Measure What Matters: 13 Key Metrics for Tech Product Success
- What are metrics in product management?
- Financial metrics
- User engagement metrics
- Retention metrics
- Product/Feature popularity metrics
- User satisfaction metrics
- What tools are available for tracking product metrics?
- FAQs on key product management metrics
- Conclusion
Building a successful product is no easy feat. It takes more than just a great idea and talented developers; it also requires a deep understanding of your users, market, and product performance. This is where metrics come in. By tracking the right indicators, you can identify areas for improvement and ensure that your product meets customer needs.
In this article, we will highlight some of the key success metrics in product management that you should track and the tools you can use to monitor them.
What are metrics in product management?
Metrics are quantifiable measurements that shed light on aspects of user engagement, product functionality, and alignment with overarching business goals. By systematically evaluating these indicators, stakeholders gain a thorough understanding of the product’s operational landscape, identifying strengths, weaknesses, and areas for improvement.
Key Performance Indicators (KPIs) emerge as a strategic refinement of these metrics. They represent a carefully selected subset that is closely aligned with the product’s core goals and objectives. While metrics provide a wide range of insights, KPIs focus on critical indicators.
Metrics are essential to tech product management because they can help you:
- Identify areas where your product is not meeting your expectations. For instance, if your NPS score is low, you can investigate what factors are contributing to this and make changes to your product to improve customer satisfaction.
- Prioritize which features to develop next. For example, if you see that a particular feature of your LTL cost calculator is not being used very much, you may decide to deprioritize it and focus on developing other more popular features.
- Measure the impact of the changes that you make to your product. If you release a new feature, you can track its usage to see if it has the desired effect.
Different types of product management metrics serve to assess multiple aspects of solution performance. The following sections discuss each of them in more detail.
Financial metrics to track revenue
When talking about a product’s success, stakeholders pay close attention to its financial performance. The numbers give a clear view of how well the product is doing now and its future financial well-being, influencing how long it will last and its growth potential.
Monthly Recurring Revenue (MRR)
MRR is the amount of revenue that your business generates from subscription-based customers each month. It is an indication of the financial health of your business and its ability to generate recurring revenue.
Tools to track: Stripe, Zuora
Calculation: Sum of the monthly recurring charges from all active subscriptions.
Interpretation: A high MRR suggests that your business is successfully generating substantial recurring income, while a low MRR may indicate challenges in generating consistent revenue.
Customer Lifetime Value (CLTV or LTV)
CLTV is the total amount of revenue that you expect to generate from a customer over their lifetime. Based on this metric, you can measure the profitability of your clients and identify areas where you may be losing money.
Tools to track: Kissmetrics, Google Analytics
Calculation: CLTV = Average Purchase Value x Purchase Frequency x Customer Lifespan
Interpretation: A high CLTV signals profitable customers with sustained retention, while a low CLTV suggests unprofitable clients or rapid customer attrition.
Customer Acquisition Cost (CAC)
CAC is the amount of money that you spend to acquire a new customer. It is a key metric for measuring the efficiency of your marketing and sales efforts.
Tools to track: HubSpot, Google Analytics
Calculation: CAC = Total Marketing and Sales Costs / Total New Customers Acquired
Interpretation: A low CAC signifies efficient new customer acquisition, whereas a high CAC suggests potential overspending in acquiring new users.
User engagement metrics to track customer loyalty
While financial indicators hold sway with stakeholders, customer-oriented metrics offer a deeper understanding of how product development efforts translate into user interactions. Engagement metrics in product management reveal how users discover and engage with the product, how much time they invest in it, and their reactions to specific features or actions.
Daily Active User/Monthly Active User ratio (DAU/MAU ratio)
DAU/MAU ratio is the percentage of monthly active users who are also daily active users. This indicator shows user engagement and the stickiness of your product or service.
Tools to track: Mixpanel, Amplitude
Calculation: DAU/MAU Ratio = (Average Daily Active Users / Average Monthly Active Users) x 100%
Interpretation: A high DAU/MAU ratio signifies daily active user engagement with your product or service, while a low ratio indicates infrequent engagement.
Session Duration per One User
This metric is the average length of time that a user spends on your product or service during a single session. It measures user engagement and the depth to which they interact with your product or service.
Tools to track: Google Analytics, Heap Analytics
Calculation: Average Session Duration = Total Duration of Sessions / Number of Sessions
Interpretation: A long session duration suggests engaged users finding value in your product or service, while a short one indicates potential disengagement and a lack of perceived value.
Paid/Organic Traffic from Different Channels
Traffic is the number of visits that your product or service receives from various sources, such as search engines, social media, and direct referrals. This metric helps you understand the visibility and reach of your product or service.
Tools to track: Google Analytics, SEMrush
Calculation:
- Paid Traffic = Number of Visits from Paid Sources
- Organic Traffic = Number of Visits from Organic Sources
Interpretation:
- A high volume of paid traffic indicates that your marketing efforts are effective in driving traffic to your product or service.
- High organic traffic shows that your product/service ranks well in search engines and attracts visitors organically.
Bounce Rate (Leaves Without Any Action)
It is the percentage of visitors who land on your website and leave without taking any action, such as clicking on a link or filling out a form. By tracking this metric, you can understand user engagement and identify areas where you may be losing visitors.
Tools to track: Google Analytics, Hotjar
Calculation: Bounce Rate = (Number of Single-Page Visits / Total Visits) x 100%
Interpretation: A low bounce rate suggests your website is effectively engaging and retaining visitors, while a high bounce rate indicates a lack of engagement, resulting in quick visitor exits.
Retention metrics to track product relevance
Retention metrics in product management reveal the health of customer relationships. They uncover the reasons why users choose to stay or leave. By understanding the factors that contribute to retention, you can tailor your strategies to nurture customer loyalty and foster long-lasting relationships.
Retention Rate (Returning Users)
It is the percentage of customers who return to use your product or service over some time. This metric reveals customer loyalty and identifies areas where you may be losing customers.
Tools to track: Mixpanel, Amplitude
Calculation: Retention Rate = ((Number of Customers at End of Period – Number of New Customers Acquired) / Number of Customers at Start of Period) x 100%
Interpretation: A high retention rate signifies customer satisfaction and loyalty, while a low retention rate indicates a significant loss of clients.
Churn Rate (Unengaged Users)
The churn rate is the percentage of customers who stop using your product or service over a specific time. It is a key metric for measuring customer retention.
Tools to track: ChurnZero, HubSpot
Calculation: Churn Rate = (Number of Churned Customers / Total Customers) x 100%
Interpretation: A low churn rate signifies successful customer retention efforts, while a high churn rate suggests a need for improvement in customer satisfaction and loyalty initiatives.
Product/Feature popularity metrics to track success
To make informed decisions, you should rely on data-driven insights into product and feature usage. This approach proves valuable throughout the entire life cycle of your product. It’s particularly beneficial when considering product upgrades, such as transforming it into a super app.
Number of Sessions Per User
It is the average number of times that a user visits your product or service over a specific time. It shows user engagement and identifies areas where you may be losing users.
Tools to track: Google Analytics, Mixpanel, Amplitude
Calculation: Number of Sessions Per User = Total Sessions / Number of Unique Users
Interpretation: A high number of sessions per user suggests active engagement with your product/service, while a low number of sessions per user indicates a lack of engagement.
Number of User Actions Per Session
It is the average number of actions that a user takes during a session, such as clicking on links, watching videos, or making purchases. By monitoring this metric, you can gain insight into user engagement and the effectiveness of your product or service.
Tools to track: Heap Analytics, Amplitude
Calculation: Number of User Actions Per Session = Total User Actions / Total Sessions
Interpretation: A high number of user actions per session means active usage of your product or service, while a low number of user actions per session indicates less active engagement.
User satisfaction metrics to track feedback
For a direct measure of customer satisfaction, turn to surveys. Net promoter score and customer satisfaction score are valuable metrics in product management that can be obtained through feedback mechanisms.
Net Promoter Score (NPS)
NPS is a measure of customer loyalty and willingness to recommend your product or service to others. It is calculated by asking users to rate their likelihood of recommending your product or service on a scale of 0 to 10.
Tools to track: NPS.io, SurveyMonkey, Delighted
Calculation: NPS = (% Promoters – % Detractors)
Interpretation: An NPS score of 70 or above is deemed excellent, a score of 50 to 69 is considered good, and a score of 0 to 49 is considered poor.
Customer Satisfaction Score (CSAT)
CSAT is a metric used to evaluate customer satisfaction with a product/service. It’s commonly assessed by soliciting feedback from users using a rating scale of 1 to 5 or 1 to 10.
Tools to track: SurveyMonkey, Zendesk
Calculation: CSAT = (Number of Satisfied Customers / Total Number of Respondents) x 100%
Interpretation: A CSAT score of 80 or above is considered excellent, a score of 70 to 79 is deemed good, a score of 60 to 69 is considered fair, and a CSAT score below 60 is considered poor.
What tools are available for tracking product metrics?
To effectively monitor and analyze different indicators, businesses employ a variety of tools, each tailored to specific types of data and analysis techniques. Some of the most popular tools are listed below.
Google Analytics: the complex insights platform
Google Analytics is a web analytics service that provides insights into website traffic and user engagement. It tracks key success metrics in product management such as page views, bounce rate, session duration, and conversion rates, enabling companies to assess the effectiveness of their product’s website and identify areas for improvement.
How to use: Create a Google Analytics account and add your website or app to your Google Analytics account.
Mixpanel: the user behavior and product engagement monitoring platform
Mixpanel is a product analytics platform. It offers detailed insights into user behavior and product engagement. It tracks metrics such as user acquisition, funnel completion rates, and feature usage. This allows organizations to understand how users interact with their products and identify areas for optimization.
How to use: Create a Mixpanel account and install the Mixpanel SDK on your website or app.
Amplitude: the customer insights platform
Amplitude is another product analytics platform. It provides deep insight into how users behave and engage with products by monitoring indicators such as user activation, feature adoption, and customer lifetime value. By using this data, companies can make more informed decisions about product development and marketing strategies.
How to use: Create an Amplitude account and add your website or app to the platform.
SurveyMonkey: the feedback collection platform
SurveyMonkey is a survey platform that allows businesses to create and distribute surveys to collect feedback from their users. This feedback is used to determine product satisfaction, pain points, and feature requests. This information can be used to improve the product and increase customer satisfaction.
How to use: Create a SurveyMonkey account and then add surveys.
NPS.io: the customer loyalty evaluation platform
NPS.io is a platform for tracking net promoter score, a measure of customer loyalty. It allows companies to collect feedback from their users and track their NPS scores over time, providing insights into customer satisfaction and product perception.
How to use: Create an account and set up a NPS survey.
FAQs on key product management metrics
When launching a new product, it is essential to keep a close eye on metrics to measure its performance and ensure that it aligns with your business goals.
Here’s a closer look at the metrics you should be tracking:
Customer acquisition cost helps you understand the cost incurred in acquiring a new customer.
Customer lifetime value provides insights into the total revenue a customer is expected to generate over the entire duration of their relationship with your product.
Retention rate shows you the percentage of customers who continue to use your product over time.
The churn rate is the flip side of the retention rate, representing the percentage of customers who stop using your product.
The customer satisfaction score measures the contentment level of your customers based on their experiences with your product.
Essential indicators of a product’s health are:
Conversion rate serves as an indicator of your product’s ability to entice users to engage further and ultimately become paying customers.
The churn rate helps identify potential issues and allows for proactive measures to retain customers and improve product satisfaction.
Session duration provides insights into user engagement and interest.
Customer satisfaction is a direct measure of how satisfied customers are with your product or service.
Net promoter score is a key metric for assessing customer loyalty to your product.
At Coreteka, our approach to creating product metrics in product management is streamlined and tailored to each client’s unique goals. We start by understanding our client’s business objectives and then identify the metrics that will best measure the success of the product in achieving them. Then we work with our clients to identify a set of KPIs that will track the most important aspects of product performance. Our team implements and uses a variety of tracking tools to collect data on product usage and performance. As an example, when you entrust us with the development of your retail app, we provide comprehensive monitoring of key metrics such as average order value, customer retention rate, and customer satisfaction. We are also open to making changes to our approach based on new data and insights.
Here are some steps to guide you in selecting suitable KPIs for your product:
1. Start by establishing clear and specific business objectives for your product. Understand what you aim to achieve and how success will be measured.
2. Evaluate the current stage of your product’s lifecycle — whether it’s in the early phases of introduction, experiencing growth, or reaching maturity.
3. Use a mix of lagging and leading indicators for a comprehensive view of your product’s health. Lagging indicators, such as revenue and customer satisfaction, reflect past performance. Leading indicators, like user engagement and conversion rates, provide insights into future trends.
4. Identify a few key metrics that directly align with your business objectives. Avoid overwhelming yourself with a plethora of metrics.
5. Ensure that the chosen metrics are practical and feasible to track. Utilize tools and systems that align with your product infrastructure and capabilities.
Conclusion
Creating a successful tech product is an ongoing process that requires continuous evaluation using key metrics. These indicators cover various aspects of product performance, including financial health, user engagement, customer retention, product/feature popularity, and overall satisfaction. Tools like Google Analytics, Mixpanel, SurveyMonkey, and others, can help track these metrics effectively. By employing a comprehensive set of metrics and deriving data-driven insights, you can navigate the complexities of product development with agility and precision.
Need help with developing successful tech products? Drop us a line.
