For example, they can help guide product changes or updates, measure the success of new product features, segment audiences, and forecast revenue. Let’s say based on your product performance metrics, you’ve discovered a specific customer segment demonstrates a higher propensity to buy. From there, you can alter your marketing and sales strategy to develop several tiers for your offerings, enabling customers to choose the options that best suit their needs without alienating any of your existing segments.
Here’s another instance — let’s say you’ve looked at your product metrics and identified that CSAT scores are significantly higher when new features are added to your products and services. This considered, you can develop a product update schedule and share a public version with your customers. This’ll not only keep them engaged and interested, it’ll also increase their likelihood to purchase.
Product Metrics: How to measure product success
What are product metrics?
Product metrics are the quantifiable measurements that businesses use to track their success. Metrics are data points businesses collect and analyze to identify trends in customer behavior and satisfaction. Based on these patterns, businesses can determine what features of their products, services and websites lead to increased customer engagement and what features they can improve. Additionally, tracking these patterns over time allows businesses to predict future trends, make decisions based on historical evidence and implement effective budgeting strategies to increase their profit.
13 product metrics
Here are 13 product metrics to help your business manage its products:
1. Monthly recurring revenue
Your monthly recurring revenue measures how much revenue a product produces within one month. This metric is especially important for subscription-based businesses because it helps you monitor how many new customers subscribe to your services each month and how many existing customers unsubscribe. Tracking this metric allows you to assess whether your revenue is growing or shrinking and by how much. Additionally, this metric tracks subscription patterns over time, which can offer insight into customer behaviors that you can use to make decisions about budgeting, expanding and cutting based on forecasted patterns of engagement.
2. Customer lifetime value
A customer lifetime value metric measures how much revenue a customer generates throughout the length of their subscription. Its an average of how much profit a customer produces until they cancel their subscription to your business. By calculating the average profit accrued per customer, businesses can determine how much to spend on attracting new customers so their net profit exceeds their expenses and they meet their financial goals. To determine customer lifetime value, businesses find the average length of a customers subscription or use of their product and the average revenue produced per user.
3. Customer acquisition cost
The customer acquisition cost is the money spent on attracting new customers. It includes all the marketing, advertising, promotions and public relations used to acquire new customers. Your customer acquisition cost can also include your expenses for maintaining your marketing and sales teams. Businesses track this metric so they can determine how much it costs to gain new customers and compare those expenses to the revenue generated per new customer. To calculate this metric, businesses factor their total expenses for sales and marketing over a set period and then divide it by the number of customers gained within that timeframe.
4. Daily and monthly active user ratio
Another way to measure your businesss growth is by the number of users or subscribers who actively engage with your business, its products or services within an established period. The daily and monthly active user ratio is a metric that measures the number of unique visitors to your website within a specified timeframe. You can track this metric based on each users unique login ID when they access your website. Measuring the ratio between daily and monthly active users can provide insight into patterns of user engagement, which is useful for forecasting, budgeting and developing new features.
5. Session duration
Session duration refers to how long users spend engaging with your product, service, application or website. It tracks digital product usage and can help you determine ways to increase user interactions and improve engagement. For example, noting how long users spend on average using your product and identifying key points when customers disengage can provide useful information about areas where you can improve your product or develop new features to keep user attention. To calculate this metric, take the total time users spend engaged with your product, divide it by the number of users and find the mean.
6. Paid and organic traffic
This metric helps businesses monitor how much traffic their digital platforms generate. Organic traffic refers to how many users found and accessed your website through an online search, while paid traffic is the number of users accessing your website from a paid source. Examples of paid sources include social media advertisements or your sponsored content. Knowing how many users you generate from your digital marketing strategies helps you determine their effectiveness. If youre gaining a significant amount of traffic from paid sources, its a good indicator that your advertisements are working as intended.
7. Bounce rate
Bounce rate is the measure of how many visitors accessed a single page of a website or application before leaving. This metric helps you monitor user behavior and identify pages that lead to users exiting your site or application. By identifying pages that lead to user disengagement, you can develop strategies to improve those pages to keep user attention, engage them with your content and encourage them to spend more time viewing other content on your website.
8. Retention rate
Your customer retention rate is the number of customers who remain subscribed to your business within an established timeframe. This measure helps you see your customer retention patterns so you can determine how long your customers continue to use and engage with your products. Identifying factors that lead to increased customer retention allows you to make the most of those features to keep your customers. Additionally, if you notice a drop in your customer retention rate, you can research the cause of this decline and implement strategies to restore your retention rate.
9. Churn rate
The churn rate metric is a counterpart of your customer retention rate, but, while retention rate measures the number of customers who stay with your business, churn measures the number who disengage. There are two ways to measure churn rate. You can either measure the number of customers who unsubscribe from your business and its services, or you can measure it by the amount of lost revenue that the customer churn caused. To calculate customer churn, divide the number of customers lost within a timeframe by the total number of subscribed customers within the same timeframe.
10. Number of sessions per user
This metric measures how frequently customers begin sessions on your website or application. It helps you track how often users visit your site and when theyre most likely to visit, which indicates the popularity of a product, service or piece of content. You can also use this metric along with your retention and churn rate to find patterns in user frequency, retention and disengagement. For example, you may find that users who visit your site more frequently have a higher retention rate than those who rarely visit. You can forecast the likelihood of customer churn based on visitor frequency.
11. Number of user actions per session
The number of user actions metric identifies how users interact with features on your website or application. For example, it tracks the links that users follow, what pages they view and how they interact with content on each page. Monitoring this metric helps you identify popular pages on your site and how visitors use them. This can help you when making design decisions about web pages. When you understand patterns of customer interaction with your web page, you can include more features that lead to increased engagement for your viewers.
12. Net promoter score
Your net promoter score is the number of customers who are likely to recommend your business to others and those who are unlikely to recommend your business. To track this metric, implement a survey that asks customers how likely they are to recommend your products and services to others. Based on the data gained from this survey, you can determine customer satisfaction. A positive net promoter score suggests that the experience your business provides leads to excellent customer satisfaction. A low score can help you identify areas for improvement so you can meet your customers needs and preferences.
13. Customer satisfaction score
Customer satisfaction score is another way of measuring how well youre meeting your customers expectations for service. You can measure this metric by distributing surveys to your customers and asking them to rank specific products or provide feedback about a service. When customers report satisfaction with your products and services, they may be more likely to engage with your business again.
To gain insight into customer satisfaction at different stages of the purchasing process, consider promoting several brief surveys at different points of the process. For example, ask the customer how easy it was to find products before they checkout, and ask for feedback on the checkout process after completing the transaction.
What are examples of metrics?
What are the 4 types of metrics?
What are the five types of metrics?