As a product strategy professional, you need to measure the impact of your decisions and actions on your product's performance and value. But what metrics should you focus on and how should you use them to guide your product strategy? In this article, we will explore six essential metrics that can help you define, validate, and communicate your product strategy.
The first metric you should consider is how well your product aligns with your product vision. Your product vision is the overarching goal and purpose of your product that guides your strategic direction and decisions. To measure product vision alignment, you can use qualitative and quantitative methods, such as customer feedback, user research, surveys, interviews, and usability tests. You can also use frameworks, such as the product vision board, to map out your product vision and validate it with your stakeholders and users.
As a product manager, I've learned that the key metric essential for product strategy professionals is the combination of user engagement and customer feedback. This dual focus offers a comprehensive view of how users interact with the product and their satisfaction levels. User engagement metrics reveal the product's actual usage patterns, highlighting areas of strength and those needing improvement. Simultaneously, customer feedback provides qualitative insights into user experiences, preferences, and pain points. Together, these metrics form a robust foundation for informed strategic decisions, ensuring the product not only attracts but also retains and satisfies its user base.
In numerous instances, establishing a well-defined product vision at the outset constitutes a pivotal factor in securing the requisite funding, staffing, and alignment with overarching organizational objectives. This stands in stark contrast to scenarios where the product vision is merely discussed but eventually relegated to a lower priority. Moreover, the alignment of the product vision necessitates a crucial step of harmonizing perspectives among all cross-functional stakeholders, including the C-level suite, with the strategic trajectory defined, encompassing any overarching objectives set as guiding principles.
Product vision alignment is one of the critical aspects of product manager to explore and I have been applying the customer funnel and customer satisfaction score metrics. Customer funnel presents the usage part of the product where as customer satisfaction represents the overall feedback of the product. Customer funnel can be tracked by dividing the customer usage in form of daily, weekly or monthly and in various categories like new, active, inactive and reactive. Customer funnel is one of the helpful measure to track if the previously delivered features and new features are meeting or going beyond user expectations or not. Thus, If customer funnel is mind of the product then customer satisfaction is the heart of the product.
Evaluating product vision alignment is more than a box-ticking exercise; it's about ensuring every aspect of your product resonates with its core purpose. Dynamic approaches to assess this alignment can involve deep diving into customer insights and proactive adaptation to evolving market trends. This process is about conforming to the initial vision and allowing the concept to grow based on real-world feedback and innovation opportunities.
Aligning your product vision with the overarching business strategy is fundamental to guiding the product's overarching success. This alignment facilitates structured validation with stakeholders, fostering internal consistency and resonance with external market perspectives including consumer demand and competitive forces at play. Considering the dynamic nature of alignment, ongoing validation aligns with the evolving nature of products and markets. A well-aligned product vision is not just a standalone metric but a cornerstone of a broader strategic framework, ensuring that the product contributes synergistically to the larger corporate and business strategies.
The second metric you should monitor is your product-market fit, which is the degree to which your product satisfies a real market need and delivers value to your customers. To measure product-market fit, you can use indicators, such as customer retention, referrals, reviews, revenue, growth, and churn. You can also use tools, such as the product-market fit canvas, to identify your target market, value proposition, and key metrics.
To identify product-market fit or the value your product brings to the marketplace, focus on customer growth rate and customer retention rates. These will reflect how well you attract new customers and how well your product keeps customers engaged over time. High retention signifies a strong product-market fit, as customers continue to find value in your product long after the initial purchase. Referrals are another powerful indicator. Satisfied customers are more likely to recommend your product to others, which can be a testament to the product's value. Tracking referral sources and the rate of referral-driven growth can provide insights into product-market fit.
While product innovation is glamorized, real value-add is in continuous improvement to adjust as per market changes, user needs, changing metrics etc. Once this is done well, it reflects in client satisfaction, retention, higher user adoption, high ROI and ofcourse, growth. Getting a product fit for the market, the first time, is a dream. And hence this topic of discussion! What is practical & important is to rollout a product version with solution to core need and keep it scalable & adaptable. Continue to expand the product scope as much as possible before declaring it a cash cow and moving on to the next journey.
Product-market fit goes beyond meeting market needs — it's about creating a product integral to your customers' lives. Success in this area is reflected in metrics like retention and growth and how customers advocate for your product.
Determining Product-Market Fit (PMF) isn't reliant on a singular metric; instead, product managers must employ a diverse set of metrics for a comprehensive evaluation, including: - User Surveys: Utilizing metrics like NPS to gauge customer satisfaction and the likelihood of recommendations - User Interactions: Evaluating user interactions from activation to ongoing engagement and retention - Social Credibility: Assessing the product's reputation through referrals and virality rates - Performance Metrics: Such as financial metrics and market shares Achieving PMF is an iterative and continual process, and requires consistent reassessment as the market evolves and no single metric can provide a holistic understanding
Determining product-market fit involves assessing customer satisfaction and demand. Regularly surveying users and analyzing qualitative feedback helps gauge their enthusiasm and the product's perceived value. Tracking key metrics such as customer retention, user growth, and Net Promoter Score provides quantitative insights. Observing organic growth and word-of-mouth referrals also signal alignment with market needs. A product resonates with its market when users not only find it useful but actively advocate for it. Continuous iteration based on user input ensures the product remains attuned to evolving market dynamics, solidifying its position in the market.
The third metric you should track is your product goals and OKRs (Objectives and Key Results), which are the specific and measurable outcomes that you want to achieve with your product. Your product goals and OKRs should be aligned with your product vision and strategy, and should be SMART (Specific, Measurable, Achievable, Relevant, and Time-bound). To measure your product goals and OKRs, you can use dashboards, reports, and analytics to track your progress and performance.
Many PMs periodically assess adoption and business growth objectives. Yet, what distinguishes an outstanding PM is the ability to define product health and experience metrics like page load speed, API latency, support ticket volumes. etc. For a 0-1 product, emphasis typically centres on adoption and growth, claiming top priority and dominating discussions. However, for continuous insights, growth experiments, and customer retention, astute PMs allocate a more substantial mind-share to metrics related to product experience and health. Moreover, exceptional PMs display diligence in implementing a structured metric dashboard, dedicating at least 10-15 minutes daily to ensure that all indicators are trending towards growth or improvement.
Product goals and OKRs are navigational beacons guiding your product journey. These objectives should adhere to SMART criteria and be fluid enough to adapt to new insights and market shifts. Effective tracking of these goals requires a combination of analytical rigor and creative flexibility, ensuring that you meet your defined targets and remain open to redefining success as your product and market evolve.
Moving from strategic thinking to strategic execution requires prioritizing product goals and OKRs that align specific, measurable outcomes with the overarching product vision and strategy. Measuring progress through dashboards, reports, and analytics reflects a commitment to ongoing evaluation and adaptability. This approach not only enables real-time assessment but also contributes to strategic agility, allowing adjustments in response to market dynamics. The use of such tools enhances communication and transparency, facilitating stakeholders' grasp of progress and impact.
Having OKRs is essential. If a company does not have OKRs or they are not SMART, work on establishing them. Make sure they are clearly documented and easily accessible by different teams. Spell out how they align with the product vision and strategy. Reinforce this alignment by showing it to other teams/departments. If there is any misalignment you will receive the feedback quickly.
Setting product goals involves aligning with broader business objectives and addressing user needs. Clear, measurable, and time-bound goals are crucial. Objectives and Key Results (OKRs) break down these goals into actionable steps. For instance, a goal could be increasing user engagement, and the corresponding OKRs might include improving feature adoption rates or boosting daily active users by a certain percentage. Defining these metrics ensures everyone on the team understands what success looks like and can work collaboratively toward achieving it. Regular reviews and adjustments to OKRs enable agility in responding to evolving priorities and market dynamics, ensuring the product team stays focused on impactful outcomes.
The fourth metric you should evaluate is your product value and ROI (Return on Investment), which are the benefits and costs of your product for your business and customers. Your product value and ROI should reflect your product vision and strategy, and should be quantified and communicated to your stakeholders and users. To measure your product value and ROI, you can use methods, such as value proposition design, customer lifetime value, customer acquisition cost, net promoter score, and cost-benefit analysis.
Understanding and articulating the product value and ROI is critical to product success. It's not just about numbers; it's about the story those numbers tell regarding the impact of your product on both the business and its customers. Effective measurement of product value and ROI should weave together quantitative data like customer lifetime value and qualitative insights like net promoter scores to create a holistic view of the product's success in the market and its alignment with the overarching business strategy.
ROI along with Acquisition Metrics are pretty important for a product specialist. These metrics measure how well the product is attracting new users. Examples include: New User Acquisition: The number of new users who sign up for or start using the product during a specific period. Customer Acquisition Cost (CAC): The average cost of acquiring a new user. Conversion Rate: The percentage of visitors who take a desired action, such as signing up for the product or making a purchase.
Assessing product value and Return on Investment (ROI) is pivotal for strategic decision-making. Every product must be outcome-driven, underscoring the interconnectedness of financial considerations with the product's overarching vision and strategy. Quantifying and transparently communicating these aspects to stakeholders is crucial that ensure a nuanced understanding of the product's impact on both the business and its customers.
Identifying product value involves understanding its impact on users and the business. User feedback, satisfaction surveys, and usage patterns provide qualitative insights, while quantitative metrics like conversion rates, retention, and Net Promoter Score help quantify value. Return on Investment (ROI) is assessed by comparing the costs of development and maintenance against the revenue generated or cost savings achieved. It's imperative to track the entire user journey, from acquisition to conversion and retention, to measure the holistic impact. Regularly evaluating these factors ensures the product delivers meaningful value, and the ROI justifies ongoing investment and development efforts.
Absolutely crucial! We assess our product's worth by tracking metrics like customer lifetime value and net promoter scores. It's all about ensuring that what we create adds real value for users while also benefiting the business. This helps us focus on initiatives that deliver the most impact.
The fifth metric you should optimize is your product innovation and experimentation, which are the processes and practices that you use to generate, test, and implement new ideas and features for your product. Your product innovation and experimentation should be driven by your product vision and strategy, and should be based on data and feedback. To measure your product innovation and experimentation, you can use frameworks, such as the lean startup, design thinking, and agile development, to validate your assumptions and hypotheses.
Product innovation and experimentation are cornerstones of a product's lifecycle. They are crucial for staying proactive in rapidly evolving markets and reflect a balance between data-driven decisions and creative risk-taking. Utilizing frameworks like lean startup, design thinking, and agile development validates assumptions and fosters a mindset where continuous innovation is ingrained in the product development process.
Optimizing metrics for product innovation and experimentation is crucial for product strategy professionals. Align these processes with your product vision, utilizing data and feedback. Employ frameworks like lean startup, design thinking, and agile development to validate assumptions and hypotheses, ensuring a strategic and data-driven approach to innovation.
Optimizing product innovation and experimentation aligns purposeful development with the product's vision and strategy. Emphasizing data-driven and feedback-based practices promotes informed decision-making and the use of frameworks like the lean startup, design thinking, and agile development underscores a structured and iterative approach for validating assumptions. Product innovation encourages continuous improvement and risk mitigation and along with a user-centric focus ensures that new features contribute meaningfully to the product's strategic objectives, fostering a dynamic and purposeful approach to product development.
Fostering product innovation involves maintaining a keen eye on industry trends, competitor advancements, and most importantly, user feedback. Regularly engaging with customers through surveys, interviews, and usability testing unveils pain points and unmet needs, sparking innovative ideas. Embracing a culture of experimentation is vital; A/B testing, pilot programs, and beta launches allow for low-risk validation of new features or concepts. It's a continuous cycle—innovate, test, learn, and iterate. By encouraging a mindset of curiosity and openness to change, the product remains dynamic and well-positioned in a rapidly evolving landscape.
Ecommerce Technology Leader | Certified Scrum Product Owner | Digital Revenue Creator
Establishing a user feedback loop to spur on successful innovation and experimentation is essential. In my organizations, we've relied on user testing to help guide our earliest efforts at conceptualizing new features. It multiplied our success and allowed us to focus on experiments that our actual users and prospective customers indicated they were most interested in.
The sixth metric you should maintain is your product health and quality, which are the aspects and attributes of your product that affect its functionality, usability, reliability, and security. Your product health and quality should be aligned with your product vision and strategy, and should be ensured and improved throughout your product lifecycle. To measure your product health and quality, you can use tools, such as bug tracking, user testing, code review, and quality assurance, to identify and resolve issues and defects.
Metrics in Usability Test such as completion or success metrics, duration metrics, error metrics and satisfaction metrics will be a good one to understand quality of the product. Tools like maze can be used. Or, conducting a simple question and answer section with a timer and recorder can also work by monitoring the user's behaviors and cues.
Prioritizing product health and quality is paramount to the functionality, usability, reliability, and security of the product and must align with the product vision and strategy. Ensuring and enhancing health and quality throughout the product lifecycle is crucial for business sustenance.
If you think about health and quality as metric #6, it will always be in the tail end of more important items. Shift it to the left of the development process. Introduce test-driven development. This will reduce costs, empower the engineering team, and create a solid foundation for the strategy to florish.
All dead on points made but I'd like to add another crucial metric for today's product strategy professionals: Customer Lifetime Value (CLTV). CLTV is pivotal as it measures the total revenue a business can expect from a single customer account over the duration of their relationship. It impacts long term strategy, resource needs, and personalization improvements which all lead to customer retention which in a volatile environment, means a ton.
I’d also consider Customer Retention and Expansion metrics so you can monitor how many customers stay over time, address reasons for leaving, and ensure satisfaction, leveraging upselling to grow revenue. Also, it’s important to look at strategic partnerships to evaluate the impact of these partnerships on market reach, collaboration effectiveness, market positioning, risk mitigation, and joint marketing success for mutual benefits.
The product strategy metrics varies depending on the lifecycle of product and type of product. Std Metrics do not make same sense in different product. Due to lack of industrywise/product wise benchmarks, metrics are being used as a dumb lamppost rather than an illumination tool. ( as mentioned by David Ogilvy) Its high time product leaders should looking beyond standard AAARR metrics, and start looking for 360 + lagging/leading fundamentals indicators that matter.