We all strive to be more data driven, but with so many ways to measure everything we do, how do we decide which metrics matter?
Learning which KPIs are most important and choosing metrics that matter is critical for assessing your performance as a product, company, and individual. Here are frameworks and examples for choosing metrics that matter for successful product management.
OKR is an excellent framework, especially for new product managers. OKR stands for objectives and key results. Objectives are qualitative or strategic and focus more on significant or action-oriented steps. Key results are key performance indicators. They measure the quantitative data behind your efforts. These should be succinct, specific, and measurable.
“Metrics are just numbers… goals on the other hand, are SMART.” — Kritika Rana
SMART is an acronym that helps you define clear objectives. Smart goals should be:
AARRR — pirate metrics
Rana mentions that product managers wear many hats, often switching back and forth like a circus clown. Now, we get to add a costume into the mix, using pirate metrics to measure customers. With this framework, you will:
HEART metrics by Google
Google developed an acronym similar to pirate metrics, known as HEART metrics. They will help you measure:
• Task success
The scientific method
The scientific method is a foolproof way to approach experimentation in product management. Talking to customers, stakeholders, and team members helps you consider challenges and ensure product success moving forward. Here are the steps:
• Define your question
• Conduct background research
• Form a hypothesis
• Set metrics
• Measure your metrics
• Prove or disprove your hypothesis
Here are some other great metrics for product management:
• NPS: Net Promoter Score. Ask users how likely they are to recommend your product.
• MRR: Monthly Recurring Revenue in terms of staff, users, features, and other specific measurements.
• Churn: The number of customers who stopped using your product.
• Cost of acquisition
• Lifetime value
Mobile app example
As an example of how these metrics would look with a digital product, let’s examine the Tinder app using pirate metrics.
Acquire: How do users acquire the app? Word-of-mouth? Another method?
Activate: How are users activating within the product? They meet people and talk to each other. Maybe the app sends a push notification to encourage this.
Retain: How can the app retain users? Perhaps they pinpoint the time of day that a user gets the most matches, send push notifications to encourage logging on, and measure how many people click through the notification.
Revenue: Tinder has a freemium model. To measure this, they can use ARPU: average revenue per paying user.
Referral: Tinder users may refer friends through word of mouth or referral bonuses. Their product team can measure these referrals in terms of NPS and virality.
“Measure what matters”
Remember these frameworks to help you decide which KPIs are most important. Don’t forget that as a product manager you can always improvise, adapt, and overcome to achieve great things. With these skills in hand, you can successfully implement metrics that matter and use them to build amazing products.