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The demand for data-driven product management is increasing day by day. Product manager work is very challenging and difficult so product management helps the team to stay ahead of the competition. But this will not be very possible if we forget to include the product metrics in product management.
What are Product Metrics?
Product metrics are a quantitative measure that helps product managers and marketers evaluate the success of their product. Business workers gain business insights into the efficacy of their methods and the development of their projects. These valuable product metrics keep updating product performance by checking the business goals and meeting the actual needs of the company.
Without product metrics, it is not possible to make appropriate decisions for the business. Product KPI helps manager in making decisions related to requirement, product enhancement, quality, quantity, size etc.
Steps for finding right Product Metrics
Set your Business Goals
The initial task before proceeding on any step is to define your business goal. In the organization, product management begins with a well-defined plan for the business and the product. This is an essential measure to grow a business. Here you can target new customers and serve the purpose of the business.
Working with right metrics
You may be wondering what are good metrics and how to choose metrics that target your business goals? Here we say that not all matrices are equal, and choosing large matrices is not so useful that we choose a low and accurate metrics.
Good metrics are defined info 3 categories:
- Selecting good KPIs: For your business is essential to select good KPIs for business growth and objectives.
- Good Metrics can improve: Good metrics are a key to measuring progress which means space is needed for improvement.
- Good metrics drives action: When you are available with good metrics and planned KPIs, you and you team know immediately what to do and what questions to ask. The team can detect every individual factor such as why the business conversation has dropped. Have we made a site change or tested a new acquisition channel? By knowing all these factors, you will get the answer to all these questions easily.
Related content: Define KPIs for Successful Business Intelligence
The most powerful Product Metrics for your business
Categories of KPIs
Managing Production KPIs is the most feasible work for a product manager. It is defined into a various category which needs to be managed as the involvement in the business. Product manager needs to explore which product metrics are important to communicate as part of building credibility, encouraging engagement, success, or identifying trends and issues.
Every business works in different objective, there are some metrics that we believe are important for product managers should track. Below we have listed few metrics which are classified into marketing perspective, business perspective and customer perspective.
For Marketing Perspective
- Organic traffic vs. paid traffic
Organic traffic measures how many people have to search your websites such as social media, keywords, or search engines like Google, Bing, etc., which come directly from search engines. Where paid traffic is what we need to pay for traffic such as from ads on Google, or linked to other social media sites.
- Monthly unique visitors
Monthly unique visitors are something that counts visitors who visit the website. Remember visiting the same person will not count in the unique visitor. A monthly unique visitor has always been a benchmark metric for the marketing team.
- Customer acquisition cost (CAC)
CAC is the estimated cost to acquire new customers. Let’s take a sample example, assuming you run a $ 1000 campaign and you are 10 new customers so the CAC would be $ 100 per customer.
- Customer Retention Rate (CRR)
CRR is a percentage of customers who join your company for a fixed period of time, like a month. When a customer has not renewed a contract, it is known as a “churn”. Here the product manager needs to focus on reducing churn rate. Poor product experience will increase churn rate.
For Business Perspective
- Active Users
This is the most important metrics to measure business success. It measures the size of the customer who is satisfied with the product and continues to use the product. Note here that the active user is not the previous user who has to cancel the contract.
- Average Revenue Per Account (ARPA)
This is a monthly contract with a customer or user. To be more specified ARPA is the monthly amount paid by the customer for the contract.
- Monthly Recurring Revenue (MRR)
As a name suggests, MRR is the revenue collected by your business per month. These metrics are always used to measure business success. This helps the investor to know the status of the company as they are investing in the business.
- Total Annual Recurring revenue (ARR)
ARR is calculated for 12 months (MRR) X12. This is the annual value of the recurring value, but in this case, it will exclude all one-time costs paid, like a one-time fee and one-time membership fee. It only collects revenue every month on an annual basis.
- Life Time Value (LTV)
Lifetime value is the estimated net revenue from the customer over the life of the relationship.
- Retention Rate
The retention rate is the ratio of the number of retained customers to the number at risk. It is not such an actionable metrics and is not so popular as other metrics to use in business.
For Customer Perspective
- Conversation Rate of Customer
The conversation rate of the customer is the percentage of customers who applied for the free trial and later on converted into a premium customer. Conversation rate is a benchmark for how well you are converting a prospect into premium buyers.
- Number of support ticket generated
This can be measured by how many customers are requesting help. With the help of ticket data support, your business team can work to improve the self-service option or choose to add more team members when a huge amount is expected.
- Churn Rate
This can be measured by what the company has lost in a given period of time. It can be either a customer or a penny. It is important to understand that your product is good but naturally, some customers cancel the contract every month.
- First response time
First response time is calculated on average measure of how long it takes for customer support to respond to a customer or act on a support ticket.
Visualization for Production Dashboard
Search string – product category, work order number by days to complete
Search String – sum quantity by company name by product name
Search String – sum sales revenue, labor cost by product group
Abhishek is working as a Web Graphics Designer at EzDataMunch. He is involved in Maintaining and enhancing websites by adding and improving the design and interactive features, optimizing the web architectures for navigability & accessibility and ensuring the website and databases are being backed up. Also involved in marketing activities for brand promotion.