The Most Important Metrics for your Product Team’s KPI Dashboard
Most Product Teams try to steer clear of Key Performance Indicators. What works for business-as-usual functions like Customer Support and Operations doesn’t always work for teams whose primary goal is getting new features into the hands of customers.
But that doesn’t mean you should avoid metrics altogether. If you want to ensure your team is executing with maximum effectiveness, then you’ve got to keep track of how it’s performing week-on-week.
What you track on your Product Team’s KPI Dashboard (you’ve got a KPI Dashboard, right?) depends on what your product (and your business) is trying to achieve. There are a few key numbers, though, which can help you measure the success of any product you’re managing.
A great place to start is Dave McClure’s Pirate Metrics, which presents a framework of categories which can help you determine where you need to focus or tweak your efforts.
The categories McClure suggests tracking are Awareness, Acquisition, Activation, Revenue, Retention and Referral (or AAARRR for short, get it?).
Not all of these items are relevant for every Product Team, though. To keep it lean, start with the following three categories and figure out if there’s anything else you need to add afterwards.
Acquisition
Measuring acquisition isn’t just for your Sales Team. It’s the first KPI that helps prove if your product is successful. If your acquisition numbers are low compared to a) what you’ve forecast and/or b) what you need for your product (and business) to turn a profit, ask yourself; “are we building the right thing?”
If your product isn’t addressing the right customer need, then it’s unlikely that you’re going to be able to attract new users. Dig deep into your target market’s jobs to be done and make sure you’re creating a product that really delivers.
KPIs to track:
- Number of New Users (Daily, Weekly, Monthly)
- New Users as a % of your Total User Base
- % User Base Growth (Daily, Weekly, Monthly)
Engagement
You might be acquiring plenty of new users for your product, but how do you know you’re meeting their expectations? The clearest indicator that your product is helping its users get their jobs done is engagement.
How well are you engaging your customers once you’ve acquired them? If you’ve got loads of sign-ups, but no one logging into your system afterwards, then it’s very likely that your product isn’t meeting expectations. It’s time to start speaking to your customers and make sure your product is helping them get those jobs done in the most effective way possible.
KPIs to track:
- Number of Active Users (this could be daily, weekly or monthly Active Users depending on the regularity of use you’re expecting)
- Active Users as a % of your Total User Base
- Net Promoter Score (the “one metric to rule them all” which will give you a real insight into how your customers feel about your product)
Retention
If you’re acquiring and engaging customers, but not retaining them, then you’re product isn’t going to last. The question to answer here is “do people come back to use this product again and again?” If so, then it means you’re delivering value. And if you’re delivering value for your customers, then it’s a safe bet that they’ll be likely to renew their subscription.
If, on the other hand, you’re acquiring and engaging new users but they’re all leaving your product at the point of renewal, then you risk burning through your entire potential customer base.
Speak to your ex-customers and really try to understand why they stopped using your product. Acquiring new customers can cost your business more than five times as much as retaining your existing customers.
If your retention metrics are poor, you need to move the dial in the right direction urgently.
KPIs to track:
- % Customers Who Use Your Product/Feature Again & Again (typically a Cohort Analysis that helps you analyse if usage drops off after an initial honeymoon period)
- Customer Churn Rate (number of customers lost in a time period divided by the number of customers you had at the start of the period)
- Customer Retention Rate (number of retained customers divided by the total number of retained and lost customers in a time period)
The above is just a starting point but, by tracking what’s happening in these three categories, you’ll soon have a real insight into the overall health of your product and where you need to focus your team’s efforts.