Want to track the different types of product metrics to get product growth insights?

Product metrics are critical for product growth managers to develop the right product strategies and drive continuous value for customers. However, it isn’t easy to choose the right product metrics from the many SaaS metrics available.

Thus, this article will discuss the 5 essential types of product metrics for your SaaS business and how you can track them to achieve product growth.

What are product metrics?

Product metrics are measurable indicators of product management efforts and how customers interact with your product. Thus, these metrics let you assess the success of your product.

Along with other key performance indicators, you can track product metrics across the different stages of the customer lifecycle.

Tracking product metrics helps you develop well-informed product strategies. Thus, you can drive continuous value for customers, which in turn, ensures customer success.

How to select the right metrics?

To select the right product metrics, you need to ensure that the metrics you choose:

• Align with your customer journey stages and goals. Thus, if your goal is to grow your customer base, you should focus on the metrics associated with customer acquisition. You can also prioritize features based on the product roadmap’s strategic goals.
• Provide actionable insights. For instance, to track feature usage, the right metrics should be able to indicate high/low engagement. The metrics should help you understand how users interact with your product so that you can offer in-time support when needed.
• Can track progress over time. By doing this, product metrics will enable you to identify trends in progress toward strategic goals and make comparisons.

Additionally, you can use a product metrics framework to choose metrics, such as the Google HEART framework, Pirate Metrics framework, or North Star Metric framework.

5 Types of key metrics to track for better product management

Whether you select metrics individually or based on a particular framework, your product team should track the following 5 types of metrics for efficient product management.

• Customer acquisition metrics
• Customer activation metrics
• Product engagement metrics
• Customer retention metrics
• Product growth metrics

Customer acquisition metrics

The customer acquisition metrics evaluate your product marketing efforts and make well-informed strategic decisions. They help you allocate resources appropriately to increase the number of users at a minimum cost.

For example, a key acquisition metric is the customer acquisition cost (CAC), the average amount spent to acquire new customers. For SaaS businesses, this refers to paying customers only.

To measure the CAC, divide the total sales and marketing expenses by the number of users gained in a specific period.

Suppose you spent $2,000 to gain 220 new customers in January. This will make your CAC $9.09 per user for the month.

The customer acquisition cost lets you keep your budget on track and use the right strategies to minimize cost.

Customer activation metrics

The customer activation metrics measure the effectiveness of your onboarding efforts and your product’s ability to engage new users.

Customer activation occurs when users experience your product’s value and find it worth their time and money.

For example, an essential part of activation is the “Aha!” moment. The “Aha!” moment is when users realize the value they could gain from your product. Customers reach the “Aha!” moment when they finally use your product and experience its expected value.

The time to value is a key activation metric that denotes the time users take to reach the “Aha!” moment and experience the value of your product. The shorter the time to value, the more satisfied the users and the greater their chances of converting to paying customers.

You can shorten the time to value by offering customers personalized onboarding experiences like in-app guidance so that they reach the activation point faster.

Product engagement metrics

The product engagement metrics measure how customers interact with your product. They offer actionable insights into user behavior as well as product performance.

Engagement is key to driving product adoption. The feature usage and adoption rate increases as more customers successfully use your product features to achieve their goals.

A critical feature usage metric is the feature adoption rate. You can calculate this rate by dividing the number of feature monthly active users by the total number of user logins in a given period.

The image below shows how Userpilot allows you to track feature usage in terms of total interactions, unique user interactions, and unique company interactions. You can also identify features with high/low engagement by tracking the number of clicks.

Tracking feature usage lets you identify high or low-engagement features and help you adopt strategies accordingly.

For example, if some users show poor engagement for a core feature, you can segment them into the ‘disengaged users’ group and personalize the onboarding process. Personalization can also help users discover features relevant to their use case.

Customer retention metrics

The customer retention metrics are used to evaluate the effectiveness of customer relationship management and product value.

To retain more customers, you need to offer continuous value to users and build strong customer relationships through personalized retention marketing. This will increase customer lifetime value and drive revenue growth.

For example, a key indicator of retention is customer satisfaction. The more satisfied your customers are, the longer they will stick around.

You can track the customer satisfaction score (CSAT) metric to measure customer satisfaction. You can collect the scores through a customer satisfaction survey, such as the one below.

CSAT surveys ask customers to rate their satisfaction with the product or a particular feature/user interaction. The rating scale can range from 1-10, 1-5, or 1-7 on an “extremely dissatisfied – extremely satisfied” spectrum.

For the example above, customers will be considered happy customers if they rate their satisfaction as 4 or 5. You can then calculate the CSAT score by dividing the number of happy customers by the total number of customers.

Therefore, if 85 of your 100 customers select 4 or 5, your CSAT score would be (85/100) or 85%. The average customer satisfaction score for the SaaS industry is around 78%.

Product growth metrics

The product growth metrics are key to tracking the expansion and adoption of your product over time. These metrics help you develop an effective product-led growth strategy.

One standard method of growing your business is account expansion. Account expansion means selling to your existing customers through upsells, cross-sells, and add-ons.

It’s measured using the expansion monthly recurring revenue (MRR) rate, which is the rate at which you increase your monthly recurring revenue via account expansion opportunities.

Here’s how you can calculate the expansion MRR rate. Find the difference between the expansion MRR at the end and the start of the month. Then divide the number by the expansion MRR calculated at the beginning of the month and multiply the result by 100.

Suppose your expansion MRR is $500 at the beginning of November and rises to $750 by the end of the month. Thus, your expansion MRR rate for November would be (250/500 x 100) or 50%.

As account expansion increases your expansion MRR, it will also boost your average revenue per user. While there’s only a 5%-20% chance of success with gaining new users, there’s a remarkable 60%-70% success rate of selling to an existing customer.

Moreover, increasing the expansion MRR rate allows you to reach negative churn. You get negative churn when the revenue you earn from account expansion surpasses the revenue you lose from customer churn every month.

Therefore, product growth metrics are vital for growing your business through existing customers and improving your customer lifetime value.

Product metrics list by category

The table below classifies product metrics according to their category, metric, formula (or measurement method), and use cases.

How to track product metrics using Userpilot?

Userpilot is a powerful product growth platform that offers a vast range of functionalities without any need for coding.

One of its key functionalities is understanding your customers (and the companies they work for).

Userpilot’s built-in analytics capabilities allow you to collect a wealth of data and track key product metrics. The platform automates product analytics for you and presents actionable insights in organized dashboards.

Let’s dive into the details.

Collect data for tracking product metrics

Userpilot lets you collect a large data pool to track your product metrics. Here are the three main areas of focus.

• Feature usage: You can track the usage of specific features by using feature tags. Feature tagging allows you to tag particular UI elements/features to monitor feature engagement.
• Engagement with in-app experiences: Userpilot lets you understand how users interact with onboarding flows, checklists, and other in-app guides. You can also track active users and
• Custom events: You can track onboarding content engagement, e.g., by completing a checklist that leads to the activation point. You can set up custom events and trigger in-app experiences based on event occurrence (including a certain number of events in a specific period).

Gain actionable insights with product analytics dashboards

Userpilot enables you to visualize the collected data with various analytics dashboards. You can get dashboards for features & events, users, goals, and more.

The dashboards are highly detailed, easy to understand, and offer actionable insights for making data-driven decisions.

Here’s a dashboard that provides multiple insights on your users. You can use this to check user activity, session activity, average events per session, average active users by time of day, etc.

Userpilot has two new upcoming features – funnel analysis and path analysis.

Funnel analysis will help you find friction and drop-off points in the customer journey. Thus, you can improve the stages where users churn the most and increase customer retention.

In addition, path analysis will let you see how customers behave with your product and whether they are achieving their goals.

Conclusion

Product metrics are key to achieving customer success and product growth. They offer valuable insights into customer acquisition, user activation, product engagement, user retention, and product growth.

Want to get started with all the essential types of product metrics? Get a Userpilot demo and see excellent results for your business!