As a product leader, you are tasked with ensuring that your team is always progressing and achieving objectives. But how can you tell if your team is on track? The answer lies in metrics. By tracking the right product management metrics, you can get valuable insights into how your team is performing and where improvements need to be made. Not only can this help you keep track of the health of your business, but also create a feedback loop for your team to work more effectively towards specific and achievable goals. So, what are the top 5 product management metrics that every product leader should be tracking?
1. Conversion Rate
Conversion rate is a metric that measures the percentage of visitors to your website or app who take the desired action. This could be signing up for a free trial, making a purchase, or subscribing to a newsletter. Tracking your conversion rate will give you a good indication of how effective your marketing and sales efforts are. If you see a sudden drop in conversion rate, it could be an indicator that something is wrong with your product or that your marketing message is not resonating with potential customers.
2. Customer Churn Rate
The churn rate is the percentage of customers who stop using your product or service over a certain period of time. A high churn rate can indicate that there are problems with your product or that your Return on Investment (ROI) is not high enough. If you see a sudden increase in churn rate, it’s important to take action quickly to find out why customers are leaving and make the necessary changes to keep them engaged.
3. Customer Lifetime Value
Customer lifetime value (CLV) is the total amount of money that a customer will spend on your product or service over their lifetime. CLV is an important metric to track because it gives you an indication of how much revenue you can expect to generate from each customer. If you see a decrease in CLV, it could be an indication that your product is no longer meeting customer needs or that there are problems with your pricing model.
4. Net Promoter Score
Net Promoter Score (NPS) measures customer satisfaction with your product on a scale of 0-10. It’s calculated by asking customers how likely they are to recommend your product to a friend or colleague on a scale of 0-10, then subtracting the percentage of customers who answered 0-6 (detractors) from the percentage of customers who answered 9-10 (promoters). NPS is important because it’s a good indicator of customer loyalty and can help you predict future business growth. One challenge you may encounter is collecting enough responses to make the data significant enough to analyze.
5. Average Revenue per User
Average Revenue per User (ARPU) measures the average amount of revenue generated by each user over a certain period of time. This metric is important because it helps you assess the profitability of your user base and whether or not your pricing model is sustainable in the long run. If you see a decrease in ARPU, it’s important to take action to find out why users are spending less and make changes accordingly.
There are several ways to obtain information about your app’s ARPU. You can ask your users directly, look at publicly available data, or use a combination of both approaches.
Asking your users directly is often the best way to obtain accurate and specific information about their spending habits. You can do this through surveys, interviews, or focus groups. This approach gives you the ability to obtain detailed information about why users spend money on your app and how much they are willing to spend.
Additional Metrics to consider
1. User engagement: How often are users using your product? Are they using it regularly, or are they dropping it off after a few uses? Pay attention to engagement metrics to ensure that users are finding your product valuable and are using it regularly.
2. Retention: Once users start using your product, how long do they stick around? Are they using it for a few days or weeks, or are they continuing to use it month after month? retention rates can give you insights into whether users are finding long-term value in your product.
3. Revenue: This one is pretty self-explanatory – but obviously, as a product manager, you need to keep an eye on your product’s revenue. Make sure that your product is generating enough revenue to sustain itself and grow over time.
4. Customer satisfaction: Are your users happy with your product? Keep tabs on customer satisfaction levels to ensure that users are generally satisfied with your product.
5. ROI: Finally, track your product’s return on investment (ROI). This metric will give you insights into whether your product is generating enough revenue to justify its costs.
Keep these ten metrics in mind as you manage your product. By tracking these metrics, you’ll be able to make better decisions about your product and ensure its long-term success.
Product management metrics are essential for assessing team performance and progress, as well as business health. By tracking the right metrics, product leaders can get valuable insights into where improvements need to be made, and be able to report on them effectively to the executive team and/or board of directors. Incorporate these metrics into your tracker today, and drive a more effective product team!