The Most Important Product Metrics To Measure For Product Success

Measuring the right metrics, those that are actionable in nature, is essential to being data-driven and driving your product to success.

Nine out of ten founders I speak with want to be data-driven but end up monitoring vanity metrics. They struggle with leveraging these metrics to make decisions for their product.

Let's solve that.

I'll break this article into three sections:

1. Goal of the Metrics: What should the metrics achieve for the end user?
2. Framework for Actionable Metrics: How to develop metrics that are truly actionable.
3. Key Metrics to Track: The most important metrics you should be monitoring.

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Goal of the set of metrics

As an end user, when you look at a dashboard or a set of metrics, they must:

1. Convey an easy-to-understand story about the product in a few minutes.
2. Indicate what’s working and what’s not.
3. Help you identify gaps and form hypotheses for further improvement.

Coming up with actionable metrics

Creating actionable metrics can transform how you understand and guide your product's growth. Here’s a framework to help you develop metrics that provide clear and useful insights:

What is an Actionable Metric?

An actionable metric provides clear guidance on where to steer your product and helps identify gaps.

You can read a detailed article on the difference between actionable and vanity metrics here.

Framework

1. Break Down Your Product: Divide your product into manageable parts to make it easier to analyze. You can use the AAARRR funnel. I’ll get to this in the next section.
2. List Metrics for Each Part: Identify key metrics for each part to form a comprehensive story.
3. Define the Action: For each metric, determine how it will guide your actions individually.
4. Combine Metrics: Look for combinations of metrics that provide deeper insights.
5. Validate Relevance: If a metric or combination of metrics doesn’t have a clear action tied to it, drop it.

Note: You’ll be tempted to track numerous metrics, to get a detailed understanding of the product. It’s a trap - you’ll end up with nothing. Focus on the most impactful metrics to gain a comprehensive understanding of your product.

Key metrics to measure

We’ll use the AAARRR framework to list out the metrics.

For those who don’t know, here’s what it stands for:

Awareness – How many people visit your website, & how?

Acquisition – How many people register for your product?

Activation – How many people take the first important step or experience the AHA moment?

Retention – How many people return for a second/third/tenth time, or say how many people are engaged and what’s getting them to be engaged?

Revenue – How many people start paying? And how much do they pay?

Referral – How many people refer friends to your business?

Awareness metrics

• Unique user count on the landing page: This shows how many individual users visit your landing page, providing a measure of your reach.
• Unique user count on the landing page broken down by UTM source: This metric helps identify which marketing campaigns are driving traffic.
• Landing page → Sign-up click funnel: Tracks the user journey from visiting the landing page to clicking the sign-up button.
• Distribution of sign-up click CTA sources: Analyzes which calls to action (CTA) are most effective in driving users to the sign up page.
• Bounce rate (Landing page → session end without performing any meaningful actions): Indicates the percentage of visitors who leave the site without engaging, which can highlight issues with the landing page.
• Top-performing blogs: Identifies the blog posts that drive the most traffic, useful for content strategy.

Acquisition metrics

• Sign-up click → Signed-up funnel: Tracks the user journey from clicking sign-up to completing the registration.
  • Distribution of sign-up click CTA sources: Understand which CTAs are most effective in converting visitors to registered users.
• In-depth onboarding funnel: Tracks each step of the onboarding process to understand where users might drop off or face difficulties. This could include steps like account setup, profile completion, etc.
• Distribution of signed-up users by:
  • UTM source: Identifies which marketing channels are most effective in driving sign-ups.
  • Sign-up CTA: Analyzes which specific calls to action are most effective in driving sign-ups.

Activation metrics

X = Any action that defines an activated user for your product. It could be multiple actions too.

• ‘X’ unique user count: Number of users who complete the key action(s) that define activation.
• Sign-up → ‘X’ funnel: Tracks the user journey from sign-up to performing the activation action.
  • Distribution of time to conversion: Measures how long it takes for users to become activated.
• Distribution of users who perform 'X' vs. those who don’t by UTM source: Understands which channels drive users who are more likely to activate.
• Distribution of new users who do “X” action for the first time by “X”: If there are multiple activation actions, this shows the breakdown of users by each action - helpful to understand what’s the action that most users take post signing up.

Retention metrics

• Did sign up, came back & did ‘X’ retention report: Tracks users who signed up, returned, and performed the activation action again.
• Did “X”, came back & did ‘X’ retention report: Tracks users who performed the activation action and returned to do it again.
• ‘X’ frequency report in a week/month: Indicates how frequently users perform the activation action within a given time period.
• Stickiness ratio (DAU/MAU or WAU/MAU based on what frequency makes sense for your product): Measures the ratio of daily active users to monthly active users, indicating user engagement.
• % of users that come to the product (open app, or log in), that perform a meaningful action: Measures how many users who open the app or log in perform an action that indicates they received value from the product.
• Feature funnels for products with multi-step features: Tracks user progression through features to identify drop-off points & areas of improvement.
• Distribution of users by active, power, dormant, resurrected: Categorizes users based on their activity levels to identify engagement patterns and look at how your user base is distributed across these categories.

Revenue metrics

• Total revenue: The overall revenue generated by the product.
  • Breakdown by UTM, plan type: Understands revenue sources and performance of different pricing plans.
• Monthly revenue: Tracks revenue on a monthly basis to identify trends.
• Average revenue per user: Measures the average amount of revenue generated per user.
• % of paying users out of active users: The percentage of active users who convert to paying customers.
• Unique count of paying users: The total number of distinct paying users.
• Payment funnel: Tracks the user journey from landing on pricing page/ starting pricing funnel to making a payment.
  • Breakdown by the number of meaningful actions before payment: Analyzes different user cohorts based on the number of meaningful actions taken before payment, to identify how many actions have highest likelihood to conversions.
• Distribution of the number of meaningful actions a user performs before converting to a paid user: Helps understand the number of meaningful actions a user took, before converting to paying customers.

Referral metric

• Unique user count inviting a friend: Measures how many users invite friends to the product.
• % of active users that invite a friend: The percentage of active users who engage in referral activities.
• % of successful referrals, out of total referrals: The success rate of referral invitations.

Note: Please do not blindly follow the metrics. Use it as an inspiration, & design the ones that make sense for your product.

Hope this was helpful.

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