Product Success Metrics
As product leaders, one inconvenient truth we have to deal with is that half of our product ideas are just not going to work. This reality by itself is nerve-wracking, but it gets worse —even ideas that are properly defined and prove to be valuable take several iterations to get to the point where it delivers expected value.
Properly defining the expected value and a solid understanding of the business objectives, outcomes, and success metrics is required early on in the project. With this, the product team can figure out the best way to solve problems and achieve product vision while the executive team, armed with enough information, can evaluate the return on investment and justify the injection of capital.
The idea of plodding through implementation of a roadmap, then validating success after completion, without a prior definition of what success looks like leads to waste and is counterproductive.
In the model outlined below, proper definition of success criteria should occur during discovery, while measurement and learning should be planned after delivery. Soliciting customer feedback before launch is possible, however, learning opportunities grow when a product is live and a customer base is using it.
Product Analytics
Product analytics is a process used to generate useful insights into customer experiences. Customers are put at the core of a business and the outcomes of these analytics can be used in a variety of ways:
- Identification of engaged customers can be used to improve retention.
- A/B testing of new features is valuable to make careful changes to user experience and fast product decisions.
- Uncovering the hook triggers that keeps users coming back to an app results in voluntary, high-frequency engagement.
- Tracking user interaction across web and mobile platforms for a full picture from landing to check out.
Case Study
Consider this example; a product currently requires 20 hours to onboard a new customer and the goal is to reduce this to 2 hours or less in order to scale effectively.
Step 01: Define Objectives:
- Objectives are defined by client/senior management/executive team.
- Objectives are qualitative and high level — they do not contain details. One to three objectives is typical.
- In the example above, objective would be “Reduce the time it takes to onboard a new customer”
Step 02: Define Key Results
- Are quantitative/measurable. They are a measure of the business results, not outputs or tasks.
- Designed to roll up and achieve the business objectives
- In the example above, key result would be “Average customer onboarding time is 2 hours or less”
- The objectives and key results justify the investment.
Step 03: Communicate!
Communication is critical for reasons below:
- Establish a baseline value so you know where things stand today. In the example above, baseline is “Current customer onboarding time is 20 hours”
- Determine techniques for measuring success, metrics set up and implementation.
- Discuss how to acquire new tools and techniques (if required).
- In the example above, quantitative techniques such as Analytics , A/B testing, and Surveys can be used to measure success.
Step 04: Define KPI’s
- Define key metrics to be measured and prioritize the metrics that matter most.
- In the example above, the Acquisition, Activation, Retention, Referral and Revenue frame work can be used in defining the KPI’s. Some key metrics include;
- Average session duration: amount of time that a user spends on the website in a single session.
- Bounce/Drop off rate: percentage of sessions that ended on a page.
- Conversion rate: percentage of prospects that come to the website and successfully onboarded.
- Retention rate: percentage that remain active over time.
- Revenue: amount of money generated by customers.
- Terminal value: percentage of customers who tried the product and continued to use it in the long run.
Step 05: Measurement
- Go ahead and measure!
- Brainstorm results and optimize metrics if required.
- Determine if there is a silver bullet i.e. opportunities where a small amount of effort can yield profound results.
- Implement changes go back to step 1.
