Product managers in the insurance industry need to angle their roadmaps to focus on the maintenance as well as the enhancement of their existing products. More →…
What are Product Metrics?
Product metrics are quantifiable data points that a business tracks and analyzes to gauge the success of its product. Examples of product metrics include conversion rate, churn rate, and monthly recurring revenue.
Why Product Metrics Matter:
Product metrics matter for a couple of essential reasons.
1. Product metrics matter because they lead to better product decisions.
Determining the right metrics to monitor and analyze leads to more intelligent decision making throughout the product development process.
These metrics, sometimes called key performance indicators (KPIs), give the company quantifiable evidence about which aspects of the product or customer experience are resonating with customers, and which aren’t.
Product, marketing, and sales teams can all use this data-driven information to gain a better understanding of what motivates their customer personas. This data helps the company continually improve its products.
Without such metrics, product managers are forced to rely on educated guesses when deciding which products or features to prioritize.
As Product Director Paul Yokota explains in a podcast episode on This Is Product Management, a PM’s intuition is valuable, but gut instinct should be applied in conjunction with product metrics.
2. Product metrics make it easier to earn executive approval.
A second reason to use product metrics is that they provide objective support to the plans product managers propose to their executive staff when they present the product roadmap.
Your executives will want to see the evidence suggesting that the company will enjoy a positive return on investment if they green-light the product you’re proposing.
Which Product Metrics Should Your Team Use?
There are many product metrics you can choose from. Here are a few questions to help you determine whether or not a product metric will be valuable to your team:
1. Does it reflect actual user behavior?
If you already have products in the market, you can find valuable data on how your users interact with those products and how they react to your product promotions. This data is helpful even if you are giving away the product for free to prospective customers.
Examples of user-oriented products metrics include:
- User adoption
- Percentage of users who act based on your promotion, such as clicking on an ad to learn about the product
- Customer retention or churn rate
2. Does the metric tie back to your business goals?
You will also want to track metrics relating to how your efforts build, promote, and support your product relates to your company’s objectives.
Examples of business-oriented metrics include:
- Cost to acquire a new customer
- The lifetime value (LTV) of your average customer
- The average revenue per customer
3. Does the metric align with your North Star?
According to ProductPlan’s Director of Product Management, Annie Dunham, the metrics your team chooses to track should collectively create a North Star for your product. They should help you move toward the broad strategic goal you’ve set.
Annie suggests identifying specific feature metrics within your product to track.
For a SaaS company, examples of this could include:
- Sustained feature adoption
- Sessions per user
- Bounce rate
- Number of active users
Here at ProductPlan, one metric that indicated we were moving successfully toward our North Star was the number of users adding a bar in our product roadmap software.
We combined this data with another North Star metric: the number of people in the average customer organization who were viewing the roadmaps their coworkers created in the app.
These two data points indicated an increasing rate of sustained feature adoption as well as the growing usage of our app across the customer organization.
Because our goal is to make building and sharing roadmaps easy, these increasing numbers represented objective evidence that our product was gaining traction and adding customer value in the ways we had hoped.
Are Your Product Metrics Sending You a Warning Sign?
Another value of monitoring product metrics is that they provide an early warning signal that some aspect of your product or user experience might not be working for your users.
Sometimes, these metrics represent the only feedback you’ll receive about a problem area of your product. Users might not call your customer support team for help. They might not contact their sales rep to complain, either. They might stop using some aspect of the product and never contact you to tell you why. Over time, this can lead to increased churn rates and damage to your product’s reputation.
If you are monitoring the right product metrics, you are more likely to spot these trends early, so that you can address them.
Examples of warning signs your product metrics are sending:
- A steep drop-off in the usage of a feature or area of your product
- Users taking longer to complete specific tasks in your product than you had estimated
- Average user time spent interacting with your product decreasing over time
It would be best if you were looking for these types of data points. They might all signal that your team needs to re-examine your product and user experience.
What Can You Do with Product Metrics?
Let’s say you’ve analyzed your product metrics and made a conclusion about what they mean. What should you do next? We recommend a three-step process for taking action.
Step 1: Confirm
If a product metric suggests that a feature needs to be updated or added, you will need to first confirm that your theory is correct.
Speak with your customers and ask them for their thoughts on your plans. Are they having the problems you think they are with your product? Will they use the new feature you’re thinking about building?
You will then want to confirm that this will be the most strategically advantageous use of your limited resources. Remember, building or modifying some areas of your product will come at the expense of other work those development resources could be working on. So you might also want to conduct a cost-benefit analysis.
Step 2: Communicate
When you’ve decided to move forward with your plan, the next step is to communicate the plan to the relevant people in your cross-functional team. This communication will include the stakeholders contributing to the product as well as your executive staff.
It will be a difficult sell internally, especially if you are asking people to adjust their priorities or to undo the work they’ve already done. Fortunately, though, you will have real-world data—your product metrics—to support your new plans.
Step 3: Rally your troops
When you’ve made your case to the relevant stakeholders, you will then want to help them relay this new information to their respective teams. So you’ll want to give them the data and the key messages they’ll need to do so.
You’ll also want to work with these stakeholders to help them identify the way to adjust the plan that will give the most significant benefit to the company while also minimizing any negative impact on the teams responsible for making it happen.