“How Do You Measure, Measure A Year?” - Product Metrics For Success
POPSTAR Song Inspiration - “Seasons of Love” from the RENT soundtrack
I am a self-admitted product nerd. I love to build - it is one of the most satisfying aspects of being a product manager. But building without context or check-ins can be dangerous and throw a team off track, and even risk its demise.
However, building is not enough. A good product is measured by the impact the product has for the business and its users. Establishing metrics, including key performance indicators (KPIs), is crucial for tracking progress and ensuring that the product is meeting its goals. Otherwise, product leaders risk wasting resources (money, time, personnel) in pursuing an idea that is ultimately unviable.
In this guide, we'll explore the process of defining KPIs and other metrics that will be used to measure the success of a product.
Understanding Key Performance Indicators (KPIs)
Key Performance Indicators (KPIs) are quantifiable measures that help organizations track and evaluate their progress towards specific goals. In the context of product management, KPIs are used to measure the performance of a product against its objectives and to determine its overall success.
Identifying Relevant Metrics:
Define Product Goals: Start by defining the goals of your product. These could include increasing revenue, improving user engagement, or expanding market reach. It is important to narrow the product goal to one singular outcome, and identify secondary goals as relevant. This ensures focus.
Identify Key Stakeholders: Determine who the key stakeholders are for your product and what they consider to be important metrics. This could include executives, customers, and internal teams.
Brainstorm Metrics: Brainstorm a list of potential metrics that align with your product goals and stakeholder expectations. These could include metrics related to user acquisition, retention, revenue, and customer satisfaction. For user acquisition, you might track the number of new users acquired per month, conversion rates from website visitors to users, and the cost per acquisition (CPA). In terms of user engagement, metrics like daily active users (DAU), monthly active users (MAU), average session duration, and number of interactions per user per session can provide valuable insights
Prioritize Metrics: Once you have a list of potential metrics, prioritize them based on their importance to your product goals and their feasibility in terms of measurement.
Define KPIs: From your list of prioritized metrics, select a few key metrics that will serve as your KPIs. These should be the metrics that most directly reflect the success of your product.
Examples of KPIs and Metrics:
User Acquisition: Number of new users acquired, conversion rate from visitor to user.
User Engagement: Daily or monthly active users, average session duration, number of interactions per user.
Revenue: Total revenue generated, average revenue per user.
Customer Satisfaction: Net Promoter Score (NPS), customer satisfaction score (CSAT).
Measuring and Analyzing Results:
Collect Data: Use analytics tools and platforms to collect data on your chosen KPIs and metrics.
Analyze Data: Regularly analyze the data to track progress, identify trends, and make informed decisions about the direction of your product.
Iterate and Improve: Use the insights gained from your analysis to iterate on your product strategy and make improvements that will drive better results.
Establishing KPIs and metrics is a critical step in measuring the success of your product. By defining clear goals, identifying relevant metrics, and regularly analyzing and iterating on your results, you can ensure that your product is on track to meet its objectives and deliver value to your users and business.
