Metrics are essential for any task or goal at hand for anyone. For example, be it a health goal where you measure weight loss or calorie tracking, it becomes important in order to quantify or track meaningful progress.

All the more, for a product manager who is tasked with a product, feature or any other offering, it becomes crucial to identify what you seek to measure. This could include any facet from identification of growth of users, revenue generation, engagement in any form or increase in operational efficiency. Aspiring product managers should also take note that bent towards the KPIs/metrics is something that companies look for and hence it is essential to have a metric first approach in your solution of any problems.

Why are metrics important?

Metrics give a real picture for product evaluation. It is easier to track your product and give a relevant picture to your stakeholders. The data helps us

1. Understand what problems are there and what needs to be solved and prioritized
2. Get feedback from the users on the product features that need to be developed
3. Eases communication for anything product related as numbers give a real picture

A common framework for metrics- AARRR

There are several commonly used metrics for product evaluation depending on where you are in the product journey. Here the frameworks help in the assessment of metrics in an easy quick-to-remember format. We will discuss the Pirates framework(AARRR) framework here that can help give you a quick start into product evaluation. AARRR is an acronym that breaks down the metrics into Acquisition, Activation, Retention, Referral, and Revenue.

1. Acquisition: This metric helps us understand how people are discovering our product or company. This could be through organic leads visits on the application. Or this could be people coming over and staying for over 1 minute.
2. Activation: This checks whether the user is taking the intended action. For example, signing up for weekly updates in case of a newsletter or signing up for a free trial.
3. Retention: Are the activated users engaging with the product after they have signed up? This could include whether they are reading our newsletter after the signup every month or visiting apps frequently after the first purchase.
4. Referral: Here the people tell other potential customers about the product. This could be tough to track sometimes because this could happen in multiple ways. But some commonly used ways are checking for sharing, or referring through the application(if your app has the provision).
5. Revenue: This is the finance metric in order to check if they are willing to pay. This could be checked through minimum revenue generation or revenue that exceeds the customer acquisition cost.

What metrics are usually used?

In the previous section, we talked about a commonly used metrics framework. Now let’s jump straight into the game where we talk about some commonly used metrics which we need to be mindful of while creating a feature or a product. Note that all the metrics stated below fall into the AARRR framework itself.

1. Daily Active Users(DAUs): This states the Daily Active Users(DAUs) and the Monthly Active Users(MAUs) on our application. This indicates the health of our application and better features would eventually lead to a growth in these numbers.
2. Customer conversion rate: It is the conversion of customers for the intended task. This could vary amongst features and products. For instance, uploading photos, sharing the application or signing up for freemium could be a few examples. 
3. Churn and retention rate: It is the drop-off or churn rate that helps us understand what section of users do not return. It is especially important to not have a leaky bucket and all we focus on is customer acquisition.
4. NPS score: It is the Net Promoter Score(NPS) that helps us understand customer satisfaction. It is simply asking the customer how likely are they to refer our products on a scale of 1 to 10. Usually, people who rank 9 or 10 here are the promoters who are likely to further spread the good word about the product.
5. Customer Acquisition Cost(CAC): This indicates how much it costs to acquire a customer on our platform. CAC should not be more than CLTVs over an extended period of time else we shall be heading into the product’s doom.
6. Customer Lifetime Value(CLTV): CLTV translates to how much value financially a user can generate. It is calculated as (average order value * order frequency * average lifetime).
7. Monthly Recurring Revenue(MRR): MRR and Annual Recurring Revenue(ARR) are the income we expect to achieve. This number marks the financial value our business is bringing in.

How to manage the data?

Now that we have gathered all the data, it becomes equally important to manage this data effectively

1. Organize the data that is collected and centralize it so that the analysis across teams becomes easier
2. Visualize the data: Using tools and techniques that make the metrics easy to identify and track. You can leverage statistical analysis and data visualization for the same.
3. Analyze and share your data: Share the data with the other stakeholders so that they can everyone can make data-enabled decisions.