Share the results publicly, and give some sort of prize to the top 10 users on a monthly basis. Humans love games of all sorts!

Consider also that the users who are most likely to refer you are the ones who give you the highest NPS scores. So it might be worth segmenting your users by NPS score and only offering certain referral incentives to the users with the highest scores. 

Wrapping up

Having read this article, you should now be in a position to understand what the PLG Flywheel is and apply it to your business.

If you'd like to get the most out of the flywheel, do consider having a look at UserGuiding. It will help you build product tours, modals and hotspots, create in-app surveys and help centers, and announce new features to your audience – all without having to code.

You can give it a try by signing up for free here.