Product metrics can be overwhelming. There are hundreds of things that you can track, from the high-level to the nitty-gritty. But if you monitor too much you can easily lose a sense of what’s important.
If you’re getting started with your first product metrics, this post can provide you with a framework for measuring the right things and keeping your focus on what matters most for your product.
In my post Choosing your key metrics, I shared considerations to help you evaluate the quality of your metrics. In this post, I’ll share a practical starting point for you to decide which metrics to focus on for your product.
I call this a starting point because there’s no one-size-fits-all model for all product types. But if you haven’t defined your key product metrics yet then this framework can help you quickly get started. And then you can adjust as-needed to fit your situation.
A Product leader should be able to regularly review a few key metrics to see how their product is performing. It's important to distinguish these metrics from short-term goals like OKRs, which change periodically and don't offer the historical overview needed to gauge overall product performance. Additionally, I'm not referring to Product team satisfaction, which can be evaluated using generalized team satisfaction tools and techniques.
With the Product Metrics Pyramid, I aim for a longer term outlook on the product. Over time, as the product evolves, individual metrics may be added and removed from the pyramid. But each metric should have at least a 1-year lifetime or else it loses the benefit of focus that can be provided to the product Product leader and to their team.
I’ve used the model of a pyramid because it promotes a hierarchy and focus. When it comes to metrics for your product or overall business, there is no shortage of what you can pay attention to, which can easily create analysis paralysis as to which metrics should be focused on. Therefore, with business metrics, its important to apply rigor towards which metrics consume your attention.
"It is not enough to be industrious; so are the ants. What are you industrious about?" — Henry David Thoreau, Letter to H.G.O. Blake on November 16, 1857
Your North Star is the single product metric that most drives success for your business. The chosen metric is so vital to the business's success that it is determined not just by the Product team, but also in close collaboration with the overall leadership team. And if you’re at a Product-led company, which Justin Bauer, CPO of Amplitude, describes as one “where Product is the competitive differentiator”, then your North Star will be very similar — if not identical — to the main metric used by other teams.
"The North Star Metric helps us unify all of our stories so that they relate and become part of the same story. As a result, we find meaning in our work as we contribute to this shared story." — Sam Ahn, 7 Things Every Product Leader Should Know About the North Star Metric
For some companies, the #1 product metric may be intuitively clear. For others, it may be easy to decide on the top few candidates but then difficult to choose just one. If you have trouble narrowing, then the concept of a North Star is especially valuable for you because it will force a deliberate and thoughtful decision, with tough tradeoff decisions between customer segments, use cases, or other dimensions. But you need this both for your own clarity but also to save your team from having to constantly make their own (and likely inconsistent) evaluation each time they encounter a tradeoff.
As an example from the early days of Moss, when the extent of our product could be described a corporate credit card, it was obvious to see that card spend was the right direction for the North Star. It was the alignment of user-value and business-value: customers use the Moss card instead of other options because they believe it is the best way to pay, and Moss gets a significant share of it’s revenue when purchases are made the credit cards.
But card spend is not specific enough; it can refer to the count of card transactions or the total dollar volume spent. It was clear that we wanted to maximize both, but which was the most important? There were good arguments for each option, but in the end the spend volume metric was chosen since it was determined to best aligned with driving business success. The decision was instrumental. Just think of the kinds of product ideas you might come up with and prioritize differently if your #1 product metric was the count of transactions vs. dollar volume.
Once you’ve decided on your North Star, you should then help your team keep this number top of mind whenever you can. At Moss, all teammates could view a real-time dashboard of our spend volume, announcements were shared on Slack when new spend volume milestones were hit, and our CEO spent time during all hands meetings to share progress and activities that were happening to drive spend volume.