Product Metrics PDF

The Ultimate List of Product Metrics Classification based on the AARRR framework with Engagement as a separate category: 1. Acquisition Metrics Channel Effectiveness The success of each acquisition channel in Bounce Ra...

The Ultimate List of Product Metrics Classification based on the AARRR framework with Engagement as a separate category: 1. Acquisition Metrics Channel Effectiveness The success of each acquisition channel in Bounce Rate driving traffic, sign-ups, or purchases. The percentage of visitors who leave your Traffic Source Distribution website after viewing just one page. A high bounce rate may indicate issues with the The breakdown of incoming user traffic by landing page (e.g., messaging) or targeting. different sources, such as organic search, referrals, or paid ads. Conversion Rate The percentage of users who take a desired 2. Activation Metrics action, like signing up for a newsletter. Time to Value (TTV) Landing Page Conversion Rate The time it takes for a user to experience The percentage of visitors who take a the core benefits of your product after desired action on a specific landing page, starting to use it. like signing up or starting a trial, on a A shorter TTV leads to higher user specific landing page. satisfaction, engagement, and retention. In Customer Acquisition Cost (CAC) product-led growth, optimizing TTV is crucial to ensure users quickly understand The cost of acquiring a new customer the value your product delivers. through marketing and sales efforts. Author: Paweł Huryn, Jan 2024 The Ultimate List of Product Metrics Onboarding Completion Rate The percentage of users who continue using the product after a specific time The percentage of users who complete the period. Often monthly. onboarding process successfully. User Renewal Rate User Activation Rate The percentage of users who renew their The percentage of users who successfully subscription or continue using the product complete a certain milestone in your after their initial contract period. onboarding process. Customer Lifetime Trial-to-Paid Conversion Rate The average time it takes for a user to stop The percentage of trial users who convert using the product. into paying customers. 1 First-time User Conversion Rate 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝐿𝑖𝑓𝑒𝑡𝑖𝑚𝑒 = 𝐶ℎ𝑢𝑟𝑛 𝑅𝑎𝑡𝑒 The percentage of first-time users who complete a desired action, such as creating Customer Health Score an account or purchasing. This metric helps A composite metric that combines multiple assess the effectiveness of the onboarding indicators, such as usage, satisfaction, and process. support interactions, to provide an overall Product Qualified Accounts (PQA) assessment of the customer's relationship with the product. “In product-led sales, the product determines Product Qualified Accounts Product Adoption Rate (PQA) to indicate when an account is The percentage of users who adopt new prepared for sales engagement and features or functionality within a certain potential conversion.” – Elena Verna time frame after release. Product Qualified Leads (PQL) “PQLs, or Product Qualified Leads, are the 4. Revenue Metrics people within the existing self-serve user Average Revenue Per Account base with buying power.” – Elena Verna (ARPA) 3. Retention Metrics The average revenue generated per account (customer) within a specific time Churn Rate frame. For example, monthly. The percentage of users who stop using the Customer Lifetime Value product within a specific time period, e.g., (CLV/LTV) monthly. The total revenue a user generates during User Retention Rate their entire relationship with the product. 𝐶𝐿𝑉 = 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝐿𝑖𝑓𝑒𝑡𝑖𝑚𝑒 ∗ 𝐴𝑅𝑃𝐴 Author: Paweł Huryn, Jan 2024 The Ultimate List of Product Metrics Customer Profitability Customer Referral Rate The difference between the lifetime value The percentage of customers who refer of a customer (LTV) and the cost of others to the product. acquiring them (CAC). Referral Conversion Rate Monthly Recurring Revenue The percentage of referrals that convert (MRR) into active users. The predictable revenue generated by a Net Promoter Score (NPS) subscription-based product every month. A measure of customer satisfaction and Expansion Revenue loyalty based on how likely users are to Additional revenue generated from recommend the product to others. existing customers through upsells, cross- 𝑁𝑃𝑆 = %𝑃𝑟𝑜𝑚𝑜𝑡𝑒𝑟𝑠 − %𝐷𝑒𝑡𝑟𝑎𝑐𝑡𝑜𝑟𝑠 sells, or add-on purchases. Warning: NPS measures customer attitude Net Revenue Churn and sentiment, not the actual behavior. The revenue lost due to customer cancellations, downgrades, or non- 6. Engagement Metrics renewals within a specific time period, typically a month/year. Daily Active Users (DAU) Net Revenue Retention The number of unique users who engage with the product daily. The cumulative sum of retained, contracted, and expanded revenue over a Monthly Active Users (MAU) specific period, typically a month/year. The number of unique users who engage Average Contract Value (ACV) with the product monthly. The average revenue generated from each Stickiness customer contract, which can help assess The ratio of daily active users (DAU) to the effectiveness of pricing and packaging monthly active users (MAU), which strategies. indicates how often users engage with the product. 5. Referral Metrics 𝐷𝐴𝑈 𝑆𝑡𝑖𝑐𝑘𝑖𝑛𝑒𝑠𝑠 = Virality Coefficient 𝑀𝐴𝑈 The number of new users acquired through User Satisfaction (CSAT) referrals by existing users. Often expressed A measure of how satisfied users are with as a ratio (1). the product, often determined through surveys or in-app feedback (e.g., Pendo, Gainsight). Author: Paweł Huryn, Jan 2024 The Ultimate List of Product Metrics Session Length 7. Bonus: Agile and Lean The duration of a user's interaction with the product during a single session. Before we dive in, it's important to remember that Kanban aims to optimize Session Frequency the flow of value, not the flow of work. The average number of sessions per user So, for example, if you use User Stories within a specific time frame. and sub-tasks, focus on tracking the Feature Usage whole User Stories, not individual sub- tasks. The frequency and depth of usage for specific product features. Lead Time Customer Effort Score (CES) Lead Time is a Kanban metric that measures the total time between an idea Measures the ease with which customers placed in a Product Backlog until the work can interact with your product or service. It in a specific process is completed. is often determined by asking users to rate the effort required to accomplish a task or For example, if Microsoft decides to use resolve an issue on a scale from very low to ChatGTP in Bing, Lead Time would be the very high effort. time between deciding on a specific approach and when the feature is A lower CES indicates a more user-friendly production-ready.. product, which can lead to higher user satisfaction and loyalty. Time to Market (TTM) Task Success Rate Time to Market (TTM) is a broader concept. I'd argue it's the most important metric for The percentage of users who successfully a PM, encompassing idea generation, complete a specific task or set of tasks experimentation, product delivery, and within your product. This metric helps pre-launch activities that might be required assess the usability and effectiveness of before an idea is shipped. your product's features. For example, if Microsoft decides to User Feedback Score incorporate ChatGPT into Bing, the TTM A quantitative measure of user satisfaction would be the period between having a gathered through surveys, ratings, or draft idea and when customers can use a reviews. new capability. There isn't a single standardized method or Cycle Time rating scale. This could be a numeric scale Cycle Time is a Kanban metric that is a (e.g., 1 to 5 or 1 to 10), a star rating, or a component of Lead Time. It measures the qualitative scale (e.g., poor, average, time it takes from when the implementation excellent). of an idea begins until it's done. For example, if Microsoft decides to incorporate ChatGPT into Bing, the Cycle Author: Paweł Huryn, Jan 2024 The Ultimate List of Product Metrics Time would be the period between when Time to Market developers start implementing a specific idea People start using your product and when it becomes production-ready. You analyze the data and learn Work In Progress (WIP) Minimizing TTL reduces the risks and allows WIP is a Kanban metric that represents the you to adapt quickly to changing market number of ideas that your team is currently conditions. working on. Pause for a moment to consider it in the The goal is to limit WIP to reduce context- context of the Bias for Action, Amazon’s switching and minimize the Cycle Time. leadership principle: This ultimately minimizes the TTM. “Speed matters in business. Many decisions and actions are reversible and Throughput do not need extensive study. We value The rate at which ideas pass through your calculated risk taking” team's workflow over a given period. Work Item Age It’s essential to know Little’s Law, which can be expressed as: The total elapsed time between when work on an idea started (“in progress”) 𝐴𝑣𝑔. 𝑊𝐼𝑃 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐶𝑦𝑐𝑙𝑒 𝑇𝑖𝑚𝑒 = and the current time. 𝐴𝑣𝑔. 𝑇ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡 Velocity The key to maximizing throughput lies in Refers to the amount of work, e.g., Story identifying and managing bottlenecks - Points, completed by a team during an where work piles up because it arrives iteration, typically Sprint. faster than it can be done. It’s essential to remember that Velocity Insight: working on too many ideas corresponds to the amount of work, not simultaneously will negatively affect the the value of work. It is an internal metric time to finish each. So limit your WIP. and should never be used outside the Time to Learn (TTL) team. The Time to Learn indicates how long it In particular, it should never be used to takes to learn. It can be measured for both compare teams or set expectations. experiments and shipping product features. For shipping features, the concept is even broader than Time to Market (TTM) and includes: Author: Paweł Huryn, Jan 2024 The Ultimate List of Product Metrics Key Lean and Agile concepts visualized An example of Cycle Time, Lead Time, and Time To Market: 8. Final Notes This classification I presented is based primarily on the AARRR (Acquisition, Activation, Retention, Revenue, Referral) framework, which is universal and fits every organization that works on customer-facing tech products. In AARRR, Engagement Metrics can be considered part of the Retention, and sometimes, depending on the context, Activation (e.g., Session Length). I presented them as a separate category to emphasize the distinct metrics focusing on user interaction with the product. Lean and Agile Metrics are related to the effectiveness of delivering value. Many of them, like Time To Market (TTM), are essential to succeed by quickly adapting to the changing market conditions. I presented them as a separate category. While those are the more common metrics, it’s essential to remember that none list is final. You might also formulate your custom metrics depending on the context and your specific situation. In any case, tracking everything is impossible. To succeed, focus on just a few key metrics. How to do that? You can read more here (free): Are You Tracking the Right Metrics? North Star Framework 101 (PDF, 12 pages) Author: Paweł Huryn, Jan 2024