Recently I have been inspired by the statement — what gets measured gets managed. And I carefully thought about how successful product teams measure success, identify risks, and make educated decisions on what to build next.
Measurements are an inseparable part of a successful product development process. And it is important to understand what matters to be measured.
First of all, success should be determined at the business level. When do you consider your business to be successful? For example, you may say that the business performs well when it maintains 1000 monthly subscribers. Or you may be focused rather on sales and say that the business is successful when monthly revenue doesn’t drop below $10,000.
Secondly, success should be defined at the level of functional teams. Marketing, product, and customer success teams should monitor the success of their services and products to enable a company to be successful.
Thus what is supposed to be measured depends on how a company defines its success. Let me give an example.
We, the people, tend to track our income. Most of us define success in that way.
Imagine you have earned considerably less in recent months. This change is crucial for you since your financial well-being is threatened. After a brief analysis, the cause of this change becomes clear: you are often on sick leave due to an increase in the average rate of blood pressure. If you lowered this level, you would be able to bounce back from financial losses. Therefore, your task is to figure out why this change is happening and find opportunities to return your average rate of the blood pressure to an acceptable level.
If your job and body are considered as a company and product correspondingly, the average daily rate of the blood pressure is a product metric and average daily income is a business metric. Improvement of the product metric leads to the improvement of the business one.
These metrics are often called Key Performance Indicators (KPIs) . They enable a company and product team to track business and product performance and make educated decisions.
As long as success is measured, decision making becomes faster and more effective by setting measurable business and product goals. These goals are often called Objectives and Key Results (OKRs) .
Take the maximum advantage of KPIs to improve the performance of your business and product by setting and achieving OKRs.
Despite the fact that metrics help you identify what needs to be improved, the qualitative analysis should be employed. If performance is poor, deep understanding of customers and users should help figure out why they don’t take desired actions.
For example, imagine you carry on the e-commerce business. You sell appliances. Let’s say your quarterly business goal is 1000 sales a month. This number of sales makes your business profitable.
You measure KPIs at each stage of the customer journey. You may find out that many more potential customers only view your page than take a step to purchase your product. Let’s say there are 10,000 unique views monthly, and only 500 viewers buy 700 products. Most likely, you run a successful marketing campaign. Your potential customers are aware of your offer. They get interested in it. But 1000 sales are not closed. You are lacking 300 purchases monthly so that you may wish to increase sales by at least 30%.
You know ‘what’ it is going on but you are missing ‘why’ it is happening. Do potential customers find products valuable when they learn more details on it? If so, are they willing to pay for it when they see a price? If so, what does prevent them from a purchase?
Imagine that qualitative research shows that some segment of customers is lacking product reviewers and customer ratings. These people need to switch to competitive online stores to find more information there. Another segment says that they are missing supplementary components, e.g. if this group of people buys a TV set, it wants a store to offer a TV mount. Some people say that they wish to pay via a bank transfer since they don’t provide their card details due to the security reasons.
These customers’ needs are outcomes. Once you address them, customers’ behaviour should change. This change should result in increased sales. If you have many outcomes, make sure that they are prioritized. Highly prioritized outcomes are the most valuable, least satisfied, and least risky. These outcomes can be turned into OKRs.
Product objectives aimed at customers’ success. In turn, the business objective is aimed at company success that is achieved by achieving product objectives.
Once you have measurable product objectives, you can directly contribute to them by initiating product the development and delivery process.
Start ideation activities to come up with solutions. If you have enough evidence to support your assumptions, start implementing your ideas. Otherwise, you need to make sure that your ideas are feasible, valuable, usable, and business viable.
Deliver new features to customers and monitor if customers’ behaviour changes. Do more customers take the desired action? If so, how does this activity influence sales? Base your further decisions on new measurements. Then come back to research to learn ‘why’ something is happening.
Measurements are the foundation for monitoring the success or failure of businesses and their products. They are used to identify risk and celebrate success.
You need to measure what matters.
As a CEO, you need to track those metrics which can help you to understand if your business is either successful or flop. If you need to make 1000 sales a month to be profitable, monitor this number. Raise an alarm when this number drops below the threshold.
As a product lead, you need to monitor product metrics in a way to make a product valuable for both the business and customers.
Business and product goals should be measurable. If you cannot measure result, you don’t have a possibility to claim that it is successful.