New tools to improve performance
on June 3, 2022 (last modified on May 30, 2022) • 14 minute read
Quick question: is your product really what your users need?
Before you nod yes, give your answer some thought.
The problem here is that most folks answer this question based on their assumptions or what a handful of their power users tell them. In reality, you need to look at your product management metrics as well to see how well your product is doing.
But, wait, do you know which product metrics are the most important to track? If not, this post is for you.
We’ve got a list of product metrics sourced from experts to help you better evaluate your product’s performance. In fact, we talked to 37 pros who sell digital products and services to unpack the product metrics they track.
Of these contributors, 37.84% are companies selling digital products/services and 27.03% are either agencies or consultants working for SaaS businesses or companies selling digital products/services. The remaining 18.92% are SaaS companies with 16.22% not falling into any of these broad categories.
Overall, here’s what we’ll cover:
Product metrics are quantifiable data pointers you look at to understand how well your product is doing.
Let’s say you think many users stick to using your product for the first few days but drop using it after that. To test this hypothesis, you need to start looking at your product data to understand whether your assumption stands true.
It’s only when you track the correct product management KPIs that you can be sure of your product performance. Based on the data, you can also improve your product. In fact, let’s talk about that next.
Related: How to Find, Prioritize, and Turn More Product Qualified Leads into Paying Customers
When it comes to measuring the success of a product, we learned that the top three product management metrics for B2B that help are:
Companies that track these product metrics invest time in analyzing product data and deriving insights more than acting upon insights or reviewing product metrics.
As for how they monitor product management metrics, it turns out Google Analytics is our respondents’ favorite. In fact, 90% of the experts say the tool is irreplaceable for them when it comes to analyzing product metrics.
Another irreplaceable option is a centralized dashboard like a product management KPI dashboard where pros can view and analyze their most important product metrics on one screen.
Two more popular options are HubSpot and Google Sheets.
The takeaway? Be sure to not only track the right product management metrics but also analyze them to draw insights for improving your product. With that, let’s look at the key metrics you should be monitoring in-depth.
If you sell products online, you know how important it is to understand how buyers are engaging with your website and making ecommerce transactions. You want both an overview of sales and a detailed view of individual transactions. Now you can get actionable data in one convenient dashboard showing key product sales metrics including:
Now you can benefit from the experience of our Google Analytics 4 experts, who have put together a plug-and-play Databox template that contains all the essential metrics for monitoring and analyzing your ecommerce store and its products. It’s simple to implement and start using as a standalone dashboard or in product revenue reports, and best of all, it’s free!
You can easily set it up in just a few clicks – no coding required.
To set up the dashboard, follow these 3 simple steps:
Step 1: Get the template
Step 2: Connect your Google Analytics 4 account with Databox.
Step 3: Watch your dashboard populate in seconds.
Now, let’s run you through which product management metrics you should monitor and why. Here’s a full list of product metrics followed by the details:
Tim Hill from Social Status recommends watching the average revenue per user (ARPU). As its name indicates, this is the average amount you earn from a user over a time period.
“ARPU gives me a direct market status of my product,” outlines Hill. “Because social media analytics tool undergoes fast-paced changes and updates, I need to determine the revenue generated per user regularly.”
“By doing so, I can define my future service revenue whenever I plan to improve the product features and alter the price,” Hill explains. “Hence, keeping an eye on ARPU helps me strike a perfect balance between client satisfaction and my business profits.”
“I have found the CAC metric to be the most telling of a product’s success,” Khamis Maiouf from Book of Barbering opines.
Essentially, CAC is the amount of money you spend in attracting and converting a target buyer. A high CAC indicates you’re spending a lot on marketing to a customer, which means your strategies aren’t scalable.
Explains Maiouf: “It is a very direct correlation between your marketing efforts and product integration. When you can keep your CAC low, it shows that you are providing value, the marketing spend is working, and you are gaining new customers at a reasonable rate.”
“More than likely it will tell you that there is an opportunity to acquire new customers at even lower costs or gain more customers with the same spend,” notes Maiouf.
“Either way, a good CAC number tells you that you are doing well as a product and business. Tightening up the customer acquisition process can have an immediate impact on your bottom line, and it’s something you should be constantly monitoring as your company grows.”
Related: How to Understand Your Business Better by Analyzing CAC and CLV Metrics
“Customer Lifetime Value (CLV) shows how loyal customers are to your product and your brand,” highlights Chris Gadek of AdQuick.
In terms of a formal definition, the CLV is the average revenue you make from a customer over the entire time they do business with you.
“You can describe lifelong customers as those who continuously interact with your platforms or continually purchase products from your website at a consistent pace,” Gadek adds.
“And the best way for any eCommerce website to sell more is by fostering bonds with their clients in order to build lifelong relationships,”
“Creating these connections with customers makes them feel more confident in the products they are getting and makes them even more inclined to return for your products time and time again.”
Put simply, aim to “create a sentimental value between customer and product [to increase] business revenue and retention.”
In fact, Gadek recommends monitoring CLV, revenue, and retention product metrics. “Together, these metrics can let you see who is a recurring customer, how long they have been a frequent shopper, and what it is that makes them want to keep buying your product,” Gadek sums up.
SnackMagic’s Shaunak Amin commends watching the net promoter score (NPS).
“We take great pride in our net promoter score (NPS). A single-question survey asking customers on a scale of 0-10 how likely they are to recommend our product and service generates this numerical value,” Amin elaborates.
“0 being ‘Not at all Likely’ and 10 ‘Extremely likely.’ This gold standard customer experience metric helps you better understand customer perception so you can gauge their loyalty. And depending upon their response, customers will fall into three categories.”
These categories include:
“To calculate your NPS, simply subtract the percentage of detractors from promoters,” Amin advises. “This score will indicate the overall NPS for your organization.”
“But you can also use it to track scores for individual products, stores, web pages, or even staff members. Doing so provides valuable insights into what is working to gain customer loyalty and what isn’t. And conducting these surveys regularly provides a benchmark for your company to ensure continued growth in customer success.”
“Customer retention rate is one of the key management metrics that need to be tracked for the growth of the product,” opines Glen Carroll from Clicksmarketing.
The reason? “It tells you how many loyal customers you have. And how you can improve to expand the number. It will also help you know what keeps your customer engaged with your product and you can use this data to enhance your marketing strategies.”
Megan Meade from Software Path adds, “Segmenting customer churn rate can lead to important data points for who your ideal customer is, as well as who you aren’t serving at all – this can lead to product development to support more customers, or improvements to make your service even more tempting to your ideal customer as well as impacting marketing targeting and activity to those groups.”
Router CTRL’s Jeremy Clifford makes another important point. “New consumers are wonderful on the growth charts, especially if it appears that every day brings new customers. However, you’ve got a leaky bucket instead of a great product if those clients drop off after only a few days.”
Put simply, “It’s pointless to add more people to the pool if you can’t keep them” in Clifford’s words.
It’s why Clifford thinks it’s essential to track churn. “You need a high rate of customer retention, which means that more consumers return rather than disappear altogether.”
Churn also tells you how many users don’t renew – helping you try strategies to retain them. For instance, Carroll suggests loyalty programs and discount coupons are great ways to increase customer retention.
You can also work on improving your users’ experience – more about this below. For a quick example: offer them quick customer support whenever they encounter a problem.
Similarly, take the community approach to make users feel valued and part of a family. To this end, create content to engage users. For instance, give free workshops to help them understand your product better.
One another tactic to try: cheer your customers by featuring their success story (with your product) on your blog.
That said, you’ll also want to work on your product. “Remember that organizations that haven’t figured out how to retain customers and have jumped on the acquisition bandwagon too rapidly will quickly lose all of their customers,” Clifford warns.
In short, “Your product is useless if it doesn’t have loyal users.” So work on your product first, then focus on retention strategies.
“One of the most important things to keep in mind is product engagement and its related metrics when it comes to product management,” points out Justin Berg of CV maker.
“Daily Active Users (DAU) or Monthly Active Users (MAU) are metrics managers need to keep a close eye on,” Berg recommends.
“As the name suggests, DAU/MAU is the number of active users in a day or month. This metric mainly relates to digital products and is a good measure of the product’s overall health.”
Sharing their experience, Berg continues, “We’ve been tracking DAU for all our products since launch, and it has helped us create a comprehensive report on how the user base of each product has changed over time.
“DAU is a metric that has helped us evaluate other metrics too, such as their stickiness,” Berg adds. “This is how often users interact with the product. This vital product engagement metric enables us to make strategic decisions about adding or removing specific features in the product. A DAU of 20% is considered to be pretty good.”
“Tracking our repeat purchase rate (RPR) shows us how loyal our customers are,” highlights TapRm’s Jason Sherman.
“It’s becoming harder to attract and retain current customers in the retail marketplace. So, for this reason, maintaining a high repeat purchase rate is crucial as loyal customers are a steady source of revenue.”
To add, retaining customers is less costly than acquiring new ones. Plus, better retention comes with the perks of improved brand loyalty and word-of-mouth marketing.
“And the ones who keep coming back to make purchases typically spend, on average, 3%-15% more on each subsequent order,” Sherman adds.
“This additional spending boosts each order’s average amount and significantly increases the customer lifetime value. Your RPR shows how often customers make repeat purchases.”
So how do you calculate your RPR? Sherman shares: “First find the number of customers who placed an order, let’s say, in December. For that same month, find the number of repeat customers. Then divide the repeat customers by the total customers.”
“To get your RPR, multiply the quotient by 100. If that percentage is 25%, that means out of 100 orders, 25 are from repeat customers,” continues Sherman. “An ideal range is 20-40%.
What’s more, your repeat purchase rate can compound, meaning that a 25% RPR can add 33% revenue over time.”
As for how to grow your RPR, here’s Sherman’s advice: “Improve your RPR through customer retention strategies such as an optimized customer life cycle, loyalty programs, retargeting ads, and cart abandonment emails. This creates a better post-purchase experience that drives customer loyalty and increases repeat sales.”
Not to forget, you can also tap into fear of missing out (FOMO) to encourage repeat orders. For instance, share a limited-time discount with your customers only. Or curate bestselling products and offer them as a customer-exclusive surprise box.
Remember: buyers today love good experiences. So focus on offering the best experience to increase your repeat customer, reduce churn, and boost your CLV simultaneously.
Looking for ideas? For eCommerce, try tactics like unique (read: instagrammable) packaging and adding personalized notes.
As for SaaS, improve experiences by making things easy for users. Take a page from ApproveMe.com’s Kevin Michael Gray who shares the ‘Minimum Click, Predictive Behavior’ philosophy for improving user experience.
“While we were building our new Document Signing Experience™ (coming out Spring 2022), we brought on a product coach as lead designer who had worked at Campaign Monitor, Skype, and Atlassian,” Gray shares.
“He taught us the power of ‘minimum clicks.’ In other words, your user should only be one or two clicks away from their desired destination at any time,” explains Gray.
“We applied this philosophy to our onboarding experience. We spent nearly 6 months creating an onboarding user flow. After recreating it over half a dozen times (from scratch) we came up with a minimum click, experiential onboarding experience that is somewhat enjoyable. This was important for us, as onboarding is an overlooked opportunity by most.”
Now that you’ve a list of product metrics you should be tracking, be sure to use the right tools to keep tabs on the data points.
Ideally, the simplest and easiest way to monitor product management metrics is by organizing them on a central dashboard using Databox.
In fact, with Databox, all you need to do is to plug your data sources into the dashboard maker. From there, Databox will create visually engaging dashboards featuring all the important product metrics in one place.
It’ll also auto-update these metrics so you can focus on analyzing the data and improving your product.
So what are you waiting for? Sign up for Databox for free and start improving your product today by monitoring the right product metrics.
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