You're a product manager who needs to track metrics. How do you know which ones are most important?

On a daily basis I divide my metrics into 3 buckets - North Star Metric (NSM) - Supporting metrics (DAU , sign ups , sessions ) everything that helps reach the NSM - Guardrail metrics ( churn, feedback, reviews, cancellation, uninstalls ) However, the importance of each metric can vary depending on the specific feature or aspect of the product being monitored. It's essential to tailor your focus to the particular objectives and outcomes associated with each feature, ensuring that you prioritize the metrics that directly correlate with the feature's success. By adopting this approach, you can effectively track performance, identify areas for optimization, and drive continuous improvement across the product ecosystem.

Keep metrics simple: 1. Measure everything impacting your bottom line 2. Next, think how you can improve your bottom line by tracking your funnel for conversions 3. After this, learn more about your users: active user rate, adoption, ARPU etc. 4., Look at demographics of your users to identify more interesting areas to discover. 5. Leverage user discovery insights to pinpoint further areas for data discovery

Surprisingly, a lot of product managers try to shoehorn certain metrics to product/feature launches because they like to play it safe. Certain products/features have very distinct strategic goals that are fundamentally different from one another. If you're launching something that seeks to shorten the time taken for a user to execute a process, you'd need to measure how many tasks per unit of time the user is able to execute (before and after). Tracking time spent per user might skew your understanding of the effectiveness of your new functionality. These subtle nuances need to be taken into consideration when deciding upon a metric to track.

As a product manager tracking metrics, 'Align Metrics with Goals' using the 'Strategic Alignment Framework'. Identify key performance indicators (KPIs) that directly reflect the progress towards your product’s strategic objectives. Whether it's user engagement, revenue growth, customer satisfaction, or another goal, choose metrics that provide clear insight into these areas. This ensures that the metrics you monitor are meaningful and directly contribute to informed decision-making and strategy refinement. The importance of a metric is determined by its ability to accurately measure success in achieving your product's overarching goals.

1: Outcomes over Output: When thinking of metrics, make sure they capture the outcome and not just an output. 2: Problem of Plenty: Identify and prune the vanity metrics so that desired focus is achieved and a repeatable common language is build. 3: Input / Leading Metrics: Make sure the product metrics that you are tracking provide early signs on the direction of the movement of the bottomline needle. 4: Comprehensiveness: Make sure the set of metrics you track encompass adoption, engagement, retention and monetary aspects of the feature.

As a product manager, ensure you 'Choose Actionable Metrics' by applying the 'Actionable Insights Framework'. Focus on metrics that not only reflect performance but also provide insights that can directly influence decision-making and action. These are metrics that clearly show cause and effect, allowing you to understand how changes in product features, user experience, or marketing strategies impact your key outcomes. Actionable metrics lead to specific improvements or adjustments, making them crucial for iterative development and continuous improvement. The value of a metric lies in its ability to drive meaningful action towards your product's success.

Opt for metrics that provide actionable insights and drive decision-making. While vanity metrics may look impressive on paper, they often lack actionable value. Instead, prioritize metrics that offer actionable insights into user behavior, product performance, and market dynamics. These metrics empower you to make informed decisions and take concrete actions to drive desired outcomes.

Balance your metrics portfolio with a mix of leading and lagging indicators. Leading indicators provide early signals of performance and help anticipate future trends, while lagging indicators offer retrospective insights into past performance. By tracking both types of indicators, you gain a comprehensive understanding of your product's trajectory and can course-correct as needed.

Understanding both metrics is necessary before creating a balance in between. Leading metrics help you in understanding how your users would interact and how much growth your product would achieve in future. For example, churn rate or average time per session help you to understand how acceptable your product is gonna be among your targeted market. Lagging targets on the other hand give you a historic heads-up for what had happened. Metrics like Avg. revenue per user guide you that what has been your trajectory of growth in the past and what actions that you need to take in order to improve the trajectory.

I have used the Objectives and Key Result (OKR) framework and After Action Review (AAR) to maintain sanity on following the 'northstar' and reviewing what went wrong if we failed to achieve the results. Irrespective, of what framework one uses, it is important to constantly revisit it to ensure you stay on track and if you need to divert, document the reason and the required approvals for risk acceptance or mitigation. This ensures adequate change management and communication plan followed through

Consider employing a framework, such as the Balanced Scorecard or Objectives and Key Results (OKRs), to organize and prioritize your metrics effectively. These frameworks provide structure and clarity, ensuring that each metric serves a specific purpose and contributes to overarching goals. Organizing metrics within a framework facilitates alignment, accountability, and clarity of purpose across the organization.

To keep business and customer goals always present and as the ultimate goal, I prefer to use the North Star Framework to create metrics that contribute to each other and translate those into real initiatives that pay into the prioritized metrics.

I've used every goal organization framework available—North Star, OKR, Balance Scorecard, JTBD, etc. They all try to achieve the same outcome via a similar mechanism: align all stakeholders on what we're doing and why we're doing it in a way that builds trust between managers and individual contributors for empowered delegation. Each framework has a different way of emphasizing potential goals and metrics that reinforce alignment, trust, and successful delegation given the vision, mission, and values of the organization.

We embraced the OKRs (Objectives and Key Results) framework, and it truly transformed our approach. It wasn't just about numbers; it was about aligning our entire team's efforts with our big-picture goals. Setting clear objectives and measurable key results helped everyone understand their impact and stay focused on what really matters. This approach brought our team closer, fueled our motivation, and made our progress visible and meaningful. It felt like we were all pulling in the same direction, united by a clear sense of purpose.

Metrics are not set in stone; they should evolve in tandem with your product and business objectives. Schedule regular reviews to assess the relevance, accuracy, and effectiveness of your metrics. Solicit feedback from stakeholders, monitor changes in market dynamics, and adjust your metrics accordingly. By staying agile and responsive, you ensure that your metrics remain aligned with evolving priorities and objectives.

Steer clear of metrics that look good on paper but don't offer real insight into your product's performance or user value. Avoid tracking too many metrics. Focus on a manageable number that provides a comprehensive view of your product's health and progress.

Some other common pitfalls include: 1) Ignoring the context in which metrics are used. Metrics should be interpreted in the context of specific goals, user behaviors, and market conditions. Without considering these factors, metrics can be misleading. 2) Failing to update metrics as the product and market evolve. Using outdated metrics can lead to misinformed decisions. 3) Neglecting qualitative insights that accompany quantitative data can prevent a comprehensive understanding of user experiences and needs.

Beware of common pitfalls when selecting and tracking metrics. Avoid falling into the trap of focusing solely on vanity metrics or becoming overwhelmed by data overload. Instead, maintain a laser focus on metrics that drive actionable insights and align with strategic goals. Additionally, beware of the temptation to cherry-pick metrics to fit preconceived narratives; strive for objectivity and transparency in metric selection and interpretation.

Not all data that gets tracked are metrics. One needs to be very careful in identifying the right metrics to track else there will soon be a set of overwhelming dashboards with full of charts and numbers but little information and insight. The key here is to identify data that will help you measure your progress towards a goal or an objective and bring out the metrics (lagging, leading). The goal or an objective could be the a tactical or a strategic one. But the principle remains the same. Book recommendation: Measure What Matters (John Doerr)

Navigating the metrics landscape requires a strategic approach grounded in goal alignment, actionable insights, balanced indicators, organizational frameworks, regular review, and avoidance of common pitfalls. By following these guidelines, product managers can effectively track and leverage metrics to drive success and achieve their product's objectives.

Prioritize answering 2 questions - Does it solve the problem statement? Yes or No - Is usage going up at the rate you want? Yes or No