What are the best metrics for a product manager to track?

Answer by Jeff Eddings:

Apart from building the actual product, the single most important
thing that a product manager can do to ensure the success of their
product is to build in ways to measure the product. Measurement enables
the product manager (and anyone else) to see whether the initial value
proposition for the product was realized, and to what extent. For a good
 product manager or product management team, they will have instrumented
 metrics for all their products, and the benefit here is that for the
particular product launch in question, other metrics can be monitored to
 see if there were any indirect detrimental effects that the product
manager never anticipated. For examples, registrations may go up as a
result of an onboarding product launch, but retention could be affected
as a result.

Here then are the metrics that every product manager should have at
their fingertips, ideally in one easy-to-access dashboard. Alerts should
 be built into these to warn the product manager if anything amiss is
going on. Note that these are metrics for product managers at consumer
web/mobile companies; your mileage may vary.

I work for a consumer web company, so depending on your industry, this may vary, but here are the 12 that I watch:

User Activity

  • Monthly/daily unique visitors: before a user can
    become a user, they have to arrive from elsewhere and start using your
    site or product. Monitor this carefully to see the effects of your
    marketing programs.
  • Monthly/daily active users (MAU/DAU): knowing how
    many users are actively engaged in your product is critically important.
     Equally important is how you define what an active user is. You’ll know
     a user is active if they are getting tangible value out of their
    engagement.
  • Average session time: one of the most telling
    metrics for whether or not a user is happy and engaged is to look at how
     long they spend with your product. Barring user experience issues that
    slow down users, the more time users spend with your product, the
    better. Note that for site, average page view count is a possible
    substitute for this, but in most cases, not an ideal one. Page views
    could very well denote an issue site architecture, or do not capture any
     interactive activity driven by AJAX or other calls that don’t require a
     new page view.

Conversion and Retention

  • User/customer conversion rate: once visitors come
    to your product and try it out, how often are you able to convert them
    into an active user? Conversion rates measure this, and again, rely on
    the definition of “active user.” Make sure you define this carefully as
    to not mask user non-activity as engagement.
  • Monthly/daily retention rate: you can bring them in
     the door, you can turn them into active users, but are they leaving in
    droves after that? Retention rate (with average session time) is one of
    the best indicators of product quality and whether the user is getting
    the value they seek from your product.
  • User sentiment/net promoter score (NPS): while
    average session time and retention rate can be calculated quite
    precisely, there is no substitute for what a user says they think and
    feel about your product. Understanding user sentiment can point out
    problem areas in your product, and net promoter score is a good way to
    gauge the passion your users feel for your product by asking whether
    they would recommend it to others.

Revenue

  • Average revenue per user (ARPU): to have the
    company continue to exist, and reward shareholders and employees, every
    for-profit company must generate revenue. How efficient your revenue
    generation is can be measure by average revenue per user. This metric is
     most effective when compared against user/customer acquisition cost.
  • User/customer acquisition cost (UAC/CAC): if every
    one of your customers generates $1 of revenue, but costs $2 to acquire,
    then clearly one of three things must occur: increase ARPU, decrease
    UAC/CAC, or stop trying to acquire this kind of user/customer. Ignoring
    this metric and focusing only on ARPU misses half of the picture.
  • User/customer lifetime value (ULV/CLV): for ongoing
     optimization, comparing ARPU and UAC/CAC makes sense. For understanding
     the long-term effects, and comparing them with ongoing costs associated
     with retaining users, user/customer lifetime value is important. For
    the day-to-day, use ARPU. For a feel-good, long-term metric, use
    ULV/CLV.

Team

  • Product/feature velocity: how effective and
    efficient a team is correlates to how quickly new products and features
    can hit the market. You could produce great products, but if those
    products are slow to come, the company gets left behind. This is a good
    metric to evaluate how well your software engineers are doing.
  • Product/feature quality: perhaps you get products
    out fast, but is it at the risk of quality? Users and customers want
    products yesterday, but they also want products that they can use. This
    is a good metric to evaluate how well your user experience and quality
    assurance teams are doing.
  • Team happiness: this metric perhaps doesn’t have a
    discrete number correlated with it, but whether a team is happy or not
    is important in maintaining high-quality products that get out quickly. A
     happy team is a productive team.

By carefully watching and reacting appropriately to these metrics,
product manager can make sure all the hard work they put into their
products pay off, and everyone knows it – including the product manager
themselves.

What are the best metrics for a product manager to track?

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