How do you create a product that will sell? What are the product metrics, key performance indicators (KPIs) that matter for product success? We will teach you what to measure and how to drive your product to success. You’ll learn about product usage, product quality, customer satisfaction, customer loyalty, conversion rates and more.
Choosing Product Metrics That Matter
The product metrics you choose to measure and analyse will depend on your product and stage of growth. What is the user doing with it? How does their use of the product compare to others? You can track how often they’re using it, what features are most popular, whether those patterns change over time (i.e., learning curves) and more. The list is almost endless but here’s some questions you need to ask in order to find the product metrics that matter.
Do they help drive towards the product’s mission or objectives?
Do the product metrics help product managers, product marketers or entrepreneurs make good decisions about product changes and customer value propositions to improve product success?
Are they based on vanity?
Quite often we look at large social media followings to decide whether or not someone is successful. In the age of influencers this has become a standard for comparison but thankfully, you don’t need a large following to succeed.
If the metric is purely to impress an outside audience and has no impact on the bottom line, chances are it’s a waste of time. If you’re in the content business, a following may be critical but if you’re in the B2B product business you might be better targeting leads through outbound lead generation.
What is a Key Performance Indicator?
A key performance indicator (KPI) is a measurable statistic that product managers, product marketers and entrepreneurs use to define the current state of their product. A KPI quantifies how your business or product is performing with regards to its goal(s). It answers questions like: Are we making progress towards our objective? How do we compare against our product metrics?
Key performance indicators can be quantitative (numbers) or qualitative (descriptions). A good KPI is like a progress bar for your product. You should know where you are, how much work it’s going to take to get there and why.
Objectives & Key Results
OKR’s are another way to represent KPI’s. The Objective should be audacious enough that it motivates the team and the Key Result should be the product metric that determines success.
These are a great way to shoot for stretch targets, they encourage high standards and add a sense of urgency towards a project, release date or outcome.
Good Churn vs. Bad Churn
Two of the most important product metrics are product usage and customer churn. As a product manager, you need to understand how these two product metrics work together in order to measure your product’s health over time.
Customer churn is when people stop using your product so it’s an easy number to track but be wary of making it your key performance indicator. Customers may leave for many reasons so make sure you define the difference between good churn and bad churn.
Bad churn is usually related to poor user experience, frustration or outcome. However, if you run a learning management platform and a user gets a job from your training and disappears, this is a good type of churn. Focus on bad churn to improve retention, use and loyalty.
Product Analytics & Data
When it comes to product metrics, product analytics and data are usually the best way to get started. Make sure you have a tool in place that can help measure product usage patterns over time so you know where users drop off the funnel or how they’re using your product from start to finish.
Once you have them installed you will need to be aware of:
The Happy Path
This is the usage pattern or journey that your product follows. It’s where users are successful and don’t need any help or guidance along the way, they just keep on doing what you want them to do. If there aren’t enough happy path conversions then it could be a sign of poor design, user frustration or lack of product clarity.
Be sure you are not just tracking the happy path, the user journey is rarely linear and happens a different way to the way we intend. Be mindful that your users may cut corners or run into problems you may not have predicted.
The product metrics that you don’t know about today, but will be important in the future. Whilst we intend on tracking everything, we don’t know what we don’t know. Schedule time for user interviews and collecting feedback from users that have a negative experience to help uncover the unknown unknowns.
Tools like FullStory can help you view user interactions with your product that will let you know ahead of time of product metrics that may matter in the future.
Types of Product Metrics
Product Quality Metrics
You want product quality metrics to monitor your product’s health. This includes bugs, crashes and other product issues that affect experiences. Plus, look at user feedback for insights on product improvements you should prioritise over others.
These product metrics will help you understand how your product is helping or hurting users. For example, if people are using a product that doesn’t do what they want then this is bad for the business and product. Try to track active users as well as inactive because these numbers can be skewed by beta testers and early adopters.
If you are an ecommerce product then customer metrics will be your bread and butter, but what about products that don’t have users? Try to track product usage regardless of the user type because not all customers are equal. For example, a business or enterprise client may pay more for your product but represent less overall revenue than an SMB client.
For product metrics that affect the entire business, you need to track revenue and customer growth over time. However, this can be difficult if your product is part of a bigger suite or offering so try to isolate your product’s impact on both KPIs as best you can. If it was a product that was a stand alone success then you can focus on revenue metrics.
Dissecting The Data & Implementing Change
Once you have product metrics in place, start to work out what is working and what isn’t. For example, if your product has high customer churn then this will affect revenue so take action before it’s too late.
If data shows that users are struggling with the product or not using key features then try to pinpoint why by looking at product analytics and product usage data. Is the product clear enough? Are users getting stuck at a certain part of the flow? Work with your product team to gather feedback from customers who dropped off or struggled in order to improve user experience, understanding and engagement.
Start by looking at the funnel and solving the biggest problem first. If nothing is presenting as a big problem, focus on moving down the customer journey in an iterative process on problems as you find them.
A final point.
If it is not broken, don’t fix it. A common problem once we have analytics in place is that we start to over-engineer solutions. Keep it simple, test the results and only adjust if required.
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