How to Optimize Your Product Metrics for Growth? Insights from Dan Olsen
‘How to optimize your product metrics for growth’ by Dan Olsen is one of the talks in this year’s Product Drive hosted by Userpilot.
Intrigued?
In this article, you will learn who Dan Olsen is, discover the core ideas from his book The Lean Product Playbook, and find out what you can expect from his talk.
Let’s dive in!
TL;DR
- Dan Olsen is a well-known product coach, speaker, and the author of the Lean Product Playbook, in which he introduces his Lean Product Methodology.
- Dan is one of the speakers at this year’s Product Drive conference organized by Userpilot. In his presentation, ‘How to Optimize Your Product Metrics for Growth’, he will share tips on how to fix leaky funnels.
- His lean product analytics framework consists of 5 steps:
- Choose the metrics to track. Prioritize acquisition, conversion, and retention metrics.
- Measure the baseline so that you can track progress.
- Evaluate the upside/growth potential of each metric, considering their ROI.
- Choose the metric that will have the biggest impact on business goals. That’s your OMTM or North Star Metric.
- Optimize the metric iteratively as long as its ROI is favorable.
- To learn how to implement the process with Userpilot, book the demo!
Who is Dan Olsen?
Dan Olsen, the author of The Lean Product Playbook, is a product management expert.
He has a background in UX design and is known for his Lean Product Management methodology, which relies on rapid iteration and customer feedback to help teams quickly find product-market fit and build customer-centric products.
As a consultant and speaker, Dan has worked with both tech startups and giants like Google, Facebook, Uber, Amazon, Box, and Walmart. He’s also the founder of the Lean Product Meetup community.
What is lean product analytics?
Lean product analytics is a key component of the Lean Product Methodology.
It focuses on the ‘measure’ stage in the Build-Measure-Learn cycle, known from the Lean Startup framework. Its aim is to help you use product metrics effectively to inform the lean product development process.
How can product metrics be optimized using the lean product analytics process?
The lean product analytics process consists of 5 steps:
- Identify your top product analytics metrics.
- Measure the baseline values for key metrics.
- Evaluate the upside potential of chosen metrics.
- Select the metric that matters the most.
- Continuously optimize the primary metric.
Let’s unpack them one by one.
1. Identify your top product analytics metrics
The first step is choosing the right metrics to track – ones that are aligned with your business goals.
Dave McClure’s Pirate Metrics, or AARRR, framework is a good place to start.
The acronym AARRR stands for:
- Acquisition (trial sign-ups, demo bookings, customer acquisition cost).
- Activation (activation rate, adoption rate, onboarding completion rate, time to value).
- Retention (retention rate, churn rate, daily/weekly/monthly active users).
- Referral (NPS, referral count).
- Revenue (monthly/annual recurring revenue, lifetime value, expansion revenue).
Focus on acquisition, conversion, and retention metrics. Growth isn’t possible if you can’t attract customers at a sustainable cost, turn them into paying customers, and retain them long-term.
2. Measure the baseline values for key metrics
Next, measure the baseline for the main metrics. Otherwise, you won’t know if the changes you introduce make the desired impact.
To do this, use an analytics tool or a product growth platform like Userpilot. The advantage of the latter is that it allows you not only to collect the data and track trends over time but also act on the insights.
3. Evaluate the upside potential of chosen metrics
Once you have the baseline values, analyze each metric’s potential for improvement. Or, in other words, how much you can realistically move the needle on that metric.
After that, estimate the business impact of improving the metrics. For example, how much you can increase revenue by optimizing the free trial sign-up rate.
Coming up with specific figures might be hard, so use a grid and group them into 3 categories: low, medium, and high. That’s your Y-axis.
The X-axis is for the cost or effort needed to improve the metric (use low, medium, and high again).
4. Select the metric that matters the most
Based on the results from the previous stage, define the metric with the highest potential for improving your product’s performance.
That’s your OMTM, or One Metric That Matters, sometimes called the North Star Metric.
Your OMTM will guide all your efforts.
5. Continuously optimize the primary metric
Finally, you move from the problem space to the solution space and iteratively optimize your main metric.
Imagine that your goal is improving the retention rate. You can boost it by creating a personalized onboarding process that helps users activate and adopt the features they need to achieve their goals.
Once you implement the flows, you measure their impact, for example, by conducting cohort analysis and tweak it again to improve the metric further.
Rinse and repeat. Until you exhaust, the potential for improvement or the ROI stops being as favorable.
Learn more about streamlining metrics for product growth
Would you like to learn more about leveraging analytics and feedback loops to enhance your key product metrics?
Why not book your place and listen to Dan himself, then? He’ll share practical tips on how to fix the ‘leaky bucket’ and enable sustainable growth.
In the meantime, check out our SaaS Product Metrics 2024 report. It covers 6 metrics and provides benchmark data from 7 industries so you can compare your product’s performance against other businesses in your niche.
Conclusion
Dan Olsen’s lean product analytics process allows companies to achieve the best ROI, which translates into better overall business performance.
You can learn more about the approach from the man himself by booking his Product Drive talk above. And to learn how to implement the framework with Userpilot, book the demo!
