(Product + Business) Metrics = Product Management Metrics & Growth Hacking
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Product Management Metrics are the real backbone of a product life cycle. In this article, we will be exploring an exhaustive list of product management metrics that will include both business metrics and product metrics.
Business metrics can be further divided into three different categories
- Revenue Metrics
- Customer Metrics
- Financial Management Metrics
- Revenue Run Rate: Revenue run rate is used to forecast the annual revenue based on the revenue generated over a small period, for example projecting the monthly revenue to annual revenue.
Revenue Run Rate = (Revenue in a period / Number of days in a period) * Number of days in a year
- Annual Recurring Revenue: Annual Recurring Revenue is used to calculate expected revenue from all active subscriptions over a year.
Annual Recurring Revenue(ARR) = Beginning ARR + (New ARR — Churn ARR) + (Upgrades ARR — Downgrades ARR)
- Average Revenue Per User: This is used to estimate the average revenue comes per user.
Average Revenue Per User(ARPU) = Total Revenue in a period / Total Users in that period
- Customer Life Time Value: The present value of the future cash flow from a customer in its entire journey with the company.
Customer Life Time Value(CLTV) = Average Revenue Per User per months * Average Lifetime of a customer (In Months) OR
Customer Life Time Value(CLTV) = Average Revenue Per User per month / Churn Rate (in months)
- Conversion Rate: This is used to estimate the % of total customers who are turning into real customer
Conversion Rate = Number of Users who do purchase / Total number of Users
- Customer Growth: This is used to estimate the rate at which customers are growing
Customer Growth(Monthly) = Number of customers this month / Number of a customer last month
- Customer Acquisition Cost: This is used to calculate the expense to acquire a new customer
Customer Acquisition Cost = Cost of marketing & Sales / Total Number of Users
- User Stickiness: Daily Active Users(DAU)/ Monthly Active Users(MAU)
- Churn Rate: Average rate at which the customers are ending the relationship with the company.
Churn Rate(Monthly) = Total Number of customers lost in month / Total Number of Customer
- Burn Rate: The rate at which a company is burning the cash
Burn Rate(Monthly) = (Cash at starting — Cash at ending) / Total Number of Months
- Cash Runway: Total Number of months you can run your business with existing cash
Cash Runway(Months) = Total Cash/ Monthly Burn Rate
- Total Number of Downloads/Install of an application
- Total Number of Registration/Profile Completion in an application
- Average Amount of time spent by a User per session in the app
- Average Amount of sessions per user per week.
- Number of Screens per session per user.
- Average Rating on the play store
- Referral Rate
There are several product metrics which depends on the specific functionality of the application. We can use HEART & AARRR frameworks to define metrics
North Star Metrics
There is one North Star metric that are tracked by all the teams in the company. It is that one metric that gives clarity on how well the company is performing. Let’s understand by having different examples
- Facebook, LinkedIn — Monthly Active Users
- WhatsApp — Number of Messages Send per day
- Amazon — Number of Purchase per month
- Airbnb — Number of Bookings per day
- Uber — Number of rides booked per day
- Slack — Daily Active Users
- Spotify — Time spend listening to music
Growth hacking is the techniques used by the early stage startups who don’t have much resources and their aim to maximise the Acquisition, Activation, Engagement, Referral, Revenue as much as they can.
Following techniques can be used for growth hacking
- Referral Hack: Referral hack is the technique in which the company give incentive if you have invited other people on their platform. For example Google Pay started by giving INR 50 for every successful referral.
- Gamification: Gamification is the technique in which can increase the required engagement. Since human beings are competitive by nature, they try to maximise their ranks, score, points etc.
- Social Media: Create your own channel on social media like Instagram, Facebook etc and try posting contents regularly
- There can be other hacks as well like SEO hacks, Attractive landing page, cross posting etc.