Digital product metrics reveal how customers interact with your product. They paint a picture of your product’s impact and the success of your marketing strategy. However, not all metrics are created equal.
In this article, we hone in on the best metrics for product teams looking to drive product growth. We discuss 15 of the most important metrics and examine what to consider when choosing which metrics to track.
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Summary of digital product metrics
- Digital product metrics are KPIs that measure customer interactions with your product and their effect on your business.
- To choose the right product metrics, you’ll need to define your product goals and consider your product growth stage and customer needs.
- Digital product metrics can be grouped into five broad categories: acquisition, activation, engagement, satisfaction, and revenue metrics.
The top product management metrics for measuring the success of your product include:
- Number of new signups
- Customer acquisition cost
- Free to paid conversion rate
- Time to Value
- Activation rate
- Active users
- Product engagement score
- Feature usage rate
- Customer satisfaction score
- Net promoter score
- Customer effort score
- Customer lifetime value
- Monthly recurring revenue
- Retention rate
- Churn rate
- Userpilot can help you track relevant product metrics, from user behavior tracking to qualitative metrics like NPS. Book a demo now to learn more.
What are digital product metrics?
Digital product metrics are indicators that show how customers interact with your product and how they affect your business. They are a measure of the performance and health of your SaaS product.
How do you choose the right digital product metrics to focus on?
Product metrics are excellent sources of information on how to improve your product. To be truly, effective, though, you must carefully select which metrics are important to you.
To do that, you’ll need to define your product goals. What are your most important business objectives? Are you aiming for user engagement, acquisition, or revenue growth?
Next, you’ll need to consider your product stage. For example, early-stage businesses will do well to prioritize user acquisition, activation, and engagement over all else.
Beyond your business needs, though, your chosen product metrics should reflect your users’ needs, pain points, and usage patterns. Avoid vanity metrics that don’t produce any actionable insights.
To make your search for the right metrics even easier, you can adopt one of the popular frameworks, such as the AARRR (Acquisition, Activation, Retention, Revenue, Referral) or HEART (Happiness, Engagement, Adoption, Retention, Task Success) frameworks.
15 Key metrics to track across the customer journey
Now that we’ve established the conditions for selecting the right metrics to track, let’s examine some digital product metrics you can track to ensure the success of your product.
Acquisition metrics to track for SaaS
Customer acquisition metrics are great for determining which marketing channels work best for you so you can further optimize your acquisition strategy.
1. Number of new signups
At its simplest, this is just the total number of signups in a day, week, or month. However, you can gain deeper insights using this metric.
For example, you can calculate the signup rate to see how many users signed up versus the number of signup page visitors. If this number is low, it may indicate that your signup page is not well-optimized.
If you have 1,000 visitors to your sign-up page, for example, and 100 signups. Your sign-up rate will be (100/1000) * 100 = 10%.
2. Customer acquisition cost
The customer acquisition cost (CAC) is the average amount you spend to acquire each new customer. It helps you determine if the cost of acquiring a new customer is worth the average revenue they bring in.
CAC is calculated as the total sales and marketing costs divided by the number of new customers acquired.
For example, if you spend $1,000 to acquire 100 new customers, your CAC is $1000/100 = $10 per customer.
Activation metrics to track for SaaS
Activation metrics track how well you’re moving customers from the acquisition stage to the Aha! moment when they discover your product’s value.
3. Free to paid conversion rate
Also known as the free trial conversion rate, this metric measures the percentage of users who go from free trial users to paying customers.
It, thus, measures the effectiveness of your trial in guiding users toward paid subscriptions. By regularly tracking this metric, you’ll better understand how to improve conversion during the trial period.
Assuming you had 100 free trial users over the last month, for example, and 25 of them upgraded to paid accounts, your free-to-paid conversion rate would be 25/100 = 0.25 or 25%.
4. Time to value
Time to value (TTV) measures the time it takes a new customer to derive the expected value from your product after purchase.
To calculate the TTV, you must identify the series of events a user must complete to reach the Aha! moment (activation). Of course, how you define value (and how soon users find it) will depend on your product.
For example, a link-shortening platform may define its TTV as the time it takes a user to shorten their first link on the platform.
5. Activation rate
The activation rate is concerned with how many users realize your product’s value proposition. It is the rate at which users reach the activation point.
Depending on your product, the activation point may also be when the user starts delivering value back to your business.
To calculate the activation rate, divide the number of users who reached the activation milestone by the number of users who signed up in a period.
For example, if 100 users signed up for your product over the last month, and 40 of them completed the activation event, your activation rate for the month is 40/100 = 0.4 or 40%.
User engagement metrics to track customer behavior
User engagement metrics measure how often users engage or interact with your product. They track user behavior within your product.
6. Active users
The active users metric tracks the number of users using your app daily, weekly, or monthly.
The goal of this metric is not just to track the number of users logging into the app but to identify how many users engage with the app and derive value from it after logging on.
For example, a gaming app may define an active user as one who logs on and completes a level or gains a set number of experience points. This defined activity that indicates value is known as a critical event.
Go one step further to determine the frequency with which users are returning to your product. This is known as your product’s “stickiness” rate and is the ratio of daily active users to monthly active users.
Assuming you have 30 daily active users and 60 monthly active users, your stickiness rate will be 30/60 = 0.5 or 50%. This shows that your average user returns to your app on 15 out of 30 days each month.
7. Product engagement score
The product engagement score (PES) provides a holistic view of how users interact with your product. It is a composite score that combines three key indicators – adoption, stickiness, and growth rates.
By calculating the average of these three metrics, the PES score reflects the overall engagement level of your users.
This high-level overview of engagement trends provides a singular insight into how users are interacting or engaging with your product. It can, thus, be a major contributor to product development decisions.
8. Feature usage rate
This metric tracks user interaction with various features of your product. It measures the percentage of users who engage with a feature and provides insight into which parts of your product users love the most. On the contrary, low feature usage can point towards usability issues.
Also known as the feature adoption rate, improving this metric leads to better user satisfaction, which translates into a higher customer lifetime value.
It is calculated by dividing the number of a feature’s monthly active users (MAUs) by the number of user logins during a period.
Digital product metrics to track customer satisfaction
These metrics examine how happy your existing customers are with your product or service.
9. Customer satisfaction score
The customer satisfaction score (CSAT) is a simple score used to gauge how satisfied your customers are with a specific feature or interaction.
The score is derived by asking customers to rate their satisfaction on a scale. The scale often ranges from 1 (very dissatisfied) to 5 (very satisfied), but it can also be a simple thumbs-up/down.
After collecting users’ responses, you can calculate the final score by dividing the number of positive responses (4 and 5) by the total number of responses and multiplying it by 100.
10. Net Promoter Score
The Net Promoter Score (NPS) measures customer loyalty and the likelihood of recommending your product to others. It focuses on the customer’s overall feeling about your brand.
The first step to deriving the NPS is to ask users: “On a scale of 0-10, how likely are you to recommend our product/service?”
Responses are then grouped into three:
- Promoters (9-10): These are loyal supporters who are happy to refer others to your product.
- Passives (7-8): They are satisfied with your product but won’t mind switching to a competitor if they find better offers.
- Detractors (0-6): These users are unsatisfied and will likely leave negative reviews about your product.
Finally, you can calculate the NPS by subtracting the percentage of detractors from the percentage of promoters.
For example, if 60% of your users are promoters and 20% are detractors, your NPS score will be 60-20 = 40.
11. Customer effort score
This metric evaluates how easy it is for customers to resolve an issue, find relevant information, and interact with your product.
The customer effort score (CES) is measured through a survey that asks customers about the ease of completing a task or resolving an issue on a scale that ranges from 1 (Very Difficult) to 7 (Very Easy).
The responses are then grouped into:
- Easy to use (5-7): They agree that your product is easy to use.
- Difficult to use (1-4): They disagree that the product is easy to use.
Finally, the score is calculated by dividing the number of “easy to use” responses by the total number of responses and multiplying it by 100.
For example, if 50 users responded to your survey and 25 gave you a 5+ rating on the 7-point scale, your CES will be (25/50)x100 = 50%.
Revenue metrics to evaluate business success
Revenue and monetization metrics capture how well your business model turns engagement into revenue growth.
12. Customer lifetime value
The customer lifetime value (CLV, CLTV, or LTV) measures how much the average customer spends on your product during the relationship with your business and is a good measure of profitability.
To calculate the CLV, you’ll need to first calculate the average customer value. This is the average purchase value multiplied by the average number of purchases a customer makes in a year.
Finally, multiply this value by the average customer lifespan to get your CLV.
13. Monthly recurring revenue (MRR)
The MRR measures your predictable total revenue each month. It gives you a short-term view of your revenue trends and can be a great predictor of cash flow and financial health.
The MRR is calculated by multiplying the average revenue per user (ARPU) by the total number of users in a month. To get a longer-term view of revenue trends, calculate the annual recurring revenue.
14. Retention rate
Acquiring new customers is useless if you can’t retain existing customers. The retention rate, thus, tracks the percentage of customers that return to engage with your product.
How you measure retention differs for different products. For SaaS products, though, this is often measured using the number of paying customers available from the beginning to the end of a period.
For example, if you start the month with 100 customers, gain 10 new ones, but lose 20 before the month ends, your retention rate will be ((90 – 10)/100)) x 100 = 80%.
15. Churn rate
The churn rate is the direct opposite of the retention rate. It is the percentage of customers who abandon your product or cancel their subscriptions within a period.
For example, in our previous example (start – 100 users, lose – 20 users), your churn rate will be 20%.
How to track and analyze critical metrics with Userpilot
Once you’ve selected your ideal digital product metrics, it’s time to get tracking. Userpilot boasts a lineup of features and functionalities that help you collect relevant data and track key metrics.
Some of its key features include:
- User behavior tracking: View key user behavior metrics at a glance on a simple dashboard. Track your product performance in real-time without any technical setup.
- Retention rates tracking: Define what events signal retention in your product. Track product-wide retention rates or filter down by cohorts, users, etc.
- Trigger in-app surveys: Create, customize, and launch targeted surveys at key customer journey touchpoints. Choose from a library of CES, CSAT, NPS, and other survey templates.
- NPS dashboard: Track all the key NPS data from a simple dashboard. View your NPS score, response rate, NPS trends, etc.
Conclusion
Digital product metrics are more than just numbers. They’re an insight into how customers interact with and perceive your product.
Userpilot offers product managers a powerful tool for tracking user behavior, launching targeted surveys, and monitoring key performance indicators like retention and churn. Book a demo today to learn more.
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