With the margin between success and failure ever-so slim, it is important as a product manager that you are data-driven. Data is the justification for your roadmap, it is the justification for further development, or abandonment. Being able to quantify your product with metrics, provides you with the measurement ammunition for articulating the viability of your product to stakeholders.
So what metrics should you be looking at, as a product manager, to measure your progress? Well the answer is, most teams have their own carved out mother of all metrics (MoaM), so there isn’t one solution fits all. Having said that, these are My Top 5 Metrics, as a Product Manager.
1. Customer Acquisition Cost (CAC)
This refers to an estimated cost needed to acquire every new customer, derived from various initiatives. For example, if you spent $5k in promoting your product and obtain 5 new customers, the CAC is $1000 per customer.
According to Aha.io, this metric is best correlated with the Annual Contract Value (ACV) and Customer Lifetime Value (CLV) to assert whether your customer acquisition model is optimally performing.
New Monthly Recurring Revenue (NMRR)
This measures new customers, and the revenue they bring in each month, sans existing customer revenues, including upgrades to existing customers. This measurement is great at letting you track new revenue over time, the impact and size of new customers to your product.
As opposed to Add-on MRR, which measures new monthly recurring revenue existing customers bring you, such as upgrades to their subscriptions, new products purchased as a returning customer. This is important because it assesses your engagement to retain existing customers.
Churn measures customer or revenue loss over a period of time. It is most commonly used to track subscriptions lost, or revenue from a subscription, or active users, over a duration. You measure this, by “dividing the number of customers lost in a month by the prior month’s total.
4. Lifetime Value (LTV)
This measures the estimated net revenue of a customer over time, the worthiness if your relationship with that customer. You measure this metric by multiplying the average revenue per month by the average lifetime of the customer, in months.