Entire role of Product manager revolves around metrics. There’s an old saying “what gets measured gets managed”. Sometimes the term KPI or Key Performance Indicators is used interchangeably with metrics. Some examples of metrics are Monthly Active Users, Returning Users, Churn users, Reviews, Social media shares.
Metrics are used depending on the company domain and product, One of the most important things for product managers is to accomplish a goal and in order to do this you need to define the success via metrics. As an example, this is the numbers we’re trying to hit with this metric by building this feature. And we’re hit it then it’s a success if not then there’s something wrong.
This is the feedback loop for a product manager. For example, in real world if you’re going to lose weight you need to monitor calories intake, weight and physical activity using fitness tracker such as Fitbit. Here’s how Cook explained how the Apple Watch helped him personally lose weight: “Because it motivates you, and it constantly gives you feedback, it constantly gives you rewards. And this makes a difference over time.”
Talking about apps and software, if Facebook wants to increase the time spent on site and they know that people who comment spent more time on it so they need to build something to increase commenting by X% per person an average.
Categories of metrics
What are the categories of metrics? They can be grouped by growth and activation, engagement, retention, user satisfaction, revenue.
Growth metrics track and measure how the product is growing. Total new users, new users by source (seo, social media, ads), activated users (those who performed certain actions on site i.e.). Retention measure and track how many people are coming back, how many users are here now versus last month, If 100 users downloaded the app and 40 is using it then the retention is 40%; returning users – those continuously using service or app week after week.
For instance, Twitter growth metrics are total new users per month/day, monthly/daily active users, activated users per month. Engagement metrics – multiple logins per day, time spent within the app, number of tweets sent per user, number of likes, retweets and follows, messages sent.
Youtube growth metrics would include total new users per month/day, monthly/daily active users, activated users, Engagement metrics – video views per user, average viewing time per user.
Engagement is mostly traced at consumer based companies. Engagement metrics are tailored per company to encourage specific type of behavior.
Way to quantitatively say how happy are the users. – number of complaints, NPS, app store rating.
Revenue metrics – LTV e.g. over 1 year how much revenue each customer generates an average, CAC cost of aquisition.how much money we do have to spent in ads or marketing to acquire a customer.monthly recurring revenue/annual recurring revenue – all of the users combined.
How to pick good metrics
What is a good metric? Metrics should be understandable just by name of the metric and relatively simple – you don’t need to create some complicated metrics nobody understands. For example, rate or ratio – active users per month vs total users signed up; average number of nights booked per person
Metrics should be consistent – if you measure something in one way in one period of time – you should measure similar things in the same way in order to being able to compare it with the past.
For changeable metrics – it’s not idea to measure something per day if the users don’t use it often enough and use per week instead.
Why would you use metric frameworks? To ensure you’re considering all the aspects of the user journey and how the user sees your product. This can be used for anything – a feature, product or entire company. You can pick and choose what metrics are relevant to your product/company and not use all of them.
HEART is the acronym for Happiness (how happy is the user) , Engagement (how engaged is the user per period of time), Adoption (how many users tried the product), Retention (how many users are retained long term), Task Success (how successful you’re at allowing a user to perform the most valuable task)
What would be the goal for each metric in this frameworks? Happiness (maximize the satisfaction with the quality of the service), Engagement (maximize number of actions users take on the service/app), Adoption (maximize number of users signing up for the service), Retention (minimize number of users who stop using the service), Maximize number of users successfully completing the most important tasks on the service/app).
What would be the signals for each metric we’re tracking in this framework? Happiness (app store reviews month over month, NPS score percentage), Engagement (number of orders per customer per week, average order value), Adoption (number of users making at least one order vs total new users, number of users downloaded/used the app), Retention (number of users leaving the service or staying at the service) Task success (incomplete orders per month, average time taken to complete purchase).
AARRR Pirate Framework
It’s an acronym of the 5 step process – Acquisition (user went to the website or downloaded our app), activation (signed up, confirmed email, etc), retention (they come back, repeat users), referral (users are happy and going to refer our app to other users), revenue (you make revenue from this user, buying subscription/pro version). This framework makes you to think about lifecycle of your user. You use five stages as a guide. It works like the steps in the funnel.
Common tools for tracking metrics
Google Analytics, Kissmetrics, Mixpanel.