Product management is a crucial role that involves a wide range of responsibilities. Among those responsibilities is the tracking, measurement, and evaluation of specific metrics to monitor the product's success and performance.
Product managers must be data-driven and have a deep understanding of key metrics and how they relate to the business.
In this post, we'll discuss the five most important metrics for product managers, including what they mean, how to measure them, and why it matters.
User Engagement
User engagement is crucial for product managers. This metric measures how much product users interact with your product. A few of the most common metrics used to measure user engagement are user retention, user satisfaction, and user activity. High user engagement is essential to the success of your product.
You can track user engagement using a range of metrics such as time spent on your platform, active users by day, app and website visits, user sessions per day or week. Measuring and understanding user engagement will help you improve your product and cater to your users better.
Customer Acquisition Costs
Customer Acquisition Costs (CAC) is the amount of money spent acquiring new customers. The metric helps you understand the amount of money you spend to convince a new customer to buy your product. This is an important metric to monitor because the cost of customer acquisition should always be lower than the Lifetime Value of the customer, which is measured by how much revenue that customer generates over the customer’s lifetime.
To calculate CAC, evaluate your sales pipeline, promotional costs, salaries, and advertisement spend, then divide this by the number of customers you acquired in the same time frame. Tracking CAC will help you optimize your budget towards more efficient acquisition and reduce churn.
Churn Rate
Churn Rate measures the number of customers who leave your product over a given period. It's a vital metric to product managers because high churn rate is an indicator your product is not appealing or satisfying shoppers' needs, leading them to find better alternatives.
To track churn, measure the number of customers who abandoned your product during a given month, quarter, or year. Once you understand the reasons behind your product's churn, you can optimize your product strategy, user experience and inter-touchpoints to improve customer retention.
Net Promoter Score
Net Promoter Score (NPS) is a metric for evaluating customer loyalty and referral potential. The score is calculated from feedback surveys that ask customers whether they will refer your product to their friends or colleagues. NPS scores range from -100 to +100, and scores above 0 indicate a product has more promoters than detractors, thus earning the name “Net Promoter Score.”
The formula for NPS is subtracting the percentage of detractors from the percentage of promoters. High net promoter score means your product is meeting customer needs and generating organic growth. Regular survey feedback analysis provides actionable insights that product managers could use to improve key touchpoints and product positioning.
Time to Market
Time to Market (TTM) measures the time it takes for your product or feature to go from concept to launch. TTM includes understanding future feedback, market survey, testing, and developing a launch plan strategy for the market.
Reducing the Time to Market metric helps companies stay competitive and ahead of the game. Measuring Time to Market is crucial, and its analysis can help product managers better understand how to reduce this period, especially in fast industries like technology.
As a product manager, understanding these essential metrics and using them to track your product's performance is crucial for the success of your business.
Regular tracking, analysis and optimization of these metrics enables product managers to better understand their product, align business goals, and stay ahead of competition. So, whether you are just starting as a product manager or you are a seasoned professional, prioritize these metrics and keep them at the forefront of your product management practices.
