Complete Product Ramp-Up in 10 Mins

Breaking into product can be somewhat difficult and strenuous because of the vast amount of content you need to read to be on-par with your colleagues who are already from a product background.

I was in the same situation a few years back, and understanding which concepts were important, and where I should study them from, was a big undertaking. To that end, I have collated a list of all the most important topics of product management and summarized them in this article. There will also be links to external sources if you want to learn that concept in more depth.

So, let's get started! Let us first look over some important application related terminology.

Applications

• A/B Test: A/B testing is the process of running two concurrent & separate test groups, one with your feature and one without (or with another feature). This way, you can see the impact of your feature first-hand in a real-world setting. Learn more.
• Holdback Population: When releasing an update, the update is pushed out in waves, to safeguard against unforeseen crashes or bugs. For example, when pushing an iOS update, Apple first pushes it to 1% of users, then to 5%, then to 20%, then 50%, then 90%, and finally 100% of users. The final 10% of users who get the update are called the holdback population. This is because in case something extremely wrong happens, Apple is assured that at least a certain population of their users are safe (held-back). Learn more.
• Agile: It is a form of software development that focuses on iterative improvement and frequent customer feedback. Its most common application is called Scrum. In agile, work happens in 2 - 3 week increments called sprints, after which all parties involved (developers, clients, stakeholders, managers) come together to discuss the progress of the product. Learn more.
• ?SWOT: It stands for Strengths, Weaknesses, Opportunities, and Threats. It is a way to categorize a product’s internal strengths and weaknesses, versus its external strengths and weaknesses. Learn more.
• Key Performance Indicators (KPIs): A KPI is the company’s key business objective, which is separate from a product’s main objective (which are north-star metrics). A product’s north-star metrics are aligned to help the overall company’s KPI. For example, Microsoft’s KPI currently is increased monetization. As such, Xbox’s north-star metric would be the number of GamePass subscriptions, which would increase revenue for Microsoft, meeting its KPI. Learn more.
• RICE: it is a formula which gives you a more numerical score for prioritization. RICE here stands for Reach, Impact, Confidence, and Effort. Give a score for Reach, Impact, and Effort between 1–5, and Confidence a score of 0% to 100%. Learn more.
• MVP: It is short for Minimum Viable Product. It is considered to be the bare-minimum a product can offer to be competitive in the market. Lately, the term MLP (Most Lovable Product) is also becoming popular, which refers to the minimum set of features a product can have so it is loved by a particular group of demographics the most. After that, the company would launch an outer-ring strategy to push it to other circles. Learn more.
• Jira: It is a progress-tracking software that is used by development teams to track the progress of their feature implementations and bug-fixes. Learn more.

Now let's go over some important metrics that will be useful for everyone in product.

Metrics

Revenue

• Customer Acquisition Cost (CAC): The cost to onboard a customer. This can be technical costs like server capacity space or operational costs like the marketing costs to acquire that new customer. Learn more.
• Life-Time Value (LTV): The total revenue a customer brings over her entire tenure with the app / website. This is a combination of ad-clicks, premium subscriptions, and other ways the particular product earns revenue. The timespan is measured in years. For example, a Facebook user’s LTV is $98, and the “life-time” is 7 years. LTV is very commonly compared to CAC to get the marginal revenue of onboarding customers. A CAC : LTV ratio of 1:3 is considered healthy. Learn more.
• Average Revenue Per User (ARPU): This is as it sounds, the revenue an average user generates. This is a combination of both free and paid users (for freemium services). Learn more.
• Average Revenue Per Paying User (ARPPU): This is similar to ARPU, but only for paying users, i.e., those users who are subscribed to a premium version of the product. For example, Linkedin Premium. Learn more.
• Monthly Recurring Revenue (MRR): the predictable total revenue generated by your business from all the active subscriptions in a particular month. It includes recurring charges from discounts, coupons, and recurring add-ons. Learn more.
• Free-to-Paid Switch Rate: The % of users who switch from the free version of a product to a Premium version. Services with free trials of their Premium versions have this rate boost by 60%. Learn more.
• Cost Per Click (CPC): an internet advertising model used to drive traffic to websites, in which an advertiser pays a publisher when the ad is clicked. In general, this is around $2 per click. Learn more.
• Cost Per Mille (CPM): stands for cost per thousand impressions (milli means thousand, eg: millimeter). This is around the same as one cost-per-click. So, if a CPC is $2, then CPM is also $2. Here, “impressions” just mean views. Learn more.

Engagement

• Acquisition Rate: This is the most important metric for start-ups and new products. It is the rate at which people have registered themselves or signed-on for any product or service. It is generally a combination of download rate & sign-up rate. Learn more.
• Activation Rate: Many times, it is not enough just for a user to create an account. Most revenues are generated by actually using that product or service. Activation rate, therefore, is the % of people who are considered ready to start using the product, and are not just blank/empty profiles. For example, Facebook’s acquisition criteria could just be a new user sign-up. But their activation criteria could be uploading a profile picture, posting their first comment, etc. Learn more.
• Click-Through Rate (CTR): the % of users who click a notification or link. It is the number of clicks that your ad receives divided by the number of times your ad is shown: clicks ÷ impressions = CTR. For example, if you had 5 clicks and 100 impressions (views), then your CTR would be 5%. Learn more.
• Heart-beat Rate: the time it takes in between two “significant” actions on a product. For example, let’s say Facebook defines a “significant” action as liking a post, sending a message, commenting, etc. So if you like a post, and 30 seconds later send a message, then your heart-beat rate on Facebook is defined to be 30 seconds. Learn more.
• Scroll Rate: The rate at which a user is simply scrolling through an app without doing anything “significant.” It is somewhat the opposite of the heart-beat rate. It is useful to measure the effectiveness of some features. For example, if YouTube releases a change in their recommendation algorithm, and the average scroll rate falls from 5 seconds to 4 seconds, it means users are able to find relevant videos faster, and so their change was a success. Learn more.
• DAU / MAU: DAU is Daily Active Users, MAU is Monthly Active Users. The criteria for a user to be “active” differs per product. For Spotify, for example, a user may only be considered “active” if she listens to one song per day. Meanwhile, for Instagram, simply logging in once a day would constitute being “active.” The DAU / MAU ratio is significant because it means how many of your core users are returning daily. A ratio of 20% is considered healthy. Learn more.
• Net Promoter Score: This is a metric that measures the popularity of the product, and aims to capture shares or word-of-mouth. Essentially, users rate the product from 1 - 10, with scores of 9 - 10 being called “promoters” and < 6 being called “detractors.” Scores of 7 - 8 are ignored, being considered “passives.” Finally, the number of detractors are subtracted from the number of promoters to get the final score. Keep in mind this is different from a metric like Play Store Rating, which is a simple aggregate of all review scores. Learn more.
• Customer Satisfaction Score (CSAT): It is very similar to a simple aggregate, but instead only looks at positive reviews. CSAT essentially measures how satisfied a customer is with your product, while NPS measures overall brand loyalty and sentiment. They are separate because many times, positive feedback can be more constructive and so is focused on. Learn more.
• Session Duration: the average duration a user is logged-in on a particular site or app. This is a unique metric because, depending on the app, you’d want it to either fall or rise. For example, Instagram would want people to spend more time on their platform (their current session duration is only 23 seconds per session), while a banking app may want to provide their functionality to users as quickly as possible, and want to reduce the session duration for a smoother customer experience. Learn more.
• Bounce Rate: It represents the percentage of visitors who enter the site and then leave rather than continuing to view other pages within the same site. You would want the bounce rate to be the lowest on the home-page of any site. Learn more.
• Retention Rate: It is the % of subscribers of a premium service who continue to pay for that service in the future. If a product does not have a premium service, then it can still be measured by engagement of the product. For paid-services, though, it is extremely important as a main source of revenue. Amazon Prime has an extremely good retention rate of over 90%, while LinkedIn Premium only has a retention rate of ~30%. Learn more.
• Churn Rate: It is the opposite of retention rate. It is the % of users who stop using a product after a certain period of time. Churn can be measured by cancellation of subscriptions, diminished use of product features, etc. Learn more.
• Stickiness: It is the feedback loop that measures user value, and by extension, enterprise value. Sticky products aren't just nice to have or fun to use once in a while, they become part of a person's daily routine, and that can be the secret to customer retention. Learn more.
• HEART: It is a framework to make product decisions. It stands for Happiness, Engagement, Adoption, Retention, Task success. Learn more.

Technical

• Load-Time: It is the time it takes to load the page of an app or site. It varies widely based on backend infrastructure and database design, but in general, it should be as short as possible. A high load-time can make the product seem heavy and lagging. For example, Amazon has a hard-requirement that all pages of Amazon.com finish loading in less than 3 seconds, at the most. WhatsApp’s competitive advantage over Telegram is that it is much faster, owing to its lack of many features that Telegram has. These are also called functional requirements. Learn more.
• RAM Usage: RAM stands for “Random Access Memory”, and it just means the amount of storage an application can have access to at any point. Most phones have at least 4 GB of RAM, so this is generally a hard-limit for most apps. Google Chrome is constantly under criticism for being very RAM-heavy, while Microsoft has optimized its browser, Edge, to be very RAM-efficient on Windows devices, giving Edge a competitive advantage on budget laptops which do not have much RAM. Learn more.
• Application Programming Interface (API): An API is the main way different apps and services communicate with each other. All apps have an API built-in to them so they can be used with other services. For example, Uber uses Google Maps to create a topography around the user. But how can Uber communicate with Google Maps, when they’re built on completely different technologies? They use an API, which is essentially just a translation tool. Similarly, Google Maps in-turn uses an API to communicate with your phone’s geo-location services to find your physical location to pass on to Uber. Learn more.

Prioritized

• North-Star Metrics: these are the metrics that are directly tied to our main goal and so these are our main concerns. In the example we chose, since we want to improve user engagement, some north-star metrics we can look at are # messages sent, time-on-app, etc. Learn more.
• Guardrail Metrics: these are metrics that you do not want to see decrease, no matter what. Sometimes, an implementation of one feature can increase one metric and can also potentially decrease another metric. We need to make sure the decreased metric is not crucial for the product. For example, one of WhatsApp’s competitive advantages is that it is very fast to load. If one of our solutions increases the load-time of WhatsApp, we may choose to not go forward with it. Learn more.
• Health Metrics: these are standard metrics that do not change much, and only give a high-level indication of the product’s performance. These include something like DAU or MAU. Learn more.

_______________________

Well, that's it! Hopefully this list was helpful. It is meant to be a quick kick-off article for people to start their product journey.

If you have any questions, feel free to reach out!