Product Metrics: The Best Choice for The Best Business Results
Every product that is created or that is in the process of its creation should meet the specific expectations of its creators and be suitable for its users in accordance with its specific parameters. Thus, for every product there are its own metrics that can highlight its effectiveness and operation.
Today we are glad to cover the topic of product metrics to the full. In our article, we consider the main concept of product metrics and their components. Here we also learn the most relevant product metrics systems for those professionals who want to plan and develop useful products, achieve the best business goals, and find a way to effective product evaluation.
The meaning of product metrics
To be honest, the theme of product metrics is rather complicated – there are many multivalued and questionable moments in its researching. So let’s start our material with the etymology of the word ‘metrics’ – it is clear that this word means something that is able to be measured. That is, every criterion, used in the evaluation, may be represented as a certain figure, that can later be used for many different purposes.
Therefore, product metrics allow specialists to make a competent and timely assessment of the product’s performance based on the company’s current work strategy and goals. Product metrics help to know how the product meets the stated expectations, how the quality of its work performance is, how the customers are satisfied with its functionality, etc. The properly selected metrics become really useful working tools in achieving the best results.
As usual, product metrics are established by different specialists such as product managers and product marketing managers, business analysts, UI/UX designers and others. After the primary evaluation with some product metrics, all the received data become the statistically important results that can be suitable for many further cases, as follows:
- product marketing research and testing for determining the best business strategy and searching for the most appropriate ways of customer acquisition
- updating the current product development plan with possible replacing or removing of inefficient features or design elements in order to make the product more consistent and practicable
- commercial improvements in the product development: increase funding for successful product directions or budget cuts for non-demanded lines.
The most popular types of product metrics
As we mentioned earlier, the use of product metrics has its special purpose – it makes possible to understand, how the product works in real life, and to realize what the users really need. Also, we noted that the processes of the product metrics searching, confirming and estimating can be very difficult and exhausted even for successful development teams.
One of the reasons for such a complexity is the difference in approaches to product management and development. Every professional has his personal opinion of what should be done first and what should be developed next – and sometimes the product manager makes a rather wrong decision to try to check the product by all the existing metrics. However, the principle ‘the more is the better’ does not work here, because all the process of the product metrics integration turns into just a waste of time and resources of the company.
As it is said, it is unnecessary to recreate the wheel, so the best decision is to use the common practices in product metrics verification. Now we mean so-called product metrics systems that have their distinct sets of the parameters to be checked and evaluated.
There are typical metrics that are used in the product lifecycle testing, as follows:
- Monthly Recurring Revenue (MRR) demonstrates the amount of profit that the company intends on receiving. Also, this metric reflects the revenue from the regular users and the possible profit that was lost by the company because of the churn rate.
- Churn rate is a metrics that shows the percentage or the number of users that have stopped using the product. Churn rate can be constant or temporal, but such an indicator should be always under control.
- Customer Lifetime Value (CLTV) is a kind of forecast for the amount of money from customers in the future. That is, with the help of special calculations it becomes clear how much the current number of clients is profitable for the business.
- ARR (Accounting Rate of Return) is the amount of the profit that is expected from the product investment.
- CAC (Customer Acquisition Costs) is the sum of the entire investment that was spent on customer acquisition channels, marketing promotion, advertising and other sources.
Actually, there are lots of different methods that combine many specific product metrics. Today we would like to focus on two the most effective and demand product metrics systems that are actively used by product managers in many companies.
Product metrics system 1: HEART (made by Google corporation)
This system is considered to be one of the top techniques not only because of its unusual name but also thanks to its simplicity and versatility. HEART was created by Google specialists who more than anyone else needed a good way of the product effectiveness determination.
HEART system, as being an abbreviation, contains the following components:
- H (Happiness) is one of the equivocal indicators that implies user satisfaction, the comfort of use of the product and other metrics of the product. At first sight, happiness is an unmeasurable thing, but it is not so. This indicator can be found during many checks, surveys, monitoring of traffic and finally the interviewing of the users about the product on vivid meetings (or it can be possible with the help of feedback emails and messages).
- E (Engagement) usually presents the pure data of the users activity, including their number of visits, likes, shares, comments, etc. In other words, this metric is an user’s direct interest in the product.
- A (Adoption) means how a user cares about the product. That is, it becomes clear how many users downloaded the latest version, bought some additional functions (like Premium account), or how many subscriptions were made. This product metric is all about the product support by users.
- R (Retention) shows the number of repeat visits, users or orders. Also with such a product metric, it becomes possible to know the customer churn.
- T (Task Success) is a specific indicator of how the product becomes utilizable and how it meets all the requirements. For example, the load performance or the speed of the profile access can be considered as the product metrics of success.
Product metrics system 2: Goals-Signals-Metrics
This product metrics technique is a kind of a relative of HEART system. It is a quite understandable scheme that implies the mechanism of the selection of every product metric into your current check.
It all starts with the Goals. As we noted, this system has some common things with HEART product metrics system, so in order to determine proper goals, it is possible to align with the main principles of E-engagement, i. e., what the users like to do with the product. For example, you have composed the goal like ‘we want our product would have a function of HD video watching’ – this is not the users do: they do not have the function of HD videos. Instead of it, your goal should sound like ‘we want our users would enjoy watching HD video’ – it is a direct activity of the users, and that is a right goal.
The second part is Signals – they are usually present as the certain quantitative data that are easy to be operated with. For example, it is a number of views of a certain website page or it is the time spent on video watching. Now the main point is to determine, what exactly this signal gives to the overall product metric, how it is difficult to track such a signal or how long the tracking is being made. Signal is mostly connected with T-Task Success of HEART system, and it becomes quite easy to understand what the product needs.
Metrics is the final part of this product metrics system – there is an evaluation of those signals that have been chosen in the previous stage of the work. Now it is absolutely clear for specialists of which the signal is deserved to be taken as an appropriate indicator of the product work effectiveness.
As we can can say now, product metrics have a big importance for the entire product development process. They are helpful satellites in the product improvement and in the choice of the best ways of the product management in future.
What product metrics do you usually use in your personal work? How can you understand which strategy is the most proper right now? Write to us the answers to these questions in the comments of the article – we will really appreciate your participation!