Talking of scaling products, here's a question.
"How" do you know & decide on metrics to be measured / tracked such that they would surely put your product on the desired growth path with absolute confidence?
Here's a thread🧵
#productmanagement #growth #productgrowth #PMF
1/
A natural answer that leads off that question there could be:
- after seeing a healthy display of metrics, the numbers that matter over a given a cohort
Great!
But, how do you know whether or not the metrics you're tracking is linking up towards making the right inferences?
2/
Just a quick reminder:
This thread 🧵 takes off from my recent article posted over my newsletter this week called "Over mountain peaks...! ⛰️"
Here's the link to it:
mgmtinc.substack.com/p/scaling-peaks
3/
Firstly metrics are those set of figures, numbers, stats that make sense to track against a set benchmark / success criteria in order to indicate that your product has a healthy growth rate.
But, here's the trouble with it.
Most times they aren't really a direct measure.
4/
When metrics are known to measure the value added to the users, we often use proxy metrics which are data points that represent the value of some (x) which could still be a valid & unambiguous indicator of that value added to the users indicate of positive growth.
5/
Lets take an example.
Consider a product whose vision is:
- "make online gifting simple"
Now, what's one metric that ought to matter to you here if you were the CEO?
Revenue? Right!?
- MRR, ARR are possibly your pets & make a lot of sense to track
6/
But, not to the PM / people heading the product team.
They would be looking for:
- something more meaningful & tangible
- easily trackable
- represents the usage of the product
- closely tied to & proportionally indicative of growth
- isn't gameable
7/
- one metric they could track is "active users per week"
ex: WAU (weekly active users)
And now, say you get a number, assume 5,500.
Cool! 😎
Does it tell you for sure that your product is headed in the right direction?
Well! No, not sure❗❓
8/
What's missing?
Well! As I see it 5,500 users are using my App.
Alright. But, here's the thing.
They may just be browsing gifts / packs / offers.
Don't you think there ought to be something more precise, something that'd indicate growth absolutely & confidently.
9/
When the users are getting onto the App & you see a northbound number on "active users in a week" it could represent "healthy engagement" but still end up falling short of representing growth unless:
- its tied to a goal
- an job / task / outcome users look to finish
10/
For that, you'd do well to tie it down to the sole purpose of your existence, your vision, your value proposition.
Recall the vision:
- the app helps people exchange gifts with ease
So, clubbing WAU & gifts we have:
- no. of weekly active users who send gifts to others
11/
Is that enough?
Wait! Does it make sense to track the value of gifts being sent?
- Most certainly!
So, you calculate the average value of the gifts sent per user per session.
ARPU - (average revenue per user) is given by:
Remember, the period in concern here is a week
12/
So, including it to the growth equation you now have:
- No. of active users who send a minimum of <#ARPU> gifts in a week
With this metric here you could surely track what matters to identify your primary growth contributor unanimously (aka NSM).
13/
Once you have access to this data, you could then analyze it further to understand behavioral patterns building an understanding of detailed user's choices, preferences which would all be great to feed to the algorithms in the back-end & optimize cutting down on cycle times.
14/
A major benefit of running analysis across cohorts is it could indicate a lot more than just growth.
Using it you could bucket users based on their spending curve & get those growth hacking teams to work ensuring that it could add more value to your users continuously.
15/
That's it folks!
If you enjoyed reading this, please:
1. Retweet the first tweet - it'd help me greatly!
2. Follow me @bgpinv for more on #productmanagement, #leadership & #culture.
3. Check out & subscribe to my Newsletter - mgmtinc.substack.com/
Thanks for reading 🙏
SUMMARY:
Finding the right set of metrics to track that are representative of growth in whole & identifying those primary contributors is the first step to scaling a product.
Without that, it could all feel like shooting in the dark. 💥🔫
Guru Prasad “TPW - The Product Web 🕸”
@BgpInv
Product Management (Fintech, B2B B2C SaaS PaaS); Leadership; Coined Solution State Model (SSM)-2014, Elevated Trapdoor-2014; Mentor & Advisor @ TPW;