Don’t get tricked by Metric(k)s.
The core of a product manager’s job revolves around metrics. What distinguishes great product managers from the rest is their ability to pay heed to the right metrics at the right stage of AARRR (more popularly known as pirate metrics¹). This framework was developed by Dave Mcclure and here is what it stands for:
AARRR: Acquisition, Activation, Retention, Revenue, Referral
Each of these 5 stages warrants different sort of metrics to be focused upon. The key is in identifying which metric makes the most sense for your product and your business model and then constantly monitor them to be able to deeply understand your user behavior. While the metrics that Facebook might want to focus on may be very different from what YouTube might want to focus on, I will try and list some metrics that should be considered in each of these phases described above.
Acquisition:
1. New users/month
2. New users/source (Source eg: Facebook, Youtube, Google Search)
Activation:
1. Users who did at least one key activity — share, like, subscribe or purchase
2. Monthly active users (active users are the ones who interact with your product in some way)
Retention:
1. Returning customers — customers who did more than one purchase
2. Number of sign-ins/month
Revenue:
1. Average revenue per user/month
2. Customer Lifetime Value
Referral:
1. Users who referred other users
2. Survey scores asking users to rate “how likely they are to refer this product to their friends”
Focusing on the wrong metrics could lead to missing the main “requests” or “pain points” that the customers are facing. After all, what good can a doctor do if he/ she can’t diagnose the exact problem?
Another important value chain to monitor metrics over is while traversing through “The Marketing Funnel”. For most e-commerce businesses today, it is extremely vital to understand which part of the buying process they are losing customers in. If you have a startup or a growing company and don’t have an in-house analytics team, Google Analytics² can come to your rescue.
I recently completed the “Google Analytics for Beginners” certification and here’s what I thought is awesome:
1. It is free.
2. Super easy to integrate with your existing website/ application (Just paste a few lines of Javascript code and you’re done!)
3. It provides a marketing funnel analysis visualization which I thought was particularly awesome. When you can actually see the % conversion at each stage of the funnel, it becomes astonishingly insightful.
4. Offers a very detailed analysis of every facet related to your business/ product: right from web page analytics: landing page versus checkout page analytics to understanding your customer: demographics, the kind of devices they are using etc.
5. Last but not least, it enables the attribution to the source of your user traffic. There might primarily be four sources: direct, referral (through links on email/ blogs), CPC (traffic that landed on your page through ads) and external search traffic (through Google/ Bing searches). Given that most businesses today have an omnichannel presence, knowing which channel is bringing traffic and which isn’t can help you optimize your revenue spend and marketing strategy.
Too good to be true? So, what’s not so good with Google Analytics?
Well, there are no free lunches in life. While you get access to such a detailed analysis of your business touch points, you have to share your data with Google in return.
In this age where data is the new currency, it is a BIG tradeoff. However, for a company in its early stages, not monitoring the right metrics can also result in a flop product/service. Hence, maybe it would make more sense to use it rather than invest in an in-house data analytics and metrics tracking team. However, as the business grows, the company may choose if that is still the best option for them. There are also a few solutions where there is lesser privacy tradeoff like and slightly less sophisticated analysis:
- Optimizely
- Piwik
- Open Web Analytics
I haven’t used these tools however if you and if they work well, let me know in the comments section below.
So whatever way you choose, focus on the right metrics, understand your customer and see the magic unfold.
