How To Use Product Metrics Right?


28th Apr'22
How To Use Product Metrics Right? | OpenGrowth

Imagine, today is the day, you have to give a presentation to the boss about your new product or feature. You had been planning and preparing for it for months. Five minutes in, your boss stops you and leaves the cabin. Why? Maybe because your boss wanted to know: how your product adds value to the business and what impact it has on consumers. 

Do you know these answers? To get answers to these questions, you need product metrics. Basically, you need the right metrics. In this blog, you will learn about the most common product metrics, how to use product metrics right, and why you need them. Let’s go! 


What are Product Metrics? 

Product metrics are data points that help a business track and analyze the success of its product. It captures the ways consumers interact with your digital app or products and shows how those interactions affect your business. 


Why do Companies Use Product Metrics? 

Depending on the size and the goals, companies use product metrics to: 


Product Metrics


What are the types of Product Metrics? 

Here we have got a list of primary product metrics. 


Business Metrics 

Depending on the type of business, different business metrics are used. They are:  


Monthly Recurring Revenue ( MRR) 

It is the total revenue that your product brings in each year. It is used to predict cash flow and financial health. 


  • MRR = Number of customers x amount each customer pays per month 


Customer Lifetime Value ( CLTV, CLV, or LTV) 

It is the amount the average customer spends on your product during their relationship with the company. It is used to understand how much you should spend to acquire customers. 


  • CLTV = Average Order Value( AOV) x purchase frequency customer lifespan 


Customer Acquisition Cost ( CAC) 

It is the average amount your company spends to acquire new customers. It is used to measure the efficiency of marketing and sales activities. 


  • CAC = Total cost ( marketing + sales) / Number of new customers 


Churn Rate 

It is the percentage of users who stop using your product over a specified period. It is used to track your company’s ability to retain customers. 


  • Churn Rate =( Number of users beginning - Number of users end) / Number of users beginning 


Engagements Metrics 

Engagement metrics help you to understand how customers interact with your product and how stratified they are. It can be measured by: 


Adoption Rate 

It is the percentage of users who move past exploring your product and start to use it in earnest.


  • Adoption rate = ( Number of new users/ Total number of users) x100 


Daily Active Users/ Monthly Active Users 

It is mostly used in SaaS companies to measure retention and growth. To calculate it, you must determine the active users by day and month. Active users can be calculated by using Google Analytics. Once determined, multiply it by 100. 


  • Ratio = ( Daily active users or monthly active users) x 100 


Conversion Rate 

It is used to measure how effectively your product guides users to take the action you want them to take. 


  • Conversion rate = the number of conversions/ the total number of visitor 


Session per user 

It is used to measure the number of times an average user has been active on your site or product.


  • Number of session per user = Sessions / Total users 


Net Promoter Score( NPS) 

It measures the overall perception of the brand, product, or feature. For calculating NPD you have to rank customers’ perceptions on a scale of 0-10 Then rank them as promoters, passives, and dictators. 


  • NPD = Percentage of promoters- Percentage of detractors


How to use product metrics


The Pirate Metrics ( AARRR) 

It is the metric for product teams. It is used to capture the entire customer journey. It is a great way to improve your product and make your company product-market fit. 



It helps to describe your ability to attract new people to your product and convert them into your consumers. 


  • Acquisition rate = Number of users acquired/ specific time period



It captures the moment when the users first do the things your product is built for them to do. It is the first encounter the customer has with the work of the product team. 


  • Activation Rate = Number of active users/ Total number of users 



It describes your product’s ability to keep users engaged over a long period of time. 


  • Retention rate = Number of continuing users/Number of customers you started with 



It measures your company’s ability to induce customers to advocate for your product and bring other customers in. 


  • Referral Rate = Number of referred purchases/ Number of total purchases 



It is considered the key metric for a successful business and the ultimate goal of other pirate metrics. You can track revenue by the audience, channel, or any other thing.


How to Use Product Metrics Right? 

These metrics capture a lot of information about your product and services. But how to use product metrics right? Here are a few tips that will surely help you. 


  • Draw the correct conclusion from your data.

  • Don’t use data just for the sake of using data.

  • Make a strategy to achieve your vision. 

  • You must know about your north star. It will tell you, if you are going in the right direction or not.

  • Focus on the metrics that matter. 

  • Measure the metrics with baseline metrics 

  • It is important to be data-informed, not data-driven. 

  • Make sure they are understandable and allow you to make a smarter decision. 

  • Avoid focusing on single metrics. 

  • Make sure that metrics are connected to your business strategy and goals. 


Product metrics


The metrics are more than numbers, they define the customer's behavior and capture everything your user is doing with your product. You can use different metrics, and experiment with them to improve your product and services. This will assist you in making better product decisions and, as a result, will make your customers happy.


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An explorer who takes risks and learns from her mistakes. An aspirational content writer, studying social work. Kajal loves trying her hands in different crafts.