Overwhelmed with Product Metrics? Measure What Matters
Imagine you’re trying to navigate a dense forest. Every tree, shrub, and rock is a metric, each representing a different aspect of the forest’s health.
It might seem helpful to know everything about the forest, but it can also be overwhelming. Once you have so much data to consider, it can be difficult to figure out where to focus your attention.
This is the challenge many product teams face when it comes to metrics. Having too many can be like trying to drink from a firehose. It can lead to decision fatigue, as you’re overwhelmed with options and unsure which path to take.
It can also create conflicting priorities, as different metrics may point you in different directions. And let’s not forget the wasted resources spent tracking data that doesn’t provide any real value.
The goal is to focus on the metrics that truly matter – the ones that will help you improve your product.
You can make better decisions about where to invest your time and resources by tracking the right metrics. You can align your efforts with your business goals and ensure that you’re working towards the right outcomes.
So, let’s cut through the clutter and focus on what really matters. By carefully selecting the metrics that will guide your product development, you can navigate the forest of data and emerge with a stronger, more successful product.
Top Metrics Driving Adoption
To understand how well your product is being adopted, it’s crucial to track specific metrics. These metrics can provide valuable insights into user behavior and help you identify areas for improvement. Let’s explore some of the most important ones:
1. User Activation Rate
This metric measures the percentage of new users who take a specific action within a defined timeframe.
This action, often referred to as the “activation event,” is typically a crucial step in the user journey that indicates they’re starting to derive value from the product.
Formula:
- [No. users who complete the set milestone / Total no. users who signed up] × 100
A high user activation rate is a strong indicator that your product is meeting the needs of your target audience. It suggests that users are finding the product intuitive, valuable, and easy to use.
While benchmarks can vary depending on your industry and product, a generally accepted good activation rate is between 20% and 40%.
Example:
A new online learning platform has 1000 users sign up for a free trial. The activation milestone is defined as completing at least one course module. Within the first week of signing up, 350 users complete at least one course module.
User Activation Rate = (350 / 1000) × 100 =35 %
This means 70% of the new users who signed up for the free trial completed at least one course module, indicating a strong level of user activation and a positive user experience.
2. Time to Value
This metric measures the average time it takes for a new user to achieve a specific value-driven action. This action could be anything from making a purchase to completing a core task within the product.
Formula:
Depending on your product and industry, you can set the criteria and calculate the time between start and end points. This gives you the Time to Value
- [Total time to value for all users / Number of users] x 100
A low time-to-value indicates that your product is easy to learn and use and that users can quickly see the benefits of using it. This is essential for driving adoption and retention.
Benchmarks for time to value can vary greatly depending on the product and industry. However, the goal is to make it as short as possible.
Forinstance, the average TTV for SaaS companies is 1 day, 12 hours, and 23 minutes.
Example:
An e-commerce platform might measure time to value as the time it takes for a new user to make their first purchase. If the average time to value is 24 hours, that’s a positive sign.
3. Engagement Score
This metric measures the level of interaction and involvement a user has with your product over a specific period. It can be calculated using various factors, such as the frequency of usage, the duration of sessions, and the number of actions performed.
Formula:
- Engagement score = (Frequency of usage * Duration of sessions * Number of actions) / (Total number of users)
A high engagement score indicates that users are finding your product valuable, enjoyable, and addictive. This is essential for driving long-term adoption and retention.
Benchmarks for engagement scores can vary widely depending on the product and industry. However, the goal is to keep it as high as possible. For instance, these are the average Engagement scores for social media platforms as of September 2024
- Average Instagram engagement rate: 6.7%
- Average Facebook engagement rate: 3.6%
- Average X (Twitter) engagement rate: 4.6%
- Average LinkedIn engagement rate: 3.8%
- Average TikTok engagement rate: 2.8%
Example:
A gaming app might calculate engagement based on the number of levels completed, the time spent playing, and the frequency of logins.
A high engagement score would indicate that users are actively playing and enjoying the game.
4. Net Promoter Score (NPS)
This metric measures customer loyalty and satisfaction on a scale of -100 to +100. It’s based on a single question: “How likely are you to recommend [company/product] to a friend or colleague?”
Formula:
- NPS = % of Promoters – % of Detractors
A high NPS indicates that users are satisfied with your product and are likely to recommend it to others. This is essential for driving word-of-mouth marketing and increasing adoption.
A generally accepted benchmark for NPS is anything above 0. However, the higher the score, the better.
Example:
A company might survey its customers and ask them to rate their likelihood of recommending the product on a scale of 0 to 10.
If 50% of customers rate the product 9 or 10 (Promoters), and 20% rate it 0 to 6 (Detractors), the NPS would be 30.
By tracking these metrics and analyzing the data, you can gain valuable insights into your product’s performance and identify areas for improvement.
This will help you drive adoption, increase user satisfaction, and ultimately achieve your business goals.
Top Metrics Driving Engagement:
To understand how well your product is engaging users, it’s crucial to track specific metrics. These metrics can provide valuable insights into user behavior and help you identify areas for improvement. Let’s explore some of the most important ones:
1. Active Users (DAU/MAU)
- DAU (Daily Active Users): The number of unique users who use your product on a specific day.
- MAU (Monthly Active Users): The number of unique users who use your product in a specific month.
Formula:
- DAU/MAU ratio = (DAU / MAU) × 100
Low DAU/MAU ratio: This indicates that a large portion of your user base is actively using your product on a daily basis.
This is a positive sign as it suggests that users find your product valuable and engaging. For example, a social media app with a DAU/MAU ratio of 0.5 means that half of its monthly active users are also daily active users.
High DAU/MAU ratio: This indicates that a smaller portion of your user base is actively using your product on a daily basis.
This could suggest that users are not finding the product engaging enough or that there are issues with product usability or content. For instance, a streaming service with a DAU/MAU ratio of 0.2 indicates that only 20% of its monthly active users are daily active users.
2. Average Session Duration
The average length of time a user spends using your product in a single session.
Formula:
- Total session duration / Number of sessions
A longer average session duration indicates that users are finding your product engaging and valuable.
A shorter average session duration may suggest that users are struggling to find value or are encountering usability issues.
Let’s say a mobile gaming app has an average session duration of 30 minutes. This indicates that users are spending a significant amount of time playing the game each session.
However, it’s important to consider other factors such as user churn and feature adoption to get a complete picture of engagement.
3. Feature Adoption
The percentage of users who have used a specific feature or function within your product.
Formula:
- Number of users who have used the feature / Total number of users
A high feature adoption rate indicates that users are finding the feature valuable and useful. A low feature adoption rate may suggest that the feature is difficult to find, understand, or use.
If you take Instagram, for example, and it had a feature adoption rate of 80% for its new “Stories” feature. This means that 80% of the user base has tried the feature at least once.
A high feature adoption rate is a good indicator of user interest and engagement. It suggests that users are finding the new feature valuable and are actively using it.
But, it’s important to also consider other factors such as feature usage frequency and user satisfaction to get a complete picture of feature adoption.
Engagement Funnels
To understand how different user segments engage with your product, it’s helpful to analyze engagement funnels. This involves tracking users’ progression through various stages of engagement, such as:
- First-time users: Users who have created an account but haven’t taken any significant actions.
- Active users: Users who are regularly using the product.
- Engaged users: Users who are deeply engaged with the product and are using it frequently.
- Loyal users: Users who have been using the product for a long time and are highly satisfied.
By analyzing the funnel, you can identify bottlenecks and areas where users may be dropping off. This information can guide product improvements and help you increase engagement.
Example: A social media app might have an engagement funnel that looks like this:
- Step 1: Sign up
- Step 2: Complete profile
- Step 3: Follow other users
- Step 4: Post content
- Step 5: Engage with other users’ content
You can analyze the drop-off rates between each step and can identify where users are losing interest and take steps to improve the user experience.
Social Proof
User-generated content and social sharing metrics can also be valuable indicators of engagement. When users share content or create their own content, it shows that they are actively engaged with your product and are likely to recommend it to others.
By tracking these metrics and analyzing the data, you can gain valuable insights into your product’s performance and identify areas for improvement.
This will help you drive engagement, increase user satisfaction, and ultimately achieve your business goals.
Top Metrics Driving Retention:
1. Churn Rate
This metric measures the rate at which users stop using your product over a specific period.
Formula:
- (Lost Customers / Total Customers at the Start of Time Period) x 100.
A low churn rate indicates that users are satisfied with your product and are likely to continue using it. This is essential for driving long-term adoption and revenue.
Benchmarks for churn rates can vary depending on the industry and product. However, the goal is to keep it as low as possible. Here’s the benchmarks for a few industries:
Media: Anything over 8% is high
Consumer Goods: Anything over 10% is high.
Software: Anything over 6% is high.
Finance and Accounting: Anything over 7% is high.
Example:
A subscription-based service might measure churn as the percentage of subscribers who cancel their subscription within a month.
A low churn rate suggests that users are finding the service valuable and are willing to continue paying for it.
Retention is a crucial aspect of product success. It’s a measure of how well you keep your existing users engaged and loyal. To understand and improve retention, it’s essential to track specific metrics. Let’s explore some of the most important ones:
2. Customer Satisfaction Score (CSAT)
CSAT measures customer satisfaction with a specific interaction or experience. It’s typically calculated using a simple survey question like, “How satisfied were you with our customer service?”
Formula:
- % of satisfied customers = (Number of satisfied customers / Total number of customers surveyed) × 100
If a company surveys 100 customers about their recent support interaction. If 80 customers rate their satisfaction as “very satisfied” or “satisfied,” the CSAT score would be 80%.
3. Retention Rate
Retention rate measures the percentage of customers who remain active and continue using your product over a specific period.
Formula:
- Retention rate = (Number of customers at the end of the period / Number of customers at the beginning of the period) × 100
Let’s say a subscription-based service has 1000 subscribers at the beginning of the month. If 900 subscribers are still active at the end of the month, the retention rate would be 90%.
4. Customer Lifetime Value (CLTV)
CLTV is a metric that measures the total revenue a customer generates over their lifetime. It’s a valuable indicator of retention, as customers with high CLTV are more likely to remain engaged and loyal.
Formula:
- CLTV = Average customer value × Average customer lifespan
Proactive Measures for Retention
By tracking CSAT, retention rate, and CLTV, you can gain valuable insights into your product’s performance and identify areas for improvement. Here are some proactive measures you can take to improve retention:
- Improve onboarding: A smooth onboarding process can help new users quickly understand the value of your product and reduce churn.
- Offer better customer support: Providing excellent customer support can help resolve issues and build customer loyalty.
- Launch re-engagement campaigns: Reach out to inactive users with targeted campaigns to re-engage them with your product.
- Gather feedback: Regularly collect feedback from your customers to identify areas for improvement and address their needs.
- Personalize the user experience: Tailor your product to individual user preferences to make it more engaging and relevant.
By implementing these proactive measures, you can improve customer satisfaction, increase retention, and ultimately drive long-term success.
Analyzing Qualitative Feedback
Beyond the numbers, qualitative feedback provides a rich tapestry of insights into user experiences. Surveys, interviews, and product reviews offer a direct window into the minds of your customers, helping you understand the root causes behind metric trends.
For example, a low engagement rate might be indicative of a poor user experience. Through surveys and interviews, you can uncover specific pain points, such as confusing navigation or slow load times, that are contributing to this decline. By addressing these issues, you can significantly improve engagement and retention.
NPS and CSAT scores also offer valuable qualitative data. A low NPS, for instance, might suggest that customers are dissatisfied with certain aspects of your product.
By analyzing the comments and feedback associated with these scores, you can identify specific areas for improvement.
The key to effective feedback analysis is to tie it directly to your quantitative metrics. This allows you to identify patterns and trends that can inform your product strategy. For example, if you notice a decline in customer satisfaction alongside a decrease in purchase frequency, you can investigate whether there is a correlation between the two.
Once you’ve analyzed your feedback, it’s essential to create an action plan to address the identified issues.
This plan should be tied to specific metrics so you can measure the effectiveness of your changes. By closing the feedback loop, you can continuously improve your product and deliver a better experience for your customers.
Conclusion
So, in the vast ocean of data, it’s easy to get lost. But by focusing on the right metrics, you can navigate the waters with clarity and purpose.
Remember, the goal isn’t to collect as much data as possible, but to use the right data to make informed decisions and improve your product. So, cut through the clutter, measure what matters, and watch your product thrive.