Recently I’ve been analyzing all the possible data that I could get and its uses case in order to set up my product metrics and dashboards.
I’m going to share with you what I’ve learnt during my ‘metrics exercise’ and some ideas for product metrics that matter 🙂 If you’re interested in SaaS product metrics, these might prove helpful for you.
Introduction to My Product Metrics Exercise
They say that what is not measured cannot be improved.
What is not measured cannot be improved.
I absolutely agree that metrics should always exist, you are responsible to get them (or find where and how to get them if there is no existing framework in your organization), track them and draw your conclusions / insights from them to come up with a list of action items.
Imagine that you’re probably relatively new in a company as I was. Or there is something new for you. That’s could be: new to the company, new to the team, relatively new to the business, have experience with the same business model, but from a different perspective, etc.
Unless you land in a place where everything is quite standardized (so you’re all covered to start analyzing your metrics right away and learning from your data), there is a high chance that you need to embark on an exciting ‘metrics discovery’ on your own.
I love measuring things and metrics have always been a part of my job. I understand the valuable data more like a tool that I can use as a part of my job rather than simply being obsessed with data.
I’ve had more experience from the website / digital product world (think: traffic, conversions, ecommerce metrics, newly acquired customers, retention, conversion funnels) where metrics differ from the SaaS space. Therefore, it was necessary to understand the business I’m in, the business model and the metrics that I should have as a starting point.
If you are in a SaaS, B2B, enterprise setup or a subscription business, the below might be helpful for you.
Why should I care?
I’d be surprised if you underestimate the value of being a data-driven product manager 🙂
But, ok, let’s review this part. Metrics can help you prove value, find a common ground with stakeholders in your company, get buy-in when it’s needed, secure your freedom to unlock a project or initiative.
Recipe for Product Management Metrics
There is no easy recipe as this isn’t a cookbook, but I guarantee that you’d better leave your excitement aside in the beginning of your new journey and do the following:
Observe.
Observation is important in so many situations. Observe your business, try to learn about your clients, your colleagues, other departments. What are other teams measuring? Why?
Brainstorm.
Jot down some metrics that you’ve brainstormed along the way.
Transferable metrics.
Instead of reading a bunch of articles (a refresh is always welcome and useful, though!) or reinventing the wheel, I’d advise you to focus on some transferable metrics, things that you measured in the past and how they relate /map to your latest experience.
Take a deep breath.
If data is not there or you’re not sure where it is, just take a deep breath. Find out what you want to measure first and then go and ask or figure out where you can get it from (or build your custom report to get to it).
Meaningful Product Metrics to Start With
The key is to find out WHAT matters to you and your business and WHY you’d like to measure it. HOW you are going to analyze the metrics to make your decisions and improve your products or inform your product management tasks to do next?
The metrics represent the WHAT that is happening around the product and the subsequent analysis represents WHY these things are happening. In the end, the goal of the analysis is to extract actionable insights and outline next steps. My advice is to perform a weekly or monthly analysis of your metrics to decide what your next action will be.
It’s not the set of metrics, but your analysis that can make a difference to help you identify opportunities, quick wins (e.g. develop high value features with less development effort), programs to team up with your account management to upsell the product, improve the product presentation and it’s sales pitch focused on the value for the customer or prepare a customer survey for leaving / new customers.
Once you’ve defined WHAT you’d like to measure, then you need to make a list of the places where you can get this data from or build a report for it. For example, if your client’s data is in Salesforce, take it easy, sit down to understand what you have available, build a report or two to get your data and determine whether this is the best report and once you are ready, just add the report to a dashboard that you can check regularly. The good thing about your Dashboard, be in Tableau, Google Data Studio or a Salesforce dashboard is that you can refer to it at any time and basically it takes all the data from your generated reports and ‘plots’ it on your Dashboard.
Instead of spending weeks or months on your metrics exercise, I’d recommend to think less (still do your prep work to jot down your metrics, build the reports and start analyzing them) AND act more. I tend to overthink sometimes to make things perfect, but remember that your earlier delivery will allow you start getting a sense of what you’re building (be it a report, dashboard etc.) and then you can always tweak it.
Metrics are the ‘spices’ to justify product decisions and development efforts.
The ideal number of metrics to track will vary depending on your company, business, product, but a good rule of thumb is to focus on roughly 3 to 5 key high level metrics and 3 to 5 more granular ones.
My suggestions below are not exhaustive and could be expanded / changed based on the priorities. The idea of this first set of metrics is to measure the performance and health of our products, as well as justify decisions. I’ve chosen them, based on the business and the type of products (subscription).
A product analysis against these metrics is performed once a month to find opportunities for cross-functional collaboration, product marketing, activation of paying, but ‘dormant’ users etc.
High level / Business metrics
Monthly recurring revenue (MRR)
By far one of the most important metrics if you are in a SaaS business. The thing is that if you are in an ecommerce, then, ok, you care about your sales and conversion rate and you may have your ecommerce forecast.
However, SaaS businesses operate differently. So, if your product has a monthly subscription, then the total value of your MRR is what is a good indicator of your business health, it’s what is being brought to the business each month.
Total MMR = Sum of all customers* monthly product subscription that they paying
I personally recommend to measure MRR, but also monitor the trend for MRR (this is the health check for current and future resources). The trend will give you insights in regards to product pricing reviews or any product bundles opportunities (e.g. if the interest for one product grows and diminishes for another, but they still serve the same audience or a customer segment).
Customer churn
In simple terms, this is the number of customers cancelling and leaving.
Churn Rate is the percentage of customers who stop using the product every month. For it, you would need to get the number of customers lost in a month and divide it by the number of the previous month’s total customers .
The customer churn or at least the number of customers leaving vs the joining ones is absolutely critical for monthly subscription products. Otherwise, imagine that you see 100 new customers, but your leaving ones in the next 2 months are roughly 80! That would be a disaster and your MRR will go red quite soon!
New monthly recurring revenue
As I said, I’m interested in the number of new customers, but also the total new MRR that they will bring provided that their package and subscription is different, then it comes to:
Total new MRR = new customers * the subscription fee each customer is paying
YoY MRR
The comparison of MRR YoY (year over year) as an indicator of how well you’re doing in terms of contributing to the business’ bottom line.
If you want to measure the growth that your team brings, then don’t overlook this and do your comparison of MRR this year vs last year to determine its historical performance.
YTD vs last year
Basic performance indicator that helps you see how far we are. Are we on track?
If you get this report and you create your dashboard, please, don’t forget your absolute numbers and then % change. The latter can give you just a part of the picture, so don’t miss your absolute numbers to paint the big picture and see the real contribution.
Product Metrics / Granular
More granular metrics that provide insights for your customers base.
The granular product metrics give you the insight into your users, their behavior, how sticky the product is for them, their satisfaction etc. I’d definitely cover it in a future post, but here I want to share the granular, still quite high level product metrics that I’ve been on my list.
Number of customers YTD
How many customers do I have year to date?
Customers by product type / product plan
If your product has a different subscription plan, then you should definitely segment customers by their usage.
The proportion of users per plan Indicates the pace of growth of a specific package and gives you a deeper look at the type of customers, who they are (high profile, medium size user), where they come from (country), existing vs new clients (haven’t used another company product before OR it’s a result of upsell).
The number of customers per product subscription and the segmentation helps understand the usage and needs of customers.
You can do quite a lot of cool stuff with this info, you can:
- Track usage
- Track usage per features per subscription plan
- Determine whether a feature is ‘sticky’ for some customers / segment of a specific plan to reuse it and define a plan to have it as a ‘hook’ to conversion to the next level subscription plan
- Track leakage
- Track engagement per features set and subscription
Number of customers by country
It provides information about the customers by country breakdown, unveils opportunities for future product marketing, upsell or issues (if the number of users by a specific country drops).
Why? You can analyze to understand the geo distribution to assign a value to each geo segmentation and think of some customers surveys.
Number of new clients this month
Why? This is your health check for the product success (aka your monthly win clients!) and estimation of the increase of the resources to be spent (if you get new clients, then the consumption of your data will increase and so does your maintenance cost to serve your clients).
Beyond the pure practical aspects of measuring, it’s nice to:
- Reach out personally to welcome them.
- Be involved in the onboarding of your customers.
- Understand who they are and what problems they’re trying to solve, their current pain points.
- What type of clients (beginners or advanced subject matter experts)? This would help you understand which features and use cases to show them first.
Usage and Behavioral Metrics
These are metrics that show how customers interact with ours products, help identify areas for overall improvement and UX.
This article is getting lengthy and this set of metrics is something that I’ll be exploring more in detail.
However, these are some of the current ‘raw’ metrics that I’ve so far on my list:
- Interactions with the product by most active users
- Daily active users and who they are
- Number of active days per month per users
Be careful with this one, because the number of days may not be your best metric if your users are not getting value every day.
- Interactions with features and a breakdown by feature sets
- Metrics for adoption of new features
This data and analysis help you understand old features to retire, newly launched features and identify areas to improve adoption.
- Total number of active customers
Tools to Help You Out
Some of the tools that can help you build your reports to start getting data for your metrics:
- Salesforce
- Mixpanel
- Google analytics
- Google Data Studio
- Tableau