Many companies face difficulties when it’s time to define the metrics which will be analyzed in order to know whether the objectives for the products are being achieved.
Defining good metrics isn’t an easy task. There is no magic formula or rule which defines which metrics are the most important ones for your product.
So how can we make this task less complicated?
1. Why does your product exist?
The starting point will always be why your product exists. Before anything else, you should ask yourself: which problem does your product solve? And whose? Why?
Define what you want to know before you go off measuring. Context is everything! It’ll help you define where you want to get to with your product (revenue, acquisition, utilization etc).
2. What is your product’s relevance?
Are people really using your product? The number of people using your product is an excellent starting point for validating its relevance. For instance, you can use the following phrase to define your product’s relevance:
“100 users did three or more searches in the last fortnight”.
3. Avoid vanity metrics
These can give you a false sense of success, and don’t add value. For example: the number of downloads of an app. Although there may be a reasonable quality of downloads, few people are actually able to use it. Instead, choose more relevant metrics, such as acquisition or utilization.
4. Metrics aren’t tasks
The number of functionalities delivered within the deadline is definitively not a good metric.
“Success is not ticking a box. Success is having an impact. If you finish all the tasks and nothing improves, that is not success.” – Christina Wodtke (OKR Coach)
5. Use qualitative and quantitative metrics
Quantitative indicators, such as active users or revenue, measure the quantity of something and not its quality. Qualitative indicators help understand why something happened, such as for example, the level of user satisfaction.
Combining the two allows for a more balanced panorama of what’s really going on with your product, as well as reducing the risk of losing sight of the most important factor of success: the clients. After all, they’re the ones buying and using the product.
6. Apply the 80/20 rule
You don’t need to measure everything that can be measured. 80% of the information which is important for guiding your product is certainly contained in 20% of the existing and/or created metrics. After defining your metrics, it is fundamental that you follow them regularly, collecting and analyzing the data, comprehending better the behavior of your segments of clients, understanding the best and worst actions and making decisions based on data.
Follow this flux: Data > Analysis > Information > Analysis > Actions.
With the tips in this post, I hope you’ll be able to define the most important metrics for your product.
If you enjoyed the post and identified with these tips, leave a comment ;D