This plan focuses on defining and utilizing key metrics for effective product management. Customer Satisfaction Score (CSAT) reveals how happy customers are with a product, which is crucial for maintaining a loyal customer base. Net Promoter Score (NPS) measures the likelihood that customers will recommend the product, indicating customer loyalty and satisfaction.
Monthly Recurring Revenue (MRR) is essential to understand consistent income, helping in budget planning and forecasting. Customer Acquisition Cost (CAC) outlines the expense involved in acquiring new customers, aiding in evaluating marketing efficiency. Finally, Customer Lifetime Value (CLTV) measures long-term revenue potential per customer, important for assessing the return on investment for customer acquisition efforts.
Top 5 metrics for Product Management
1. Customer Satisfaction Score (CSAT)
Measures the level of satisfaction customers have with a product or service, often collected via surveys at the end of a transaction or service interaction. Calculated as (Number of Satisfied Customers / Total Number of Responses) * 100.
What good looks like for this metric: 75-85%
How to improve this metric:- Gather regular customer feedback
- Resolve customer complaints promptly
- Enhance product features based on feedback
- Train customer support teams
- Improve user experience design
2. Net Promoter Score (NPS)
Assesses customer loyalty by asking how likely customers are to recommend the product to others. Calculated as percentage of promoters minus percentage of detractors.
What good looks like for this metric: 30-50
How to improve this metric:- Engage with promoters for referrals
- Address issues raised by detractors
- Implement a customer loyalty program
- Improve overall product quality
- Personalise customer interactions
3. Monthly Recurring Revenue (MRR)
The total predictable revenue that a business expects to make every month. Calculated by summing up the recurring revenue from all customers in a month.
What good looks like for this metric: Varies widely by industry
How to improve this metric:- Upsell existing customers
- Introduce tiered pricing models
- Reduce customer churn
- Expand market reach
- Improve the onboarding process
4. Customer Acquisition Cost (CAC)
The cost associated with acquiring a new customer, calculated by dividing the total marketing and sales expenses by the number of new customers acquired.
What good looks like for this metric: $10-$200
How to improve this metric:- Optimise marketing spend
- Increase organic growth channels
- Improve lead conversion rates
- Enhance targeting strategies
- Strengthen brand awareness
5. Customer Lifetime Value (CLTV)
The total revenue a business expects from a customer over their lifetime. Calculated by multiplying the average purchase value, purchase frequency, and customer lifespan.
What good looks like for this metric: 3-5x CAC
How to improve this metric:- Enhance customer retention efforts
- Increase average order value
- Encourage repeat purchases
- Improve product quality and features
- Develop customer loyalty programs
How to track Product Management metrics
It's one thing to have a plan, it's another to stick to it. We hope that the examples above will help you get started with your own strategy, but we also know that it's easy to get lost in the day-to-day effort.
That's why we built Tability: to help you track your progress, keep your team aligned, and make sure you're always moving in the right direction.
Give it a try and see how it can help you bring accountability to your metrics.
