Like it or not, every product manager needs to rely on hard data – gleaned from the right metrics – to prove successful results.
Stakeholders want to see that your company and your product is producing efficient, profit-building outcomes… and numbers are really the only thing that will get the job done.
That being said, metric tracking can feel overwhelming. And while it might be tempting to outsource the job, it’s essential that product managers track their own data on their product.
Where to Begin: Metric Tracking 101
There are an incredible number and variety of metrics that you can track on your product, your customers, your prospects, your website, and more – including variables like cost, time, revenue, and retention.
With all of the different kinds of metrics out there though, do you really know what’s worth tracking?
A couple things to consider: While revenue and cost are fundamental places to start, you’ll also want to take into consideration metrics like Customer Lifetime Value (CLTV) and Customer Satisfaction Score (CSTAT). These kinds of metrics help you measure longer-term success, and give you (and your stakeholders) an idea of how loyal, and long-lasting, your customer base really is.
Ultimately, you’ll want to track metrics that give you the right kinds of insight into your product to help you become more efficient and profit-generating – not the numbers that may seem interesting, but don’t really give you any actionable insights.
To help you get a start, we’ve narrowed down the 12 most important metrics that every product manager should track.
#1: Daily Active Users (DAU) and Monthly Active Users (MAU)
One of the first things you’ll want to take a look at is how many potential customers are engaging with your product on a daily or monthly basis. In this case, product engagement is defined by a user who signs into an account, makes a purchase, or performs some other significant activity.
In order to determine how “sticky” your product is (in other words, how likely users are to come back to your product), divide MAU by DAU. 20% is a good indicator of success, while 50% or higher means that you are killing it!
#2: Customer Lifetime Value (CLTV)
Customer Lifetime Value (CLTV) is the amount of net profit that each customer will generate before they stop using your product. CLTV can help you to assess how much money you can comfortably spend on a new customer, considering their average lifetime value.
CLTV is typically calculated by taking into consideration the average duration of each customer, and the average amount of revenue they generate during that time.
#3: Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) takes into account all of the costs of bringing in a new customer. This is where you’ll want to consider your marketing spend, in addition to expenditures on the salaries of sales and marketing staff, and divide it by the number of customers generated in a specific period of time.
If your CAC is higher than your CLTV… it’s time to rethink your marketing spend.
#4: Customer Satisfaction Score (CSAT)
Customer Satisfaction Score (CSAT) is a valuable metric, but can only be measured if you’ve done your due diligence in asking customers for feedback. Asking customers for ratings throughout the customer experience provides you with trackable data that helps take the guesswork out of customer satisfaction.
#5: Net Promoter Score (NPS)
Net Promoter Score (NPS) helps you to understand how many of your customers are loyal “promoters” (in other words, they would recommend your product). On the other hand, it also helps you to see how many of your customers are extremely unsatisfied with your product – and might detract from your overall success by giving it poor reviews.
Like CSAT, NPS can be calculated by asking your customers for ratings. Unlike CSAT, NPS focuses more specifically on how successfully your product will gain traction from loyal, happy customers who are “spreading the word.”
#6: Monthly Recurring Revenue (MRR)
Monthly recurring revenue (MRR) is the revenue that your product is generating on a monthly basis from your customers.
Within this metric, measure the revenue that is being generated from new customers (New MRR) and from additional purchases, such as upgrades or accessories (Add-On MRR). New MRR is a good indicator of how valuable your new customers are… and Add-On MRR can help you understand how satisfied your customers are with your product, and how willing they are to invest additional cash in your business.
#7: Average Revenue Per User (ARPU)
Average revenue per user allows you to see how much revenue each individual user or customer is generating. You can assess ARPU on either a monthly or annual basis, helping you to plan accordingly for future revenue.
#8: Session Duration
Second, you’ll want to take a look at how long each user is spending per session. This can help you determine how engaged they are in your product, and how successful your website and marketing is at retaining the attention of your customers.
#9: Number of User Actions Per Session
You’ll also want to take a look at how many actions users are performing per session. Depending on your product, this can be particularly helpful in assessing engagement, usability, and overall success.
For example, if you have an app, user actions can also help you to gain understanding on the most (and least) interesting aspects of your product. User actions can also help you to understand why you may be losing customers, due to low engagement.
#10: Bounce Rate
Bounce rates help you to see who is visiting your site and leaving after taking a look at only one page. [bctt tweet=”Bounce rate is key to helping you to understand site traffic and engagement, and can help give you valuable insight into whether you need to make adjustments to your site.” username=”underway”]
#11: Customer Retention Rate (CRR)
Customer retention rate helps you to see how long customers stay with your product, and whether you may be losing customers due to competition or internal issues – such as poor customer service. CRR can also help you to identify valuable growth in this area, indicating that your product has been successfully adjusted or gained traction.
#12: Churn Rate
Churn rate indicates how many customers you are losing. While losing customers is always a negative, it’s perhaps more important to consider how much revenue you are losing as a result.
In any case, if you have churn rates, you’ll want to consider your customer satisfaction rate, customer service, and product performance.
Final Thoughts on Metric Tracking
Tracking your metrics is no simple task, but tools like Google Analytics make the task easier, giving you detailed insights into how well your site is performing, customer behavior, and revenue.
And, the payoff of tracking your metrics is significant: You gain much-needed understanding of how your product is performing… and how you may want to make adjustments to your budget, your site, your marketing, and more.
Lastly, tracking your metrics gives you the data you need to deliver proof of results to your stakeholders – providing that successful, hard-earned proof (hopefully) that your product is performing well in the marketplace.