Product Management Metrics — Measuring the Right Metrics as a Product Leader

Dear Product Managers/Owners, never build a product without clear product metrics and tools to track them.

10 min readAug 5, 2022

Imagine you are on a cross-country road trip and the car you are driving does not have a dashboard. How do you know your current speed when driving through a school district? What if you are low on gas? Without a dashboard, you are completely blind to how your car is doing. The same applies to your product, there is a popular quote usually attributed to Peter Drucker, that says, “you can’t improve what you don’t measure”. As product managers, it is essential to constantly improve your understanding of your users, how they make use of your product and how you can improve upon it to provide maximum value to them. A satisfied user is a paying user and customers would only pay you if they constantly get value from your product. This brings us to the world of product metrics and analytics.

Product Management Metrics — Measuring the right metrics as a Product Leader by Solomon Ayanlakin

My name is Solomon Ayanlakin and I work as a product manager at CredPal - a fintech startup offering consumer credit solutions through credit cards, and Buy Now Pay Later services, amongst other products. Before stumbling on product management (like most PMs…lol), I self-trained to be a data analyst, taking as many courses as I could lay my hands on from Alex the analyst’s YouTube playlists, to DannyMa’s virtual data internship. Little did I know that the analytical skills acquired during this period would be beneficial to me in a product role. Today, I work in the intersection of product and data where I make use of product analytics tools to understand how users make use of our product and pin point areas for improvement. This article looks to help product managers, product analysts, and CXO’s understand what product metrics are all about, provide a framework with which they can create relevant metrics, conduct product experiments to improve these metrics, and track the results of their experiments.

☝🏽Introduction

Product metrics are essential guideposts that help businesses evaluate and track product performance from the user's perspective. Metrics are used majorly for three purposes; to give companies clarity on what to build (feature prioritization), how to build it, and to also help measure the success or failure of the outcome. To ensure that you are delivering the best possible value to potential and existing users, you need to constantly track product metrics.

Here are some reasons why metrics are important for you to monitor as a product manager:

To help your users discover the aha moment
To help you know what features are popular amongst users and what features are not
To help measure the success of a product feature
To help improve customer on-boarding, engagement and retention
To help you determine points of customer satisfaction or dissatisfaction along the user journey
To find out the number of returning users and infer what factors cause them to return

📈 What Metrics Should I Track as a Product Manager?

Now that we know the importance of monitoring product health using metrics, here comes the million-dollar question, “what metrics should I track as a product manager?”. The metric(s) to track are not constant, they vary, change and evolve depending on the industry you operate in, the stage of the business — early, growth or late, your customer's needs, as well as the company’s goals. For instance, an early-stage company would want to focus more on conversion, activation, and active user engagement metrics as opposed to metrics that track revenue growth and retention. This is because the company is yet to find product-market fit or discover what features really drive value for its customers.

Depending on your use case, company goals, or stage of the business, these are some of the major product metric buckets you should be aware of:

Popular Product Metric Buckets for Product Teams

It should be noted that all metrics are not to be used at the same time. It all depends on figuring out your business goals and what “value” means for your users, then deciding what metrics to track that accurately reflect such values for you to understand if your users are getting it.

However, regardless of your industry and customer type, some metrics are more valuable to track than others. To avoid tracking vanity metrics, it is important to define and have clear distinctions between the types of product metrics you should be monitoring as a product manager. Here is a structured way to think about metric segmentation:

North Star Metric/Focus Metric: This is the metric that reflects and helps you monitor the prime value you give to users.
Primary/Level 1 Metrics: These are metrics that complement the north star/focus metric, they should either contribute to it or be used to see if the north star metric is heading in the right direction.
Supporting/ Level 2 Metrics: They are used as leading indicators to your north star and L2 metrics. Before the North star metric changes, you should have noticed some issues with your L2 metrics.

🎖 North Star Metric

This is the most important metric you should be measuring. A good north star metric reflects the amount of value you are offering your customers. It speaks more to the long-term success of your product. North star metrics are often confused with “Other Metrics That Matter” and for this reason, a lot of companies fail to grow. A good focus metric should affect entire teams across the company and should be tracked for the entire lifetime of the company. The entire concept of the NSM lies in this simple statement, “If a company brings top value to its customers, then growth and success are inevitable”. How do we measure this value?

Here are some benefits of having a great north star metric:

Customer Obsession: It helps drive a mindset of customer value across the entire company.
Consensus: Everyone can easily see where the company stands and can make timely re-adjustments.
Growth: It offers a way to quantify the long-term success of the company. Are you going to be in business for much longer or not?

How do I choose a good North Star Metric?

The concept of having a singular metric can be daunting to some. Making sure that product leaders have a clear way to objectively choose a north star metric is super important. A great focus metric should meet some criteria to be relevant to your company. Here are a few:

Should be closely tied to end value proposition: A good focus metric should reflect the value and as such, should be closely related to when customers realize the intended value from your product. For example, UberEats’ value proposition is swift delivery to your door. A good focus metric would be closely related to the value gotten from delivery. While it is tempting to measure the number of orders placed, a better north star metric would be the number of positive review orders completed. This is because a customer who placed an order but got a wrong or delayed delivery is not getting value from Uber Eats. By measuring core value gain, we are able to not only track the total number of orders placed in a certain time period but also track the core value proposition which is the number of orders placed that led to a satisfied customer.
It should be measurable: Focus metrics should be quantifiable, it should not be a feeling or state, but should be actionable. Measuring the count of completion of a certain beneficial activity is a good way to start.
A great focus metric is time-bound: If there is no way to measure your metric within fixed time constraints then you are not measuring at all. Having time-bound focus metrics helps the company stay agile in improving that metric. The only way to know if you are heading in the right direction or not is to measure and take account of progress in fixed periods of time. That way you can compare your metrics for this day with the previous day. Using a time period of a year is typically not a good practice. Ideally, you want to take account on a daily, weekly, or monthly basis, depending on the nature of your business and what metric you are focusing on. For example, UberEats would want to measure it’s north star metric on a weekly basis, Twitter would want to measure theirs on a daily basis, while Airbnb would benefit most by measuring on a monthly basis. These time periods are gotten from the expected frequency of usage for your product by your ideal user.
It can be influenced by everyone in the company: If you take a look at the popular AAARRR funnel (also known as the Pirate Metrics), you quickly realize that different teams in the company have an effect on the funnel. If a change occurs on one part of the funnel, it should ideally affect the NSM. Take for instance the retention is being improved by the growth team in your company, this would positively impact the north star metric because at this point a returning customer is likely being satisfied on an ongoing basis. Also, if the reverse were the case and a customer churns, it would negatively impact the focus metric.
It should tie to the long-term success of the company: A good north star metric would point in the direction of sustainability. Product demand and revenue are the life-blood of a company, so it is important that your NSM points in the direction of sustainability. UberEats will forever be in business if it successfully increases the number of satisfied customer orders on a monthly basis.

One common mistake that a lot of product teams make is using revenue as a north star metric. When the bottom line becomes a focus, the entire company’s goal shifts from providing maximum value, to extracting money from customers.

A satisfied customer would stick around much longer and would willingly pay you for your service. Think of it this way, the monetary customer lifetime value gained from providing top value to customers always outweighs initial daily, monthly, or weekly revenue.

Some Examples of Great North Star Metrics

Notable companies and their North star metrics

🥇 Primary/L1 Metrics:

While the NSM is broad and focused on driving value for the users, the primary metric is more product/feature focused and is used to drive the focus metric in the right direction or to act as a signal that shows the health of the focus metric. While the north star metric is monitored by everyone in the company, the primary metric is team specific. Take for instance the NSM for our earlier example — UberEats, a great L1 metric that the marketing team could track would be the number of quality food vendors that sign up on the platform from their email marketing campaigns. If we have quality vendors, the obvious assumption is that the number of satisfied orders would also increase. As you can already infer, L1 metrics are more actionable and important in the short term compared to North Star Metrics due to its shorter feedback loop and clear assignment to a specific team.

🥈 Supporting/L2 Metrics:

These are supporting metrics to the focus and L1 metrics. It is a way to expand on the L1 metric for each team involved. A good example would be L1 metrics broken down into location, demographics, or features. Still using our example above, the supporting metrics for UberEats could be the number of sales emails sent to food vendors, the number of those emails that were opened, and the click-through rate of the emails. Secondary metrics are low-level and even more obvious metrics that can be easily tracked, and this ties into the primary and north star metrics. For UberEats to be able to actualize higher quality food vendors signing up to use its product, the number of email open rate has to be high. Another way to think of the L2 metric is as a leading indicator to the L1 metric.

🔬 How do I Measure Product Metrics

Now that you understand what metrics to track, you should be asking, how do I measure these in-app usage and activities. Enter into the world of product analytics tools. Product analytics tools are used to measure and progressively improve a plethora of product management metrics that reflect the health of a product from the users perspective.

There are various analytics tools in the market that give insight into how your product is doing. From tools that track page views and user journey, to tools that allow you conduct experiments like A/B testing, in-app walkthroughs and surveys. Depending on your use case and need, you might find yourself using a combination of tools to get a full story of how users interact with your product. Some examples of product tools are Gainsight, MixPanel, Amplitude, Google Analytics, FullStory, Heap, and Pendo.

This article is not sponsored in anyway, and is not intended to sell any product analytics tool. That being said, here are some factors to consider when choosing a tool for analytics:

Features that allow you track your Focus, L1 and L2 metrics
Pricing
Integrations with other products and external data sources
Interface and Usability
Scalability
Security

An investment in the right tool reaps great reward, you need to first understand your business need along with what value means to your users to be able to pick the right metrics to track. Product metrics and analytics are super important to the growth of any technology based product. It is what keeps you in the know of how your business is doing and how best to drive value for users.

I would love to delve deeper into product analytics tools and give insight into how some of the popular tools work, but this article is already long enough. Kindly drop a comment and share to let me know if you want to see more articles on product analytics and metrics in the future. Thank you.

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