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Metrics

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Logistics
• Let’s try and make it as interactive as possible
• Do let me know if you can’t hear me well or do not follow me
• Do respond to case study related questions in normal chat or raise your hand to
speak
• I will be actively monitoring the doubts channel once every 10–15 min and chat
channel during case studies.
• Last 10 min will be dedicated exclusively for QnA

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Agenda
. Focus: Metrics
• Review of session on 14th Apr with pictures
• Case study on Furniture: Herman Miller
• Fundamentals of product metrics: AARRR
• Tying it up with Product Lifecycle Management
• Activity
• Learnings and outcomes

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Product Lifecycle Management

Review through pictures

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Framework
Retirement and Strategy and
Disposal Planning

6 1

Support and Concept and

Maintenance
5 2 Design

4 3
Production and Development and
Launch Testing
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Alternate

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Overlay

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Designs and manufactures a wide range of furniture

products, including office chairs, desks, and storage
solutions.

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Herman Miller
Encourages customers to recycle or
donate their furniture products and also Identify customer needs
recycles its own products through its and market trends
take-back and recycling program.

Launches the product - in-store
displays, trade shows, and digital
marketing. Detailed product
information to customers and
offers support and after-sales
service.
6 1
Refine the product design,
making sure it is both
functional and aesthetically
5 2 pleasing. Considers factors
such as sustainability and
environmental impact

4 3
Manufactures its products in-house or
through 3P manufacturers, ensuring that
quality control standards are met.
Range of testing methods - high standards
of quality and durability. Seek customer
feedback.
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Trends in Furniture
1. Sustainability and eco-friendliness
2. Customization and personalization
3. Technology integration
4. Retro and vintage styles
5. Multifunctional and space-saving furniture

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Designs and manufactures a range of mattresses and

bedding products, including memory foam and hybrid
mattresses.

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Casper
Encourages customers to recycle or
donate their furniture products and also Identify customer needs
recycles its own products through its and market trends
take-back and recycling program.

Launches the product - in-store
displays, trade shows, and digital
marketing. Detailed product
information to customers and
offers support and after-sales
service.
6 1
Refine the product design,
taking into account factors
such as comfort, support,
5 2 and durability. Considers
factors such as sustainability
and environmental impact

4 3
Manufactures its products in-house or
through 3P manufacturers, ensuring that
quality control standards are met.
Range of testing methods - high standards
of quality and durability. Seek customer
feedback.
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Metrics and Growth Strategies

Focus of today’s session

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What gets measured, gets managed

Peter Drucker

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Importance of being data driven

.
1. Understand your customers

2. Make right product decisions

3. Manage stakeholders, communicate across teams

and convince leadership.

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Poll 1

How do you feel when you hear about the topic

Metrics or being Data Driven

1. Anxiety / Fear / Panic attack

2. Comfort / Confidence / Interest

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AARRR framework – Gotchas

Medium Article
Author: Melanie Balke

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Acquisition — “Where Are Our Users / Customers Coming From?”

3
. fundamental questions:
1. Channel driving the most traffic (#)?
2. Channel driving the most valuable traffic, or performs best (%) in terms
of customer conversion?
3. Channel with the lowest customer acquisition cost ($)?

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Activation — “How good is the user’s / customer’s first experience?”

AHA moment
Tesla
1. Assign a delivery specialist - Car is delivered with high CSAT.
2. Overview of the car's features and functionalities
3. Assists the customer with setting up the vehicle's software and other customization options.

GE:
1. Comprehensive training program - well-equipped for industrial equipment.
2. Hands-on training, virtual training, e-learning modules - operate, maintain their equipment.
3. Technical support team to help customers troubleshoot any issues they may encounter.

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Activation — “How good is the user’s / customer’s first experience?”

AHA moment
John Deere: A leading manufacturer of agricultural equipment
1. Offers customers a free trial of their products - the equipment meets their needs.
2. Onboarding training and resources - get the most out of their purchase.
3. Financing and leasing options to make their equipment more accessible to customers.

Stratasys: A manufacturer of 3D printers

1. Offers customers a range of training and certification programs - use their printers effectively.
2. On-site training, webinars, and e-learning modules - optimize their print processes.
3. Technical support - troubleshoot any issues they may encounter.

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Retention — “How many of your customers are you

retaining and why are you losing the others?”

Retention: people regularly come back to use your product.

Retention (opposite) Churn.

Customer Acquisition Rate > Customer Churn Rate => Growth

Customer Churn Rate > Customer Acquisition Rate => Burning a lot of money

5 – 25X expensive Acquisition :: Retention

Churn rate is a good indication of product/market fit.

Bill Gates: “Your most unhappy customers are your greatest source of learning”

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Referral — “How can you turn your customers into your advocates?”

Best way to drive growth is referral.

Net Promoter Score (NPS) – index – [–100, 100]

Customers’ willingness to recommend products/services.
How satisfied, loyal your customers are to the brand.

Viral coefficient – # users a customer refers to you.

Viral coefficient of 2:
1 customer on average refers 2 new customers to you.

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Poll 2

A viral coefficient greater than 1 is a good

indication of growth (K>1)

1. True
2. False

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Revenue — “How can you increase revenue?”

What’s the best way to increase revenue?

Increase Lifetime Value (CLV) and decrease Acquisition Cost (CAC).

CLV: amount of revenue you earn from a customer during their lifetime or
rather the lifetime as a customer of your company.

CAC: amount of money you spend on acquiring your customer.

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Metrics with
Product Lifecycle Management

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Simplification: 4 stage PLM

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Introduction
1. Market research metrics
Customer surveys, focus groups, and analysis of consumer trends.
E.g., a manufacturer of electric vehicles - preferences and behaviors of potential buyers.

2. Sales metrics
Number of sales, revenue, and profit margins.
E.g., a manufacturer of 3D printers - the number of units sold and the profit margins on each sale.

3. Innovation metrics
Number of patents filed, R&D spending, and time to market.
E.g., a manufacturer of smart home devices - invest heavily in R&D and capture market share.

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Introduction - with exact formulae and examples

1. Production Cost per Unit: Total cost required to produce a single unit of the product.
Production Cost per Unit = (Total Production Costs / Total Number of Units Produced)
E.g., Company spent ₹5,00,000 to produce 1000 units, then the production cost per unit would be ₹500.

2. Customer Acquisition Cost (CAC): Cost required to acquire each new customer
CAC = (Total Sales and Marketing Expenses / Total New Customers Acquired)
E.g., Company spent ₹1,00,000 on sales and acquired 500 new customers, then the CAC would be ₹200.

3. Market Share: Percentage of the total market that your product holds.
Market Share = (Your Company's Sales Revenue / Total Market Sales Revenue) x 100
E.g., Company sells ₹10 Cr. worth of a product in an industry with a total sales revenue of ₹100 Cr., then your market
share would be 10%.

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Growth
1. Market share metrics
Market share percentage, market penetration rate, and customer acquisition cost.
E.g., a manufacturer of industrial robots - percentage of the market it captures, how quickly it's penetrating new
markets, and how much it costs to acquire each new customer (CAC).

2. Product performance metrics

Product quality, defect rate, and customer satisfaction (CSAT).
E.g., a manufacturer of solar panels - efficiency and durability of its products and perf CSAT

3. Supply chain metrics

Lead time, supplier performance, and inventory turnover.
E.g., a manufacturer of aerospace components - lead time to ensure on-time delivery, track supplier performance to
avoid delays, and manage inventory levels to balance production needs and costs.

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Growth - with exact formulae and examples

1. Production Capacity Utilization Rate: Actual output / Maximum possible output x 100%
E.g., Manufacturing plant, the actual output of a product in a month was 50,000 units, and the maximum possible
output was 60,000 units. The production capacity utilization rate would be (50,000/60,000) x 100% = 83.33%.

2. Gross Profit Margin: (Revenue - Cost of goods sold) / Revenue x 100%

E.g., Company generates ₹10 Cr in revenue and has a cost of goods sold of ₹7 Cr. The gross profit margin would be
((₹10 Cr. - ₹7 Cr.) / ₹10 Cr.) x 100% = 30%.

3. Net Promoter Score (NPS) = % of Promoters - % of Detractors

E.g., A manufacturer of a new line of 3D printers might survey their customers and find that 50% are Promoters (score
of 9-10), 30% are Passives (score of 7-8), and 20% are Detractors (score of 0-6), resulting in an NPS of 30.

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Poll 4

Which of the following is most important metric in

the growth stage of product lifecycle
management?
a) Product Development Costs
b) Gross Margin
c) Sales Revenue
d) Market Share

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Maturity
1. Cost metrics
Production costs, operational costs, and cost of goods sold.
E.g., a manufacturer of consumer electronics - reduce production costs to maintain profit margins

2. Customer retention metrics

Customer loyalty, customer lifetime value, and churn rate.
E.g., a manufacturer of medical equipment - customer retention by providing excellent service

3. Competitive metrics
Market share, competitor analysis, and differentiation.
E.g., a manufacturer of automotive parts - analyze competitors' products/pricing strategies to differentiate itself and
maintain market share.

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Maturity - with exact formulae and examples

1. Customer Satisfaction (CSAT/CS): Level of satisfaction that customers have with a company's products.
Measured through surveys, feedback forms, and online reviews.
E.g., A manufacturer of automotive parts conducts a CSAT survey and receives an overall satisfaction score of 8/10

2. Customer Lifetime Value (CLV): Total amount of revenue that a customer is expected to generate over the
course of their relationship with the company.
CLV is the avg. purchase value * avg. purchase frequency rate * avg. customer lifespan
E.g., A manufacturer of audio equipment: avg. purchase value for the product is ₹1,000, the avg. purchase frequency
rate is 2 purchases per year, and the avg. customer lifespan is 3 years. The CLV = ₹6,000 (₹10,000 x 2 x 3).

3. Market Saturation Level (MSL): determine the market potential for a product.
MSL = (Market size / Potential market size) x 100
E.g., Company manufactures a new type of electric car, the potential market size could be the total number of drivers in
a particular country. The market size would be the number of drivers who have purchased the electric car.
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Decline
1. Profitability metrics
Profit margins, cash flow, and return on investment.
E.g., a manufacturer of typewriters - maximizing profits as sales decline by reducing costs & optimizing production.

2. Efficiency metrics
Production efficiency, capacity utilization, and labor productivity.
E.g., a manufacturer of vinyl records - producing efficiently to minimize waste and increase productivity.

3. Liquidation metrics
Selling off remaining inventory, recovering assets, and reducing liabilities.
E.g., a manufacturer of floppy disks - liquidate its remaining inventory and dispose of any unsold products, while
also selling off any valuable equipment or intellectual property.

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Decline - with exact formulae and examples

Asset Utilization (AU): How effectively a company is using its assets to generate revenue.
Asset Utilization = Revenue / Total Assets
E.g., Company producing construction equipment has AU of 80% => 80% of the assets are being used to generate

Product Phase Out Rate: Speed at which a company is phasing out its products that are no longer profitable. It is used
to determine the effectiveness of a company's product management strategy.
Product Phase Out Rate = Number of Products Phased Out / Total Number of Products
E.g., Company producing appliances has phased out 20% of its product line in the past year due to low profitability.

Liquidation Value: Amount of money a company can expect to receive if it sells all its assets in a liquidation sale.
Liquidation Value = Estimated Value of Assets - Liabilities
E.g., Company producing furniture has decided to close down due to decreased demand. Its estimated asset value is
₹50,00,000, and its liabilities are ₹30,00,000. The liquidation value of the company would be ₹20,00,000.

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I Grow Many Apples Daily

Introduction stage Growth stage

Market Share (MS) Gross Profit Margin (GPM)

Sales Revenue (SR) Net Promoter Score (NPS)
Customer Acquisition Cost (CAC) Customer Retention Rate (CRR)
Product Cost (PC) Brand Recognition (BR)
Distribution Cost (DC) Production Capacity (PC)

Maturity stage Decline stage

Return On Investment (ROI) Cash Flow (CF)

Market Saturation Level (MSL) Asset Utilization (AU)
Customer Satisfaction (CS) Product Phase-Out Rate (PPR)
Customer LifeTime Value (CLV) Cost Cutting Measures (CCM)
Supply Chain Efficiency (SCE) Liquidation value (LV)

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Poll 5

Which of the following is a specific metric used in

the maturity stage of product lifecycle
management?
a) Customer Lifetime Value (CLV)
b) Research and Development (R&D) Expenses
c) Cost of Goods Sold (COGS)
d) Brand Awareness

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Activity (30 min - let us stick to the time please)

a) Form 4 groups (2 min)

b) Select one product from the two options provided for your group (1 min)
c) Determine the current stage of the product in its product lifecycle management (PLM) (2 min)
d) Brainstorm the relevant metrics to measure and why they are important. (8 min)
e) Finally, select the most crucial metric, also known as the north star metric, for your product. (2
min)

Share your findings with the group (2*4 min)

Reflections, comments and learning (5 min)

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Products for the activity

Group Alpha: Group Gamma:

Electric cars Conventional automobiles
Plant-based meat Traditional home appliances

Group Beta: Group Delta:

Film cameras Sustainable fashion
Physical newspapers Energy-efficient appliances

Select one product from the two options provided for your group (1 min)

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Poll 6

More metrics always leads to better insights

1. True
2. False

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Not everything that can be measured,

matters!
“What gets measured gets managed — even when it’s pointless to measure and manage it, and
even if it harms the purpose of the organization to do so”.
Simon Caulkin, a columnist, neatly summarized Ridgway’s  paper in 1956

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What did we learn today?

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Next session

● Growth strategies based on metrics

● Experimentation in products
● Bringing it all together
● Assessments

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Sneak Peak
Introduction Stage: Siemens eHighway
● Enable trucks to operate using electricity rather than diesel.
● Strategy of forming strategic partnerships.
● E.g., they partnered with Scania in Sweden to test the eHighway on a public road.
● This strategy helps Siemens to establish credibility and gain exposure in the market.

Growth Stage: Siemens Gamesa Renewable Energy

● Designed to provide renewable energy to businesses and individuals.
● To maintain its growth, Siemens is using a strategy of innovation.
● E.g., they developed a new turbine that can produce more energy with less noise.
● Differentiate its product from competitors and attract new customers.

Maturity Stage: Siemens Simatic S7-400

● Designed for industrial automation.
● To maintain its market share, Siemens is using a strategy of cost reduction.
● E.g., they developed a new chip that reduces the cost of the product by 25%.
● This cost reduction helps Siemens to remain competitive and retain its existing customers.

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Onwards and Upwards!

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Appendix

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Top 5 trends in furniture

Sustainability and eco-friendliness: As consumers become more conscious of their impact on the environment, they are
looking for furniture that is sustainably sourced, made with eco-friendly materials, and manufactured using
environmentally-friendly processes.
Customization and personalization: Consumers are increasingly looking for furniture that is tailored to their individual needs
and preferences. Many furniture companies are offering customization options, such as the ability to choose fabrics,
finishes, and even the configuration of the furniture.
Technology integration: Furniture that incorporates technology, such as charging stations, smart home integration, and
built-in speakers, is becoming increasingly popular as consumers seek to simplify and streamline their lives.
Retro and vintage styles: There has been a resurgence of interest in retro and vintage furniture styles, particularly from the
mid-century modern era. These styles offer a unique, nostalgic appeal and can add character and personality to a room.
Multifunctional and space-saving furniture: With more people living in smaller spaces, there is a growing demand for
furniture that is multifunctional and space-saving. Examples include convertible sofas, fold-out beds, and storage
solutions that can maximize living space.

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