The Importance of Product Metrics for better product growth.
“If you can’t measure it, you can’t improve it”
— Peter Drucker
What are product metrics?
Before diving directly into designing the dashboard, It is important to figure out what are you trying to do with the data.
Choose whom are you designing for and what are you trying to increase user engagement, drive conversions, or generate revenue?
How does it help us, product metrics allow measuring product progress and creating alignment in an outcome-oriented way.
Product metrics are quantitative data points used by companies to decide what to do, how to do it and track how well they’re doing it.
Why do product metrics matter?
Product managers use product metrics to make informed decisions about the product strategy.
Our job is to change the product for the better — to create value for the customers in a viable way for the business.
That’s why we need to define key metrics — KPIs (key performance indicators) or KEIs (key experience indicators).
I have collected some popular frameworks for making product metrics effective.
There are also some popular frameworks which incorporate these metrics in a structured manner. They can act as a checklist to assess your product or feature’s performance.
The metrics capture user behavior at various stages of their interaction with the product and help PMs make more data-driven decisions to optimize the product and make it more valuable to users.
HEART is a frame work created to address how users interact with the product and how satisfied they are.
💫 NORTH STAR
This is the single most important measure of success for a company. ****A North Star Metric (NSM) should be:
- a direct reflection of a company’s mission
- an indicator of how a company brings value to its customers.
- the only one of its kind. Avoid having multiple NSMs as this tends to create complexity and confusion
- the answer to the following question: what is the one metric that best represents the desired outcome of your company?
I’ve put together some standard metrics for a generic product. I went through the areas mentioned by Pirate Metrics and HEART and placed its key things to track in a tree-like architecture from North Star.
To track the success of the Acquisition phase, we need metrics that tell us about the new users and how they found the product.
🟠 Activation / Adoption
To track the success of the Activation or Adoption phase, we need metrics that tell us how quickly users start interacting with the product or a particular feature. Here we should focus on new usage only (as opposed to Engagement).
- The Activation Rate measures how many of the users who signed up for the product started interacting with it and converted into active users.
⚠️ You must define what counts as starting to interact with it: e.g., performing the core action for the first time, or performing a queue of multiple actions. It’s up to us and what makes sense to our product.
- The Adoption Rate measures how many users started interacting with a specific action/feature.
- The First Time Rate is to understand how many of the users who engaged with an action/feature are doing it for the first time.
- The Time to First Action is to know how quickly users start interacting with that action/feature.
How often users interact with a product or feature. It’s essential to measure specific experiences instead of measuring the overall.
When choosing those specific experiences, we should go for core ones — we need to think about why users use our product and the key behavior that defines that usage.
- The Active Users is to know how many of the users were active on the product.⚠️ We must define what counts as being active. In this case, it’s a user that performed the core action at least once. But it’s up to us and what makes sense to our product.
- The Users per Action is to know how many users used a specific action/feature.ℹ️ As, on the scheme above, I was counting active users as those who did a core action, the number of users of the core action will be the same as the active users of the overall product.
- The Actions per User and Time Between Actions are to understand how often a user uses something and track the time between their usages.
How easy it’s for users to perform that action. It’s about usability.
- The Success Rate measures how many actions reached their end state. It measures effectiveness.
- The Time on Action and Lostness are to know how quickly the action can be performed and understand if users get lost while performing it. They measure efficiency.
⚠️ As we’ve no idea what the users’ motivation was while performing the action, it’s hard to make sense of these numbers alone.
E.g. Time on Action: maybe they needed to go to the toilet, or they’re in the middle of a phone call. Nevertheless, we can use those numbers to know when to debug after they suddenly worsen or when improvements were successful after they got better.
💡 To get accuracy, we can make an environment where we create the motivation — give a task to a user. This way, we know what they wanted to do because we asked them to.
To track the Happiness of users, we can look at Referral and Satisfaction. How often users recommend the product. To track Satisfaction, we need metrics that tell us how satisfied users are (duh!).
- The Referral Rate is to know if users are happy enough with the product to recommend it.
⚠️ NPS (Net Promoter Score) is the most known way to measure Referral. “How likely are you to recommend to a friend or colleague? 1–10”. Yet, it measures intent rather than behavior and, for that reason, it doesn’t have many fan.
💡One of the rules of talking with users is to ask about the past. What we could ask them, instead of the NPS question, is: “In the past two weeks, have you recommended the product to anyone? Yes/No”. An even better way might be to give users an easy way to recommend the product and track how many do.
- The Satisfaction Rate and Satisfaction Score are to measure how many users are satisfied enough to say it and understand the satisfaction level of most users.
⚠️ We should measure Satisfaction in context. Sending a survey a week after an experience won’t get us truthful answers — the user’s perception will have tampered.
💡If relevant, we can put a simple rating system at the end of an action, like those that appear at the end of a video call.
How long users keep using the product or a particular feature.
- The Retention Rate is to measure how many users keep using the product.⚠️ We must define what counts as use: e.g., logging in, performing the core action, or remaining subscribed. It’s up to us and what makes sense to our product.
- The Retained Time is to know how long users keep using the product. We’ll need to work to improve its extension.
- The Upgrade Rate is to understand when users choose to upgrade, in case the product has tiers.
- Some teams measure Churn instead of Retention. It has the same goal, but it has half-empty glass lenses. I’m a half-full glass person.
How much users are paying or any other way we might make money with our product.
The revenue per user is a way to measure that. There are many others — it’s a very business-dependent metric.
It’s easy to get caught up in numbers and lose sight of the bigger picture. That’s why your primary focus needs to be on those metrics that contribute to the bigger picture, and not just the ones that look good on paper.
If you can do that, you’ll be well on your way to designing a dashboard.