Adventures in Product Management 3: Product Metrics and Defining a North Star

The other day, we came up with some Personas. When we have this, it is important to think about how we can measure our success. This would help, as we don’t want to launch a product and realise that we got it all wrong, do we? Therefore we use Product Metrics to gauge this. But what are they?

Well, according to Heap:

Product Metrics are data that capture the ways customers or users interact with your digital app or product, and show how those interactions affect your business. They’re used to get insight into the success of a product or website.

Let’s assume we’re building a football boot aimed at conscious consumers. We have done our user research and determined our market segments. We have then created Personas around these market segments and now we need to know how successful our product will be. Enter Product Metrics!

Well why would we use Product Metrics? Well they will lead to better product decisions, as they give us quantifiable evidence around which aspects of our product or user experience, are resonating with customers and which ones aren't. Another reason for using Product Metrics is that when we pitch the product roadmap to our executives and other guys above, it shows them the evidence of our informed decisions.

So lets choose some metrics then! According to Product School, there are plenty to choose from. But I am going to pick five, to keep this contained and simple. I have chosen Customer Retention Rate, Churn Rate, Customer Conversion Rate, Feature Adoption Rate and New Signups. How do these use these metrics for our football boots? In no particular order:

№1 Churn Rate

The Churn Rate is a percentage metric, of how many users leave your product over certain period of time. We can measure this, through how many users do not come back and buy another boot.

If we developed a monthly subscription for accessories to boots, such as a monthly mystery box containing new things every week such as: shin pads, detachable studs, coloured laces, trainer cleaning tools. This would allow us to clearly define the churn as we would be able to see which users cancel their subscriptions.

This is calculated by: users from the start of the time period, subtracted by the users at the end of the time period, then this is divided by the users at the start of the time period, and then multiplied by 100.

This is important as it will convey how many users leave, which we can then develop strategies to stop them leaving. This lets us know if we are losing some of our personas and the success of them. Did we get our personas wrong initially?

№2 Customer Retention Rate

This is actually different from the churn rate, as it is a measure of how good we are at keeping customers over a period of time, and is a different calculation. It is also a percentage that shows how many people come back to buy boots or continue with our monthly subscriptions.

This is calculated by: users from the end of the time period, divided by the users at the start of the time period, then multiplied by 100.

This is nice to know how many users come back to us and is almost like a metric for showing our product loyalty. Are our Gifting Gertrude's happy to come back to us through our discounts on the next pair of boots? Although it is nice to know how many keep coming back, I think it is more important to focus on the churn rate, to reduce the amount that leave, which will then increase our Customer Retention Rate.

№3 Customer Conversion Rate

Using our websites (where customers can buy our boots) and our apps to measure your feet, performance and build discounts for your next pair of boots; this shows how many customers like what they see and become an active user.

This is really important for us as this is a new product and therefore need lots of new customers. This will help us to identify key features that customers are not using and the ones that they do through interaction. This can shine the light on many faults, as if the customer conversion rate is very high but we have a very small amount of users, this tells us that our product is bang on, but customers can’t find it.

This is calculated by: number of sales/orders/conversions, divided by total number of visitors, multiplied by 100.

This shows us how quick our product is growing in popularity. We can then analyse how good the conversion rate is, which will show our areas of weaknesses, to target our potential customers. Are we converting more and more of the personas we created? Are we targeting new ones, that haven't been made yet or even thought about?

№4 Feature Adoption Rate

This measures what percentage of your active users are interacting with a specific feature.

This can show us for example: how many customers like to use our measuring app for their weird feet, how many customers look at certain boots. This could also help us with our customer conversion rate measuring popular features and ones that are not so popular. The more popular a feature is, the more it helps us to driver strategies for acquisition, generate revenue and customer retention.

This is calculated by: number of users interacting with a feature, divided by number of active users, multiplied by 100.

This is important for our feet measuring app, as this can show how many Weird Foot Wayne’s, are measuring their feet to get specialised boots. This shows how many Gifting Gertrude’s like the look of certain boots, discounts and returning customer rewards. This shows us whether we were wrong to think that Conscious Consuela was one of our personas! What if barely any customers get involved with our environmentally friendly product features?

№5 New Signups

This measures the number of people who create and account with us on our websites for our product. They might not be buying a boot but they have taken the important step to becoming one.

This can help us to define who they are and how they fit into our personas. We can do this through measuring their demographic and what features they interact with as a new signup. This can help us to further determine our churn rate as how many make an account, then leave and never buy our product.

There is really no equation for this, just a figure of how many signups we have. How many we have in a certain time frame such as in the last month. You could however, calculate how many new signups buy our product.

This would be calculated by: the number of new users/sales/orders, divided by the number of new signups, multiplied by 100.

This is important for discovering whether our personas were correct. Do they as people and personalities actually fit into our Personas. This also helps us with our churn rate and our retention figures.

Overall

I think that Customer Conversion Rate, is the most important metric because it shows us the effectiveness of our product against the following personas. Therefore I think that the Customer Conversion Rate is the core value of our product and coveys whether we have delighted our customers. As I have noted this, as the most important metric that our football boots will use, we should follow this like the North Star to find our way to success!

What is a North Star Metric? Well, according to MindTheProduct:

A North Star Metric is the one metric that captures the core value that your product delivers to customers.

Therefore we will follow this to capture the ways users interact with our football boots, and show how those interactions affect our personas problems and fix them.