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Top 10 metrics for a product team

Introduction
Metrics are crucial to strategize, take the best decisions, identify risks before they become
reality or even just celebrate your team’s success (or reflect on failures…). Identifying the
right metrics is getting complex with more and more data out there to keep a cold head on
what to track and what to let go. This reflects directly on the market as we witness a growing
ask for data-driven product managers (we even heard the term engineer-PMs…). Why is that?
Product managers must constantly find innovative ways to increase revenues, gauge product
usability, increase customer loyalty and product performance. With ever-growing data, the
need to understand, digest and react quickly on the right metrics is as critical, as having
someone who puts in place the correct KPIs to make sense of this data. On top of that, you
need someone which bridges the gap between all teams: a product manager which speaks the
same language as business, technical and management teams.

Today, we’ve brought to you the top 10 metrics your data-savvy product team should
absolutely track to ensure you are extracting 100% value out of your product, in other words
monitoring the success of your company.

As shown below, those KPIs span the full product production chain.

PRODUCT BUSINESS PERFORMANCE KPIS

1. MRR
2. CLTV -ok
3. CAC -ok
PRODUCT DEVELOPMENT KPIS
4. Delivery on time
5. ---Team velocity
PRODUCT USAGE KPIS
6. DAU& TRAFFIC (traffic ok)
7. sESSION DURtion
8. onboarding time
9. CHURN/RETENTION RATES -ok
10. NPS/CSAT

<aside> 💡

1. Monthly Recurring Revenue

2. Customer Lifetime Value
3. Customer Acquisition Cost
4. On-time Delivery
5. Team Velocity
6. DAU/MAU ratio
7. Session Duration
8. Onboarding Time to Value
9. Churn Rate
 10. Net Promoter Score

Product Bus performance KPIS → prod dev —> prod usage KPIs

</aside>

BUSINESS PERFORMANCE
1. MRR
- Definition
Monthly recurring revenue (MRR) measures your product’s total revenue over the
course of one month.
- Why is it important
- How to calculate it
To measure MRR every month, you should start with the MRR at the end of last
month, add the revenue from new subscriptions and subtract the churn from
customers lost this month.

- What does it look like

2. CLTV
- Definition
Customer Lifetime Value is a metric indicating the total value a business can
reasonably expect from a single customer account throughout the business
relationship.

- Why is it important
Measuring Customer Lifetime Value is key, as it allows you to recoup the investment
required to earn a new customer. It allows you to predict future revenue and measure
long-term business success. This metric is key for acquiring and retaining highly
valuable customers. It is also a great metric to compare with Customer Acquisition
cost. In fact, you better ensure Customer Lifetime Value is higher than Customer
Acquisition costs. Otherwise, you might well be wasting your resources.

- How to calculate it
- What does it look like
 You should be displaying the Customer Lifetime Value as a trend. In fact, observing
how this trend evolves reveals a lot about your ability to retain customers and exploit
existing customer relationships. As mentioned above, it is also interesting to compare
the Customer Lifetime Value with other numbers, such as the Customer Acquisition
Cost to gauge your profitability.

3. CAC

- Definition
The Customer Acquisition Cost is the amount of money it costs your company
to acquire a new customer.

- Why is it important
This is one of the first metrics you’ll want to measure. Measuring this metric
allows you to make important decisions for keeping your company afloat. For
example, you don’t want to be spending too much money on customer acquisition
if it doesn't yield a profit. This metric helps you decide how much money should
be spent on attracting customers while keeping your company profitable.

- How to calculate it

CAC is calculated by adding the costs associated with converting prospects into
customers (marketing, advertising, sales personnel, and more) and dividing that
amount by the number of customers acquired. This is typically figured for a
specific time range, such as a year or a fiscal quarter.

- What does it look like

When looking at Customer Acquisition Costs, looking at a number at a specific point in time
won’t get you far. It should be displayed:

 As a trend, allowing to understand the evolution of the acquisition cost. It tells you
nothing to know that your customer acquisition cost is $10. However, it tells you a lot
to know that your CAC is $10 today while it was $5 last year. Analyzing this trend
allows you to compare your performance over different time periods.
 In constant comparison with the value yielded by customers. If the customer
acquisition cost is $10, while each customer brings about a value of $7, you’re clearly
doing something wrong.

4. CHURN RATE
- Definition
Customer Churn, or customer turnover, is the number of customers you’re losing in
a predetermined time period.

- Why is it important
 Churn rate is a dreadful, but super important metric. It allows you to know how many
customers are deciding to leave the business and helps you understand how this is
impacting revenue. More importantly, it enables you to elaborate strategies to retain
your customers.

- How to calculate it
- What does it look like
Your churn rate should be displayed as a trend. In fact, you need to be able to
compare the churn rate across different time periods. This allows noticing when there
is a spike in the churn rate so that you can act quickly upon it.

5. NPS / CSAT
- Definition
The Net Promoter Score (NPS) is for your customers to score the quality of your
product’s service. It gives a sense of the number of loyal customers, who recommend
your product versus customers who dislike your product.
- Why is it important
Bain & Co., the initiators of the metric, have established that a good NPS can yield
20-60% of organic growth. This tell us already indicates the importance of being
aware of your NPS. But also, the

NPS awareness throughout the organization motivates employees to deliver

more value, react to issues faster, and get to the root of detractors’ problems.
Besides, any information learned about detractors should be shared among
all departments in a common effort to improve the overall experience of your
customers.
Bain and Company who initially introduced the metric identified that high NPS leads
to 20-60 percent of organic growth. Same goes for negative NPS – a high number of
detractors results in economic penalties.

- How to calculate it
To calculate NPS, ask users to rank your product from 0 to 10. Detractors
would give it from 0 to 6 points, users with 7-8 points are neutrals, and those
who gave it 9-10 are promoters. The NPS formula is:
NPS = % of promoters – % of detractors

- What does it look like

PRODUCT USAGE
6. DAU / MAU
- Definition
Besides revenue, the most valuable metrics of product growth is the number
of users or subscribers for a fixed period of time. But the number of people
who have subscribed or purchased your product isn’t a primary KPI. What
really matters is the number of active users. Metrics of this category track
 how many unique visitors or users you have per day (DAU), week (WAU), or
month (MAU). A unique visitor is one who visits a website at least once within
a given period of time.

- Why is it important
- How to calculate it
Daily Active User (DAU) – the number of active users per day. An “active
user” is one who signed in an account and performed some valuable
activities.
Monthly Active User (MAU) – the number of active users who complete
valuable activities per month.

DAU/MAU = # of Daily active users / # of Monthly active users

- What does it look like

AU/MAU of 20 percent is considered a good sign, while 50+ percent indicates
extreme success. Growing DAU/MAU percentage allows for tracking growth
or decline of a product. This ratio is used in forecasting, budgeting, or making
a decision to develop new features. However, not every product must be
used daily to be considered successful. You can use Uber once a week on a
Friday night out or log into Airbnb twice a year. So, high-recency products are
more prone to going viral

PRODUCT DEVELOPMENT
7. Delivery on time
- Definition
Tracking performance against commitments. With a focus on engineering, this
helps the team to be more accurate in their development and testing estimates.

- Why is it important
Work with Project Management to keep this data visible to the engineering
and product management teams. Your reputation and theirs will depend on the
integrity of the plan. Catch gaps quickly, adjust with data, and communicate
appropriately if there will be a customer impact.

- How to calculate it
- What does it look like

8. Team velocity
- Definition
- Why is it important
Team velocity is a useful metric for estimating how long it will take a team to
complete a software development project. With continuous reporting and
monitoring of this metric, product managers and engineering managers can
validate engineering estimates against their proven history. This provides for
more accurate time estimates and more reliable roadmaps.
 - How to calculate it
- The team velocity is calculated by counting the number of units of work
completed in a certain interval, (many companies plan two-week sprints). For
example, if the team completed 10 stories during a two-week sprint and each
story was worth three story points, then the velocity is 30 story points per
sprint.

- What does it look like

PRODUCT QUALITY
9. Tickets/support
- Definition
Number of customer calls, tweets, chats, and blog complaints; severity of
calls; time to fix; outstanding bugs

- Why is it important
Closely monitor Support's impact on product quality. With an overall goal of
excellence, this is a critical set of KPIs.

- How to calculate it
Number of days; quantity of tickets; severity of escalation

- What does it look like

10. Testing phases

- Definition
Testing KPIs can cover several areas from automation coverage reports to
unit testing, system testing, and feature testing

- Why is it important
Work closely with the testing team and engineering teams to validate the
quality of the product and create goals around continuous improvement.

- How to calculate it
Automation percent, number of tests completed successfully

- What does it look like

https://productschool.com/blog/data-analytics/metrics-product-managers-measure/
https://www.altexsoft.com/blog/business/15-key-product-management-metrics-and-kpis/
https://www.departmentofproduct.com/blog/metrics-matter-product-managers/
https://www.toptal.com/product-managers/product-management/creating-success-a-guide-to-
product-manager-kpis

DRAFT
Important product performance indicators include on-time delivery, quality, support,
usability, and customer adoption. With a culture of continuous improvement, most product
managers will look for ways to increase revenues, loyalty, and usability to drive an
increasing customer lifetime value (CLV).
Growing need for Data-driven PMs, even more engineer PMs
 + efficient
 direct user feedback
 comm tool between all teams  speak the same language as tech, business and internal
teams

Conclusion
Of course , to track those best don’t forget to:
- Centralize your data
- Make its publicly available within your company
- Ensure you have good dashboards and visualization tools

Top 10 metrics for a product team

And how to go about measuring them
Introduction

Metrics are crucial to strategise, take the best decisions, identify risks before they become
reality or even just celebrate your team’s success. Tracking the right metrics is becoming
harder with too much data to keep a cold head. This reflects directly on the market as we
witness a growing demand for data-driven product managers (we even heard the term
engineer-PMs…). Why is that? Product managers must constantly find innovative ways to
increase revenues, gauge product usability, increase customer loyalty and product
performance. With ever-growing data, the need to understand, digest and react quickly on the
product data is as critical, as having someone who puts in place the correct KPIs to make
sense of this data. On top of that, you need someone capable of bridging the gap between all
teams: a product manager which speaks the same language as business, technical and
management teams.

Today, we’ve brought to you the top 10 metrics your data-savvy product team should
absolutely track to ensure you are extracting 100% value out of your product, in other words
monitoring the success of your company.

As shown below, those KPIs span the full product production chain.

<aside> 💡

1. Monthly Recurring Revenue

2. Customer Lifetime Value
 3. Customer Acquisition Cost
4. On-time Delivery
5. Team Velocity
6. DAU/MAU ratio
7. Session Duration
8. Onboarding Time to Value
9. Churn Rate
10. Net Promoter Score

Top 10 metrics spurning product’s life cycle — Image

courtesy of [Castor](<https://www.castordoc.com/>)

</aside>

1. Monthly Recurring Revenue (MRR)

What is it?

<aside> 💡 The Monthly recurring revenue measures your product’s total revenue over the
course of one month.

</aside>

Why is it important?

Sometimes deemed to be the most important metric out there for financial growth, the MRR
will allow you to gain key insights into the subscription behaviour of your customers. The
MRR has gained great popularity because it tracks your business’s performance, it allows for
easily planning and forecasting your growth and finally it makes budgeting more transparent:
you immediately know what to expect in revenue from your platform at any given month in
time.

How to calculate it?

To measure MRR every month, you should start with the MRR at the end of last month, add
the revenue from new subscriptions and subtract the churn from customers lost this month.

Formula Monthly Recurrent Revenue — Image

courtesy of [Castor](<https://www.castordoc.com/>)

What does it look like?

When looking at the MRR, we should look at its trend over time. This trend will reveal
critical information about the health of your product as it is directly related to the amount of
revenue coming in. This trend will help management with decision making, scaling the
business and predictability.

2. Customer Lifetime Value (CLTV)

What is it?

<aside> 💡 The Customer Lifetime Value is a metric indicating the total value a business
can reasonably expect from a single customer account throughout the business relationship.

</aside>

Why is it important?

Measuring Customer Lifetime Value is key, as it allows you to recoup the investment
required to earn a new customer. It allows you to predict future revenue and measure long-
term business success. This metric is key for acquiring and retaining highly valuable
customers. It is also a great metric to compare with Customer Acquisition cost. In fact, you
better ensure Customer Lifetime Value is higher than Customer Acquisition costs. Otherwise,
you might well be wasting your resources.

How to calculate it?

Customer Lifetime Value is calculated by adding the costs associated with converting
prospects into customers (marketing, advertising, sales personnel, and more) and dividing
that amount by the number of customers acquired. This is typically figured for a specific time
range, such as a year or a fiscal quarter.

Formula Customer Life Time Value — Image

courtesy of [Castor](<https://www.castordoc.com/>)

With:

 Average purchase value — the value of all customer purchases over a particular

timeframe (a year is usually easiest), divided by the number of purchases in that
period
 Average purchase frequency — divide the number of purchases in that same time
period by the number of individual customers who made a transaction over the same
period
 Average customer lifespan — the average length of time a customer continues
buying from you

What does it look like?

You should be displaying the Customer Lifetime Value as a trend. In fact, observing how
this trend evolves reveals a lot about your ability to retain customers and exploit existing
customer relationships. As mentioned above, it is also interesting to compare the Customer
Lifetime Value with other numbers, such as the Customer Acquisition Cost to gauge your
profitability.

3. Customer Acquisition Cost (CAC)

What is it?

<aside> 💡 The Customer Acquisition Cost is the amount of money it costs your company
to acquire a new customer.

</aside>

Why is it important?

This is one of the first metrics you’ll want to measure. Measuring this metric allows you to
make important decisions for keeping your company afloat. For example, you don’t want to
be spending too much money on customer acquisition if it doesn't yield a profit. This metric
helps you decide how much money should be spent on attracting customers while keeping
your company profitable.

How to calculate it?

CAC is calculated by adding the costs associated with converting prospects into customers
(marketing, advertising, sales personnel, and more) and dividing that amount by the number
of customers acquired. This is typically figured for a specific time range, such as a year or a
fiscal quarter.

Formula Customer Acquisition Cost — Image courtesy

of [Castor](<https://www.castordoc.com/>)

What does it look like?

When looking at Customer Acquisition Costs, looking at a number at a specific point in time
won’t get you far. It should be displayed:

 As a trend, allowing to understand the evolution of the acquisition cost. It tells you
nothing to know that your customer acquisition cost is $10. However, it tells you a lot
to know that your CAC is $10 today while it was $5 last year. Analysing this trend
allows you to compare your performance over different time periods.
 In constant comparison with the value yielded by customers. If the customer
acquisition cost is $10, while each customer brings about a value of $7, you’re clearly
doing something wrong.

4. On-Time Delivery

What is it?
<aside> 💡 Delivery on time tracks the performance of your product against time
commitments, it ensures your team commits to their development timeliness and increases
customer loyalty.

</aside>

Why is it important?

Measuring on-time delivery of your product is critical to increase your customer retention
and revenue. The metric is key to building customer relationships. This metric also reveals
bottlenecks in your team’s development process. In general, issues that emulate from on-time
delivery problems touch inventory, order supply and delivery issues. Tracking this metrics
allows your team to catch gaps, adjust and prevent customer impact.

How to calculate it?

Formula On-Time Delivery — Image courtesy of [Castor]

(<https://www.castordoc.com/>)

OTD is often measured within a date range.

What does it look like?

Again, the on-time delivery metric should be displayed as a trend. In fact, you need to be able
to compare the delivery issues or improvements across different time periods to be able to
detect for example seasonality patterns and prevent them in the future.

5. Team Velocity

What is it?

<aside> 💡 The Team Velocity metric is the average amount of work your product team
produces in one sprint. It is what we call an “Agile” work method.

</aside>

Why is it important?

Team velocity is used to estimate the amount of work and delivery date of product
features/developments. It is useful for planning but should be used with caution. When
correctly monitored and reported, the metric allows product managers to validate roadmaps
and estimate how much time upcoming projects will take.

How to calculate it?

We calculate team velocity by counting the total units of work in a certain time period
(usually between 1-3 weeks). Velocity is always measured at a team level.
We must also define story points, which are points allocated to different tasks within a user
story.

Formula Team Velocity — Image courtesy

of [Castor](<https://www.castordoc.com/>)

An example would be: XYZ product team finished 15 stories during a two-week sprint. The
team had previously defined that each story has a value of 4 story points each. Then the
team’s velocity is 45 story points/sprint.

What does it look like?

Again, velocity tends to be displayed as a trend. This allows your team to have an idea of the
“historical velocity” i.e. visualise the progress of your team. It sometimes is plotted next to an
“ideal” scenario trend to compare performances.

6. DAU / MAU

What is it?

<aside> 💡 The Daily Active User (DAU) / Monthly Active User (MAU), represents the
number of active users/subscribers per day or month. A unique user visits an application or
website at least once within a period of time.

</aside>

Why is it important?

What really maters here is the active part of DAU or MAU. It is deemed to be, after
revenues, the most valuable metric of product growth. The metric is helpful to evaluate the
traction of your product by giving context to the level of engagement of your users. It is
directly related to user retention. The ratio can be used then to forecast, budget or take
decisions to develop new features or cease others in product development.

How to calculate it?

Formula DAU/MAU ratio — Image courtesy

of [Castor](<https://www.castordoc.com/>)

Daily Active User (DAU) – “Active users” are customers who signed on the product and
performed tasks. This is, to some extent, subjective to your product and depends on what user
actions you consider important on a daily basis.
Monthly Active User (MAU) – “Active users” are customers who complete certain tasks per
month. This is, to some extent, subjective to your product and depends on what user actions
you consider important on a monthly basis.

What does it look like?

Simply put, the higher the ratio, the sticker the product is. DAU/MAU ratio is one out of
many metrics measuring customer activity. It is for that reason, that it is always better to track
this ratio alongside other KPIs as user retention, CAC and churn rate. The ratio can also be
dependent on industry benchmarks (i.e. social apps are very sticky vs. travelling apps).

7. Session Duration

What is it?

<aside> 💡 Session duration represents the time a user spends on your product, on average.

</aside>

Why is it important?

Session duration is a good kick-start to identify whats works and what doesn’t with your
product. It helps you track your customer journey.

How to calculate it?

Formula Session Duration — Image courtesy

of [Castor](<https://www.castordoc.com/>)

What does it look like?

The session duration KPI can be tracked using histograms displaying how much time each
cluster of consumers spend on your product. In fact, you need to be able to compare the churn
rate across different time periods but also across different groups/types of consumers.

8. Onboarding Time to Value

What is it?

<aside> 💡 The onboarding time to value metric is how long it takes for users from
inception of onboarding to extract value from your product.

</aside>

Why is it important?
This metric is crucial to track as it has a direct impact on your revenues (by reducing
redundant/unnecessary onboarding costs) and on your customer retention. The analysis that
comes out of this metric will help you increase the frequency of usage of your product as well
as increase conversions. Put simply, the sooner your customer feels the value, the less likely
is he to abandon your product. A low TTV translates into a faster return on investment.

How to calculate it?

There are different ways to measure time to value. Of course, it is dependent on your
customer’s definition of value and their needs, as well as your business model. Generally
speaking, we measure the TTV by:

Formula Onboarding Time to Value — Image

courtesy of [Castor](<https://www.castordoc.com/>)

What does it look like?

Time to value is complex to compare as it is highly dependent on the industry, the different
clusters of your clientele and your product at hand. Product teams usually visualise Time to
Value on a dashboard to witness its’ evolution over time.

9. Churn rate

What is it?

<aside> 💡 Customer Churn, or customer turnover, is the number of customers you’re

losing in a predetermined time period.

</aside>

Why is it important?

Churn rate is a dreadful, but super important metric. It allows you to know how many
customers are deciding to leave the business and helps you understand how this is impacting
revenue. More importantly, it enables you to elaborate strategies to retain your customers.

How to calculate it?

To calculate churn rate, you need to choose a time period, such as monthly or annual. You’ll
have to know the number of customers you had at the beginning of the time period and the
number you lost over this same time period. You then divide the number of lost customers by
the number of total customers at the start of the time period. Finally, multiply this number by
100.
 Formula Churn rate — Image courtesy
of [Castor](<https://www.castordoc.com/>)

Example: if your business had 250 customers at the beginning of the month and lost 10
customers by the end, you divide 10 by 250. The answer is 0.04. You then multiply 0.04 by
100, resulting in a 4% monthly churn rate.

What does it look like?

Your churn rate should be displayed as a trend. In fact, you need to be able to compare the
churn rate across different time periods. This allows noticing when there is a spike in the
churn rate so that you can act quickly upon it.

10. Net Promoter Score

What is it?

<aside> 💡 The Net Promoter Score (NPS) is for your customers to score the quality of your
product’s service. It gives a sense of the number of loyal customers, who recommend your
product versus customers who dislike your product.

</aside>

Why is it important?

Bain & Co., the initiators of the metric, have established that a good NPS can yield 20-60%
of organic growth. This tell us already indicates the importance of being aware of your NPS.
But also, there is a strong correlation between your employees’ motivation, reaction and
involvement in your product with the NPS. This metric allows companies to constantly build
awareness and improve the experience of their customers: it is a good business health
indicator.

How to calculate it?

Formula Net Promoter Score — Image courtesy of [Castor]

(<https://www.castordoc.com/>)

 Promoters: users who score your product and service between 9-10 points
 Detractors: users who score your product and service between 0-6 points
 Others are called neutrals and are users who score your product and service between
7-8 points

What does it look like?

The NPS score is usually looked at on a scale from -100 to 100. Most frequently, it should be
also studied as a trend in order to depict your customer’s satisfaction over time. Bear in mind
that it is important to know your industry and its’ benchmark as NPS may vary considerately
across industries.