Metrics For Product Management

Metrics are important for Product Managers to understand user engagement, product performance and health of overall business. Below are the some of metrics important for product managers:

  1. MAUs/DAUs (Monthly Active users / Daily active users) : DAU is defined as no. of daily active users. Active users are the one who signed in and are doing some activity.MAU is defined as no. of monthly active users. The definition of an active user will depend on the nature of your product. For example, Tiktok may define active users as one who spends at least 60 seconds viewing reels, whereas a digital payment platform may define an active user as one who makes atleast one payment. This metric helps us in understanding how user base and user activity is changing over a time in product.These metrics are mostly used for understanding user engagement on the platform.
  2. Customer conversion rate :This metric helps in understanding whether users are doing what we are expecting them to do after landing on the platform. High conversion rate means users are doing what we expect them to do after landing on a page or platform. Low conversion rate means users are landing on the page but are not performing activities which we expect them to do.This metric helps in understanding the drop-offs points of users and features which are not working.This will help in understanding at which point there is drop off, whether users are landing on page or not , whether they are finding the feature useful or not and hence not converting. This helps in understanding at which step in the feature needs to be focused on.
  3. Churn and customer retention rate :Churn rate is the rate at which users stop being active or stop paying. The higher the churn rate ,the more users stop buying or stop being active.On the other hand a low churn rate means that the user base is loyal and likes the product. Customer retention rate means how many users come back to your platform.High retention rate means more users come back.
  4. NPS and CSAT score ( Net Promoter Score and Customer Satisfaction Score) : NPS is used to understand overall satisfaction of users with a product.NPS tells how likely users will recommend a product to their friends.CSAT is used to understand satisfaction of users for a feature or particular service derived from a survey. CSAT will tell the satisfaction of the user base. Using CSAT, we can target specific questions related to a feature or particular part of the product and get insight about which part needs to be improved in the product.

CSAT = no.of positive responses/ overall responses

5. CLTV ( Customer lifetime value) :These metrics allow you to calculate how much money a user will generate in the long term.This helps in understanding how much money needs to be spend to acquire a user. Lifetime value is impacted by factors such as churn / retention, contract value and upsell / cross sell revenue.

CLTV = average order value x purchase frequency x average lifetime

6. CAC ( Customer Acquisition Cost ): This metric is basically the cost spent for acquiring a user. The cost includes all types of cost i.e marketing cost, sales cost etc in acquiring users.

7. MRR ( Monthly recurring revenue ) :​​These metrics measure a product’s total revenue in one month.It’s the amount of revenue generated per month.It helps in understanding how product and business is performing.

MRR= no. of users* average monthly contract value.

Hope you find this article helpful. Keep learning!

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