Demystifying product metrics
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A way to think about product Metrics in conjunction with business model, stage of the business and the range of categories
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Demystifying product metrics
- 1. Demystifying Product Metrics Side Prjct Session: Nov 4 2020
- 3. Today’s session Part 1: Foundational Principles • Characteristics of Metrics • Types of Metrics • Dimensions of Metrics • Metrics and Stages of Business • Metrics and Business Models Part 2: North Star metrics + • Characteristics • Definition • Limitations • Making it real with my product • Interactive session with your product 3
- 4. Part 1
- 19. 4. Metrics and Stages of Business
- 21. 5. Metrics and Business models
- 29. Part 2
- 31. The ONE thing to know North star metric should represent, the realized value for the customer 31
- 32. Consider… # Daily active users # Registered users # Signups # Downloads They say absolutely nothing about what your customers value about your product. A missed opportunity to provide clarity and purpose the team 32
- 33. The Purpose
- 34. NTM - 3 Critical Goals Gives your organization clarity and purpose Helps to decide the trade offs Communicates product’s impact and progress Helps to stay in alignment Product is held accountable to the outcome 34
- 35. The Definition
- 36. The Definition A north star metric should consist of 2 parts: ▪ A metric that represents customer value led by product vision ▪ A metric that represents your product strategy driven by product stage 36
- 37. 37
- 38. Example: Amplitude Customer Value Easily answering questions on what drives behavior and powering a better customer experience Growth stage [Between Virality and Revenue] The metric of Weekly Querying Users (WQUs) reflects breadth – The number of customers who get value at least once a week is a leading indicator of our ability to retain and expand accounts over time. 38
- 40. A good north star metric is Specific to your product and represents the realized customer value 40
- 41. Question Can you think of any north star metric that all products can use? 41
- 42. Answer Can you think of any north star metric that all products can use? Not possible. Your product north star should be specific to your product and what your customers value 42
- 43. A good north star metric is Leading indicator of product’s success in relation to customer value 43
- 44. Which is a better NTM? Revenue retention Renewing subscription value at $3M Usage retention Weekly querying users at 10K 44
- 45. Answer Revenue retention: Renewing revenue at $3M Usage retention Weekly querying users at 10K Leading indicator & Customer value focused 45
- 47. 47 When do your customers reach end-result? Does this apply to all our customers? Is this moment measurable for us? Does this metric show the actual engagement with the product? Does my NSM metric change frequently? Can this metric determine that the product is moving in the right direction? Is NSM growth tied to business growth? Is it easy to understand and communicate across all teams? What is the best frequency? [Stage dependent] Can this metric guide you when evaluating pricing, potential features, plans, and other important decisions? What external factors have an impact? Can everyone in the company (marketers, sales, UX, etc.) relate what they’re doing to this metric? Does the full pirate funnel impact NSM? Does it capture the essence of the company and long term value of your product?
- 48. Popular Examples
- 49. Facebook ▪ Monthly active users ▪ Revenue made from the user 49
- 51. Amazon ▪ No. of purchases per month ▪ Net purchase revenue 51
- 53. LinkedIn ▪ Monthly active users ▪ Growing monthly engagement per user defined by □ Meaningful conversations / connections / follows / shares etc. 53
- 55. The limitations North Star Metric Also known as One Metric that Matters can be limiting for large organizations. 55
- 56. Example LinkedIn has teams dedicated to monetization and engagement 1. Monetization targets revenue from ads 2. Engagement targets activities like connections, comments etc. 56
- 57. Simplistic understanding of the scenario 1. Ads will put off people and monetization team will lose out. 2. Monetization teams’ gain can affect long term engagement which can affect long term retention. . 57
- 58. A more sophisticated approach 1. Ads can put off people and enable monetization gains 2. The temporary loss of engagement may be worth the financial gains temporarily 3. This could be a grand experiment to focus on the retention of high value customers 58
- 59. So What? ▪ Large enterprises have teams with diverse focus areas. A north star metric cannot objectively represent the multiple product goals ▪ A north star metric cannot account for one metric affecting another ▪ The NTM that intends to provide clarity can actually increase blind spots All of the above create a climate for bad decision making in the long run 59
- 60. What does this mean? ▪ You should not oversubscribe to the One metric that matters argument. ▪ You should consult the first principles and choose metrics that will help you make decisions objectively, proactively and progressively as the product evolves 60
- 61. So… How to think about this?
- 62. Constellation metrics - Beyond North Star metric 62 One Metric that matters Supporting Metrics
- 63. Constellation metrics with more dimensions 63
- 64. Constellation metrics - Example 64
- 65. Understand the importance of Tradeoff Metric 65
- 66. Let’s put the steps together
- 67. ▪ Reflect on Product principles ▪ Think about your business model. ▪ Reflect on the stage of the business ▪ Begin with a North star metric ▪ Build the constellation metrics with other dimensions Engagement, Retention, Monetization ▪ Depending on the scale of the product think more input or supportive metrics that will help you achieve the primary metrics ▪ Sanity check on product principles 67
- 68. Let’s make it real
- 69. CareerEQ Paid Product – Video content and slides A DIY coaching session to figure out what’s next for you and how to get there ▪ launch offer for $39 ▪ 15-20 hour course ▪ 100% money back in 3 months ▪ 50% refund when reviews are shared via social 69
- 70. Business Stage: Empathy & Stickiness Problem Validation ▪ Is the problem real and do people care enough about it to solve? Solution Validation ▪ Will they use or buy it for enough money from you? Product value ▪ Will my product grow? ▪ Will they care to come back and tell others? 70
- 71. CareerEQ NTM Paid Product – Video content and slides Net no. of purchases [Purchases – Returns] 71
- 72. CareerEQ >NTM Paid Product – Video content and slides Engagement ▪ Ratio of positive to not-so-positive reviews ▪ No. of people getting 50% refund after completion Retention / Acquisitions ▪ Ratio of visitors to purchases Monetization ▪ Total no. of purchases ▪ Net revenue (purchases – returns) 72
- 73. Time for your product
- 74. 1. Reflect on Product Principles
- 75. 75
- 78. 3. The Stage of the business?
- 80. Business Stage: Empathy & Stickiness Before Product Market Fit Problem Validation ▪ Is the problem real and do people care enough about it to solve? Solution Validation ▪ Will they use or buy it for enough money from you? Product value ▪ Will my product grow? ▪ Will they care to come back and tell others? 80
- 81. 4. The North Star Metric?
- 82. The Definition A north star metric should consist of 2 parts: ▪ A metric that represents customer value led by product vision ▪ A metric that represents your product strategy driven by product stage 82
- 83. 83 When do your customers reach end-result? Does this apply to all our customers? Is this moment measurable for us? Does this metric show the actual engagement with the product? Does my NSM metric change frequently? Can this metric determine that the product is moving in the right direction? Is NSM growth tied to business growth? Is it easy to understand and communicate across all teams? What is the best frequency? [Stage dependent] Can this metric guide you when evaluating pricing, potential features, plans, and other important decisions? What external factors have an impact? Can everyone in the company (marketers, sales, UX, etc.) relate what they’re doing to this metric? Does the full pirate funnel impact NSM? Does it capture the essence of the company and long term value of your product?
- 84. 5. The constellation Metrics? Engagement, Retention and Monetization
- 85. Your Product ▪ Engagement ▪ Retention ▪ Monetization 85
- 87. 7. Sanity check of product principles
- 88. 88
- 89. Appendix
- 92. Quora ▪ No. of answers to questions 92
- 93. Uber ▪ Rides per week 93
- 94. Hubspot ▪ Weekly active teams 94
- 95. Slack ▪ Daily active users 95
- 99. Questions to ask to move to the next stage
- 106. Questions to define metrics based on business models