For instance, they can support product updates or changes, gauge the effectiveness of new product features, divide audiences, and forecast sales. Let’s say you’ve found that a certain customer segment exhibits a higher propensity to purchase based on your product performance metrics. Then, without alienating any of your current segments, you can adjust your marketing and sales strategy to create several tiers for your offerings, allowing customers to select the choices that best suit their needs.
Another example: Suppose you examined your product metrics and discovered that adding new features to your goods and services results in significantly higher CSAT ratings. With that in mind, you can create a schedule for product updates and provide your customers with a public version. This will increase their likelihood to buy in addition to keeping them interested and engaged.
Product Metrics: How to measure product success
What are product metrics?
Product metrics are the quantifiable indicators that companies use to monitor their performance. Metrics are information points that companies gather and examine to spot trends in client behavior and satisfaction. Businesses can determine what aspects of their goods, services, and websites increase customer engagement based on these patterns, and what aspects they can enhance. Additionally, observing these trends over time enables companies to forecast future trends, base decisions on past performance, and implement successful budgeting techniques to boost profits.
13 product metrics
The following 13 product metrics can assist your company in managing its products:
1. Monthly recurring revenue
Your monthly recurring revenue calculates the amount of money a product brings in each month. This metric is crucial for subscription-based businesses because it allows you to keep track of how many new clients sign up for your services each month and how many current clients cancel their subscriptions. By monitoring this metric, you can determine whether and how much your revenue is increasing or decreasing. Additionally, this metric tracks subscription patterns over time, which can provide insight into customer behaviors that you can use to decide how much money to budget, expand, and cut based on anticipated engagement patterns.
2. Customer lifetime value
A customer lifetime value metric gauges the amount of revenue a client produces over the course of their subscription. It represents the average amount of revenue that a customer brings in up until they decide to stop using your services. Businesses can decide how much to spend on bringing in new customers so that their net profit exceeds their expenses and they reach their financial objectives by calculating the average profit accrued per customer. Businesses find the typical length of a customer’s subscription or use of their product and the typical revenue generated per user to determine customer lifetime value.
3. Customer acquisition cost
The cost of acquiring new customers is known as the customer acquisition cost. It includes all forms of public relations, marketing, and advertising that are used to attract new clients. You can also include the costs of keeping your marketing and sales teams in operation in your customer acquisition cost. Businesses monitor this metric so they can calculate the cost of acquiring new customers and compare it to the revenue per new customer. Businesses divide their total sales and marketing costs over a predetermined time period by the number of new customers they acquired during that time period to arrive at this metric.
4. Daily and monthly active user ratio
The number of customers or subscribers who actively interact with your business, its goods or services during a predetermined period is another way to gauge the growth of your business. The ratio of daily to monthly active users is a statistic that gauges the volume of distinct visitors to your website over a given period of time. Based on each user’s distinct login ID when they access your website, you can monitor this metric. Measuring the proportion of daily active users to monthly active users can shed light on user engagement trends, which is helpful for forecasting, budgeting, and creating new features.
5. Session duration
How long users spend interacting with your product, service, application, or website is referred to as session duration. It keeps track of how people use digital products and can suggest ways to boost user interaction and engagement. You can learn useful information about how to improve your product or create new features to keep users’ attention by, for instance, noting how long users typically spend using your product and identifying key moments when customers disengage. Find the mean by dividing the total amount of time users spend using your product by the total number of users.
6. Paid and organic traffic
This metric aids companies in keeping track of the volume of traffic coming to their digital platforms. Paid traffic and organic traffic are terms used to describe the number of users who found and visited your website through online searches, respectively. Social media ads and your sponsored content are two examples of paid sources. You can evaluate the efficacy of your digital marketing strategies by knowing how many users they produce. A significant amount of traffic coming from paid sources is a sign that your advertisements are being seen as intended.
7. Bounce rate
The number of users who entered a single page of a website or application before leaving is known as the “bounce rate.” This metric aids in tracking user behavior and locating pages that cause visitors to leave your website or application. You can create strategies to improve pages that cause users to lose interest by identifying those pages, which will help you keep their attention, engage them with your content, and persuade them to spend more time viewing other content on your website.
8. Retention rate
The number of customers who continue to subscribe to your business within a specified timeframe is known as your customer retention rate. This measurement aids in identifying patterns in customer retention, allowing you to ascertain how long customers continue to use and interact with your offerings. Making the most of those features to retain customers is made possible by identifying the factors that increase customer retention. Additionally, if you notice a decline in your customer retention rate, you can investigate the reason for it and put strategies into place to raise it again.
9. Churn rate
The churn rate metric is a counterpart to your customer retention rate, but instead of counting the number of customers who continue to do business with you, retention rate does. There are two ways to measure churn rate. You can measure it by the number of customers who stop using your company’s products and services or by the amount of revenue that was lost due to customer churn. Divide the total number of subscribers within a timeframe by the number of customers who canceled their subscriptions within that same timeframe to determine customer churn.
10. Number of sessions per user
This metric counts the number of times users start a session on your website or application. It makes it easier for you to monitor how frequently users visit your website and when they are most likely to do so, which reveals how well-liked a given good, service, or piece of content is. Additionally, you can use this metric in conjunction with your churn and retention rates to look for trends in user frequency, retention, and disengagement. For instance, you might discover that users who frequent your site more often have a higher retention rate than those who do so infrequently. Based on the frequency of visitors, you can predict the likelihood of customer churn.
11. Number of user actions per session
How users interact with features on your website or application is determined by the number of user actions metric. For instance, it keeps tabs on the links users click, the pages they visit, and how they engage with the content on each page. You can learn more about your site’s most popular pages and how users interact with them by tracking this metric. You can use this to your advantage when choosing web page designs. Understanding customer interaction patterns with your website allows you to add more features that boost viewer engagement.
12. Net promoter score
The ratio of customers who are likely to recommend your business to others to the number of customers who are not likely to do so is known as your net promoter score. Implement a survey that asks customers how likely they are to recommend your goods and services to others in order to track this metric. The results of this survey’s data allow you to estimate customer satisfaction. A high net promoter score indicates that your customers are extremely satisfied with the experience you provide. In order to better serve your customers’ needs and preferences, a low score can help you identify areas for improvement.
13. Customer satisfaction score
Another way to gauge how well you’re meeting your customers’ expectations for service is to look at your customer satisfaction score. By giving your customers surveys and asking them to rate particular products or provide comments on a service, you can determine this metric. Customers may be more likely to interact with your business again if they express satisfaction with your goods and services.
Consider promoting a number of quick surveys at various points of the process to gain insight into customer satisfaction at various stages of the purchasing process. For instance, prior to the customer checking out, inquire about how simple it was for them to find the products, and after the transaction is complete, solicit feedback about the checkout process.
What are examples of metrics?
A business tracks and analyzes quantifiable data points called product metrics to determine the success of its products. The conversion rate, churn rate, and monthly recurring revenue are a few examples of product metrics. These metrics should all tie back to the product strategy.
What are the 4 types of metrics?
Sales, earnings before interest and taxes (EBIT), net income, earnings per share, margins, efficiency ratios, liquidity ratios, leverage ratios, and rates of return are important financial statement metrics. Each of these metrics offers a unique perspective on a company’s operational effectiveness.
What are the five types of metrics?
According to the researchers, only lead time, deployment frequency, mean time to restore (MTTR), and change fail percentage can distinguish between low, medium, and high performers.