The Product Way

f you were to ask someone about the characteristics of an entrepreneur you’ll probably hear words like risk taker, passionate, leader, self-motivated, and goal-oriented. And while all of these characteristics might be true, they all focus on the conceptual side and not the functional role of an entrepreneur. 

An entrepreneur is a product manager. What is the role of a product manager? Product managers lead products to success and are responsible for improving them. It’s your job to see projects all the way through and successfully. When I started my first company Rewardance I quickly learned that being passionate is one thing, but execution is another.

In a startup you are the product manager. In the same light, product managers have to adopt an entrepreneurial mindset. Leading products from inception to finished and intangible to tangible. They have to be enthused about designing and building products that their users love.

They are not only driven by innovation, but a passion for accomplishing clear objectives and measurements of performance and success. What metrics should product managers track?

For those future product managers there are tons of metrics a company might be tracking, but as a product manager it’s your job to find the best metrics for your organization and why the organization should be tracking them.

Metrics are numbers or measurements that describe what's going on with your product. There are five tiers of metrics I’ve grown to understand that product managers should be focusing on. These five key areas will help you make better products and better assist the organization you represent. ‍

Revenue‍

This one should come as no surprise, tracking how your products are doing financially and the ROI with each of your products is a metric you should be tracking. Are our efforts paying off? Are we wasting our time? Do we need to adjust? These are some of the questions you should be asking yourself as the product manager. 

What is the lifetime value of each of your customers? In other words, how much revenue does each of your customers bring in on a weekly, monthly, or annual basis? Which products make the most revenue and why? What is the average order size each customer has? These are important to know because certain times of the year can skew our judgement and data. 

For example, during the holidays sales tend to spike significantly so you wouldn’t want to present skewed data to the leaders of your organization. It’s good to get an understanding of how much revenue your customers generate normally and when the holidays do come. ‍

Growth & Activation‍

Growth and activation are especially important metrics for startups. Many investors tend to look at these metrics closely. However, even for seasoned company’s it’s important to track how your products are growing over time. Health and beauty companies would definitely like to understand which SKU’s from their new product lines are doing well and which ones aren’t. 

What is the total number of users month over month? How many new users? What source are they coming from? How many activated users? Activated users simply mean they are actually performing acts with your product. 

That is, they didn't just download your app, but performed actions within it.

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"In the early days of Rewardance I made the mistake of thinking total users add a lot of value, but it’s actually activated users. It’s one thing for customers to sign-up for your service, it’s another to get them to actually use it." - John Cornelius McCaskill

Retention ‍

How many times do you like visiting your favorite restaurant or store? It always feels good to grab that burger that is always hitting doesn’t it? Well you're called a retained user. These are customers who use your product all the time. As a product manager you want to track how many people are coming back to use your product. 

Similar to activated users, retained users not only perform actions, but are frequently doing so. You can say these are the super users of your product. Snow, sleet, or hail they’re going to use your product. This is why it’s key to track these users because in a lot of businesses these are the users who keep the businesses in business. 

You also want to track something called resurrected users. These are users who haven’t used your product for a while, maybe months, and they come back to you after you notify them. Maybe you announce a new deal or feature and they return and start using your product again. ‍

Engagement‍

This one is similar to growth and activation, but focuses more on specific behaviors of your users. These actions can vary from company to company, but have a high focus on quality and accuracy. Take YouTube, when a user watches a video on their platform for a certain amount of time, let's say 30 seconds to a minute, they consider that a success and an engaged user. 

This helps advertisers understand how many viewers or “engaged viewers” could potentially watch their ads. Tracking this metric helps YouTube bring in more advertisers with data on their engaged users. 

Engagement metrics can be many things, but make sure that it makes sense to track. Tracking how many users downloaded your app as an engagement metric wouldn’t be that beneficial if 80% of them are not using it. ‍

User happiness‍

This metric is a tricky and funny one to me. While user happiness is definitely important, I learned that unhappy customers still often use your products. I’m not joking either. It’s similar to how people who can’t stand or hate a television host, but still watch them.

How many people hate their internet service provider, but still have to use them? One reason is because there aren’t any other options, and another could be that they don’t want to learn an entirely new system like IOS to Android and vice versa.  

However, it’s still important to gage how happy your users are. Happy customers tell their friends about your product. These are normally called NPS or net promoter score. This is a score that asks customers their likelihood to recommend your product or service to a friend or colleague.   

If you’re in the app space, the app store is your safe haven. You can get a ton of data and gouge your user happiness by the reviews and ratings that your users leave. Tracking user happiness is not always easy, but is very important. Tracking customer complaints is another good metric to measure your users happiness. ‍

Final Thought‍

Being a product manager is a rewarding and challenging career. It’s something I’ve truly grown to love. For future entrepreneurs, study product management. You won’t regret it. 

As for future product managers, take these five metrics and dive deeper into them and truly understand how you can help your organization soar to higher heights.

You solve real problems and issues your users are facing. Imagine never having a drive-thru, bar codes, or even shoes. Product managers are involved with seeing all of these products through. Build things you truly want to build. Be the one stakeholders come to with assurance. 

Building one product that truly helps your organization succeed has a certain elation that I can only implore you all to go out and feel for yourselves.