Product Success Metrics

When it comes to achieving product success, the path is never one-size-fits-all. The key to understanding how your product is performing lies in deciphering what kind of product you’re building and who your users are. In today’s data-driven world, it’s not enough to merely claim that data-driven decisions are being made. We need to dig deeper and understand how these decisions are made, what is being measured, and how it’s being measured. Metrics play a pivotal role in this journey, especially when it comes to adoption and retention.


For this blog post, let’s dive into the world online business (Ecommerce)platforms. What are the top 5 metrics that truly matter for this kind of business?


User Acquisition & Retention Metrics


1. Active Users: DAU and MAU (Daily and Monthly Active Users)


   The DAU to MAU ratio is a powerful indicator of your product’s health. If this value is on the rise, it signifies that your platform is thriving. Conversely, a declining ratio might indicate potential issues.



2. Session Time


   How much time users spend on your platform matters. Longer sessions are generally linked to higher retention rates. You can calculate the average session duration by dividing the total time spent by users by the number of users.


3.Bounce Rate


   Bounce rate measures how many people leave your website after a single visit. A high bounce rate could suggest that your platform isn’t engaging enough or is failing to meet user expectations.


4.Net Promoter Score (NPS)


   NPS is a customer success metric that assesses the percentage of customers who are actively promoting your product compared to those who aren’t. A high NPS indicates satisfied users who are likely to stick around.


Financial Metrics


1. Average Revenue Per User (ARPU)


   ARPU is a crucial financial metric that holds significant weight with your product’s leadership. It measures how much revenue each user generates on a monthly or annual basis. To calculate ARPU, divide your Monthly Recurring Revenue (MRR) by the total number of accounts.


2. Monthly Recurring Revenue (MRR)


   MRR represents the expected revenue your platform generates each month. It’s a pivotal metric for forecasting and ensuring financial stability. Calculate MRR by multiplying your monthly subscription rate by the number of subscribers.


3. Customer Acquisition Cost (CAC)


   CAC measures the cost incurred to acquire new customers. This includes expenses related to sales, advertising, and marketing efforts, which might also encompass marketing team salaries. To calculate CAC, divide your sales and marketing costs for a specific period by the total number of customers acquired during that same period.


The success of whatever online platform you wish to sell your product hinges on aligning your product metrics with your broader product and company vision. These metrics are not set in stone; they’re determined by the unique nature of your product and its market dynamics. Remember that what’s essential is not just measuring these metrics but interpreting and acting on them to drive your platform’s growth and success.


Metrics are key when looking to growth and scale your business. The gold is in the data.

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