Data-driven everything is the name of the game in the modern business world. Sophisticated analytics tools measure everything from the first customer touchpoint to their daily schedules. The sheer amount of data you have access to as a product manager offers its own challenge. It’s easy to get overwhelmed with information and miss out on important product insights.
One of your most important jobs is to know what metrics actually matter. The exact set of stats you need change depending on your product, industry and specific market sector, but this list gets you off to a strong start.
Net Promoter Score
Start with your NPS. This metric is held up as one of the gold standards in customer satisfaction and loyalty. The NPS survey may seem too simple to be valuable at first, as it only asks one question: “How likely is it that you would recommend our company or product to a friend or colleague?” The respondent usually has a comment box available for elaboration.
In most cases, the customer responds on a 1-10 scale. They fall into one of three groups based on their response. Promoters are loyal consumers rating you with a 9 or a 10. Passives are 7 and 8. This group tends to be mostly satisfied with their experience, but they don’t feel strongly about your organization. Anything below a 7 is considered a detractor. This group would not recommend your products and may actively share any negative experiences online.
You gain many insights on your product performance and customer satisfaction through this survey. The direct input can clue you in on problem areas, whether it’s with the product itself, the sales process, customer support or another interaction with the company. NPS also works well as an overall health indicator for your efforts.
Don’t worry about surveying every customer. Pick a representative sample to get a comprehensive view of your audience without overwhelming yourself with too many responses. You can take the same approach with A/B testing, sectioning off a small portion of your traffic.
Customer Acquisition Cost
How much does it cost to bring new customers into the fold? This metric considers all costs associated with the buyer’s journey, which can include everything from pay per click advertisements, marketing content and the time it takes for the sales team to close the deal. Ideally, you want to move to a lower CAC by using more cost-efficient ways to generate leads and convert them into loyal customers. Your product marketing efforts become optimized over time based on customer data, which helps to drop this budget hit.
Customer Lifetime Value
The CLV estimates how much a particular account generates over the lifetime of its relationship with your company. Higher figures and upward trends indicate that you’re doing a good job at bringing in customers and maximizing their income potential. If this number goes down, you may be missing opportunities to increase deal sizes or have problems with customer retention.
Lead to Conversion Ratio
This metric looks at your sales funnel to determine how many leads are converting into paying customers. The ratio may be segmented based on specific traffic sources, marketing efforts or other characteristics.
Customer retention is key in staying on a growth path, as you don’t need to dedicate nearly as many resources for an existing buyer as you do with a new lead. Keep an eye on this metric, as it can provide you with early warning if something is seriously going wrong with your product.
Data-driven product management is essential to succeeding and thriving in today’s business environment. Use this list of metrics to gain a better understanding of how healthy your product is.