A valuable product is an asset to a business and its customers. It blends the needs of users and the business and works within the constraints of available technology. It delivers profit and a positive experience. It’s useful, usable, findable, desirable, accessible, and credible.
We all set out to design valuable products but how do we know if we’ve been successful? And how do we ensure our product remains valuable to customers? The answer to both questions lies in the use of product metrics – quantifiable data points that capture the ways users interact with a product.
Here are some tips to using product metrics successfully, as well as a few pitfalls to avoid.
Tip #1: Decide what you want to measure.
Do you want to measure retention? Engagement? Task completion? Start by ensuring your product team agrees on what questions they would like answered by the metrics. Blindly applying metrics without understanding their purpose may result in you missing valuable insights or making decisions using incorrect or incomplete data.
Make sure users are central to your metrics. It would be unwise to just track things that show apparent value to the business – for example, acquisition rates – without also learning about how customers are using your product. (If customers aren’t happy, it won’t matter how many are being acquired because they won’t be sticking around for long...)
Also, maintain alignment between your product metrics and the overarching strategic or business goals of your organisation. Is your organisation growing? Moving into a new market or segment? Wanting to retain its current customer base? Consider where your organisation is focusing its ambition and attention so you can track product metrics that support this vision.
Tip #2: Use a framework to determine which metrics to use.
There’s no 'north star' metric or one metric to rule them all, instead your product should utilise a constellation of metrics. To determine which metrics will provide the best insights, consider using one of these popular frameworks:
Google Heart – popularised by Kerry Rodden, a UX researcher at Google Ventures
AARRR Pirate Metrics – created by venture capitalist, Dave McClure
Impact Mapping – first introduced by Gojko Adzic in 2012
Using a framework may also help you understand the broader picture each type of metric signals to the business (e.g., that your product has high acquisition but low retention). A framework can also help effectively communicate your data gathering approach to stakeholders, particularly those who don’t have a technical or data background.
Tip #3: Don’t get distracted by vanity metrics.
Product teams can get distracted focusing on the wrong metrics, or those too narrow to provide the insights they’re looking for. A common example is vanity metrics – things like bounce rates or time spent on a page or screen. These metrics aren't action oriented and don't tell a complete story about how your users interact with your products. For example, people might be spending more time on your website (and less on competitors’) because it’s taking them a long time to find the right information.
Vanity metrics have a place but never in isolation. You should view them as one piece of the puzzle.
Tip #4: Decide on your product metrics before you build a product.
Too often, product teams seek to apply product metrics retrospectively. They build a product and then think about product metrics afterwards – in some cases, choosing the metrics that make a product look good to stakeholders...
You should have your approach defined before you design or build the product, so your teams are working to a clear plan. Once you release it, aim to capture metrics from day one, so you can determine early if it’s hitting the mark and adapt quickly if it’s not.
Having agreed metrics early on also helps a business know what success looks like and to determine whether it’s being achieved or not.
Tip #5: Find the right balance of leading and lagging metrics.
It’s important to consider whether your chosen metrics are leading or lagging and strike a balance of both.
Leading metrics deal with immediate progress and show the likelihood that your product will achieve your chosen goals or outcomes. Examples of leading metrics include daily active users and average revenue per user. Leading metrics can be difficult to properly measure but are often easier to positively influence.
Lagging metrics measure results – the direct output of an event or performance of your product. These metrics can include return on investment (ROI) and customer renewal rate. Lagging metrics are easier to spot and measure but often harder to change.
It’s important to ensure a balance of both metrics to produce accurate and achievable results over time. If you’re using just lagging without leading (or vice versa), you’re only getting half the picture.
Tip #6: Finally, keep iterating your product metrics.
Product success metrics aren't set and forget. Treat them as a continual hypothesis and iterate over time. Regularly review them alongside the data being captured, your product roadmap, and any changes that occur in your business or organisation.