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Product Metrics Sheet HelloPM Co 1737179833

The document outlines 15 important product metrics essential for understanding business performance, including Average Revenue Per User (ARPU), Customer Acquisition Cost (CAC), and Customer Lifetime Value (CLTV). It explains how to calculate each metric and their significance in assessing customer engagement, retention, and overall business health. Key metrics also include churn rate, conversion rate, and Net Promoter Score (NPS), which provide insights into customer behavior and satisfaction.

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11 views11 pages

Product Metrics Sheet HelloPM Co 1737179833

The document outlines 15 important product metrics essential for understanding business performance, including Average Revenue Per User (ARPU), Customer Acquisition Cost (CAC), and Customer Lifetime Value (CLTV). It explains how to calculate each metric and their significance in assessing customer engagement, retention, and overall business health. Key metrics also include churn rate, conversion rate, and Net Promoter Score (NPS), which provide insights into customer behavior and satisfaction.

Uploaded by

aditya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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15 Important

Product Metrics
Explained
Average revenue per user (ARPU) 1
How much revenue a company makes from a

c u s t o m e r i n a s p e c i fi e d p e r i o d o f t i m e ( m o s t l y

m o n t h l y o r y e a r l y ) .

For transactions or pay per use business models:

A R P U = N o . o f o r d e r * A v e r a g e o r d e r v a l u e .

F o r S A A S c o m p a n i e s :

Yearly ARPU = No. of months active in a year *

monthly cost of plan, or monthly recurring

r e v e n u e ( M R R ) / N o . o f a c t i v e c u s t o m e r s

hellopm.co
Cost to acquire a customer (CAC) 2
H o w m u c h a c o m p a n y s p e n d s t o

a c q u i r e a c u s t o m e r .

T h i s g e n e r a l l y i n c l u d e s m a r k e t i n g , s a l e s

a n d o t h e r c o s t s r e q u i r e d t o c o n v i n c e a c u s t o m e r .

B u s i n e s s e s w i t h l o w

“ a v e r a g e r e v e n u e p e r u s e r ” ( A R P U )

c a n n o t a ff o r d t o p a y a l o t t o a c q u i r e a n i n d i v i d u a l

c u s t o m e r , h e n c e t h e i r C A C

s h o u l d b e l o w . *

hellopm.co not a rule, some nuances are possible


Customer life time value (CLTV) 3
CLTV is the ARPU measured for the entire life-span

of the relation between customer and the product/

company.

Churn rate (Attrition rate): 4


The rate at which your business looses customers

o v e r a p e r i o d o f t i m e .

20% churn over 1 month means your product will

l o o s e 2 0 c u s t o m e r o u t o f e v e r y 1 0 0 a f t e r a m o n t h .

Churn rate = (Number of people who stop using

the product/Total number of people at the

b e g i n n i n g ) X 1 0 0

hellopm.co
Rate of conversion 5
The ratio of users numbers between two steps in

t h e u s e r j o u r n e y .

C o n v e r s i o n r a t e f r o m w e b s i t e t r a ffi c t o r e g i s t r a t i o n

w i l l b e 1 0 % i f o u t o f e v e r y

100 people who visit the website 10 are becoming

registered users.

Monthly reoccuring revenue - MRR: 6


The predictable amount of money a SAAS business

m a k e s i n a m o n t h f r o m i t s a c t i v e u s e r s .

Indicator of business size and health.

hellopm.co
Daily active users/Monthly active users

(DAU/MAU)
7
Number of users who do a core action in your

p r o d u c t i n a d a y / m o n t h .

O n w h a t s a p p 7 0 0 m i l l i o n u s e r s s e n d / r e c e i v e

a t l e a s t o n e m e s s a g e e v e r y d a y .

For google.com the number of users who search

atlease once everyday are DAU, for facebook the

number of users who visit the feed atleast ones a

day would be DAU.

hellopm.co
DAU/MAU ratio:
Indicator of stickiness of the product. High
8
engagement product (entertainment, social media,

messaging, news), have high DAU/MAU ratio.

Session duration: 9
How much time does a user spends in a session

with your product. Important for engagement

products in domains like social media (facebook)

a n d e n t e r t a i n e n t ( n e t fl i x , y o u t u b e ) .

Bounce rate/Drop off:


10
The percentage of people who go away from the

app-screen/website-app without doing the desired

action.

hellopm.co
Retention rate:
11
The percentage of customer who keep on using

y o u r p r o d u c t .

Retention rate = (Users at the end of the period -

User acquired during the period)/Users at the

b e g i n n i n g o f t h e p e r i o d


E x a m p l e :

→ Zerodha has 1000 paid users at the beginning of


t h e m o n t h ,

→ Has acquired 200 more users during the month,


a n d

→ The number of active users measured again at


t h e e n d o f t h e m o n t h w e r e 1 1 0 0

→ Retention in this case would be = (1100 -


2 0 0 ) / 1 0 0 0 = 9 0 %

hellopm.co
Number of user actions per session

12
S i g n i fi e s t h e e n g a g e m e n t d u r i n g a s e s s i o n .

Used in engagement centric products, number of

likes per session (Linkedin), number of video plays

per session (Youtube), number of ad clicks per

session (Facebook).

Net promoter score - NPS

13
A customer loyalty and satisfaction measurement

taken from asking customers how likely they are to

recommend your product or service to others on a

s c a l e o f 0 - 1 0 .

NPS = (% of people giving 9 or 10) - % of people

g i v i n g ( 0 t o 6 ) .

hellopm.co
Average order value - AOV

14
T h e a v e r a g e r e v e n u e m a d e f r o m o n e o r d e r .

Average order value on amazon = Total money

spend in a month/Total number of orders in a

month.

Click through rate - CTR

15
Ratio of number of people clicking a button to

number of visiting the screen where button is

p r e s e n t .

M u l t i p l e b y 1 0 0 t o m a k e i t a p e r c e n t a g e .

U s e d f r e q u e n t l y i n m e a s u r e e ff e c t i v e n e s s o f a d -

c r e a t i v e s e t c .

hellopm.co
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