Every SaaS founder loves to talk about “the funnel” like it’s some mysterious formula. Newsflash: it’s not. The Product-Led Growth funnel is just the path your users take from “I heard about you” to “fine, here’s my credit card.”

Most teams either drown in dashboards or pretend signups = success. Both are wrong. The reality is your funnel has leaks, and unless you know where, you’re basically guessing.

Let’s walk through the PLG funnel stage by stage, with the only metrics that actually matter.

What is the Product-Led Growth Funnel?

The PLG funnel is the journey where the product does the selling, not your sales team. Unlike the classic sales-led process — book a demo, sit through slides, wait for follow-up emails — here the product has to prove itself instantly.

The stages:

1. Awareness
2. Signup
3. Activation
4. Conversion
5. Retention
6. Expansion

Miss one, and the whole thing collapses.

Awareness: How People Discover You

Awareness is not just ads. It’s everything from content to a random tweet to someone sharing a screenshot of your product in Slack.

Metrics that matter:

• Traffic (where do they come from?)
• Referral sources
• Organic mentions

If nobody’s heard of you, the funnel doesn’t exist.

Signup: When Curiosity Turns Into Clicks

A signup is not a win. It’s just a user saying “ok, I’ll see what this is.” Treating signups like success is the SaaS version of counting likes as revenue.

Metrics that matter:

• Number of signups
• Signup-to-activation rate
• Cost per signup

Activation: The “Aha Moment” (or Bust)

This is the stage that makes or breaks PLG. Activation is when a user first thinks “oh, this actually does something useful.”

For Slack it’s sending the first message. For Notion it’s setting up a workspace. For your product it’s… well, you should know. If you don’t, you’re already in trouble.

Metrics that matter:

• Time-to-value
• Percentage of users activated
• Drop-off before activation

Conversion: When Free Users Decide to Pay

This is the awkward moment when your freebie users ask themselves, “Do I care enough to put in a credit card?” If the answer is no, either you gave away too much for free or your paid plan looks like a tax.

Metrics that matter:

• Free-to-paid conversion rate
• Trial-to-paid conversion
• ARPU

Retention: The Churn Test

Retention is the silent killer. You can brag about signups all day, but if everyone leaves after a week, you don’t have a funnel, you have a sieve.

Metrics that matter:

• Churn rate
• DAU/WAU ratio
• Net Revenue Retention

Expansion: When Growth Becomes a Loop

Expansion is the holy grail. It’s when users invite others, upgrade plans, or expand usage without you lifting a finger. This is where PLG turns into compounding growth instead of just a funnel that resets every month.

Metrics that matter:

• Invites sent
• Expansion revenue
• NPS

Putting It All Together

Here’s the cheat sheet:

• High awareness, low signups → your messaging sucks.
• High signups, low activation → onboarding is broken.
• Good activation, poor retention → the product isn’t sticky.

It’s not complicated. But you need to measure honestly, not just celebrate vanity spikes.

Common Mistakes

• Counting signups as success.
• Giving away the whole product for free.
• Not knowing what your “aha moment” actually is.
• Pretending churn will fix itself (it won’t).

Conclusion

The Product-Led Growth funnel is not magic. It’s a series of very obvious steps that most companies still manage to mess up.

If you’re building SaaS in 2025, don’t just collect dashboards. Map your funnel, track the right metrics, and fix leaks one by one. That’s how PLG actually works.

👉 And if you want a simple way to see your funnel without feeling like you’re running enterprise BI, check out Roaarrr.