How to Measure Product Success
In this article, you will understand what exactly product success is and learn how to have a successful product.
Every company wants to have a successful product. But what is meant by success here? And more importantly, what do you need to pay attention to achieve this product success that you are aiming for?
In this article, you will understand what exactly product success is and learn how to have a successful product. This way, you can determine strategies that will enable you to answer yes to these questions confidently about your product.
So let’s start by explaining in more detail what product success is.
What is product success?
Product success is generally related to users finding value in that product and gaining a solid place in the market. If a product:
- is suited to the market
- meets the needs and expectations of its users
- is bought and used frequently by users
- has a low churn rate
that product can be considered successful. That said, each product is different, and the definition of success may change accordingly. Later in this article, we’ll be talking about what success means for different products.
Does a successful product launch strategy equate a successful product?
A product launch is one of the most critical stages for product success. At this stage, your users are introduced to the product for the first time. A poorly planned product launch can leave prospects confused about what your product actually does and might even leave them with inadequate information that may influence their decision negatively. This is why planning your product launch beforehand is critical to increase your chances of your product’s success.
But what if you got through this process successfully? Does this mean that your product will definitely be successful?
Unfortunately, this isn’t the case either. A successful product launch doesn’t necessitate product success. In fact, to increase the chances of product success, you’ll have to
- Gather product feedback from your customers
- Make improvements based on customer feedback
- Identify strategies to achieve product-market fit and grow your customer base.
No matter how great your product launch has been, failing to make improvements based on changing user requirements and market conditions may come in the way of your product’s success.
How to measure product success
You’ve designed a product, launched it, and think things are going well. But how can you be sure of this? Or how can you determine what the problem is when things go wrong at some point?
With product success metrics, of course!
Metrics and KPIs highlight a lot of valuable information about your product. Here are some key metrics to help you measure product success:
The average revenue per user (ARPU)
As the name suggests, average revenue per user indicates the average revenue you will earn per each customer that is using your product. You can calculate ARPU monthly or annually.
ARPU is one of the most valuable metrics, especially if you evaluate your product’s success over the profitability of the product. It also allows you to compare your product to that of your competitors and see how revenue has increased over time.
Monthly recurring revenue (MRR)
Monthly recurring revenue is the average total revenue you expect to earn from your product in a month. MRR is a helpful product success metric in SaaS companies, as revenue and expenses fluctuate monthly.
You can calculate your monthly recurring revenue by multiplying your monthly user count by ARPU.
Customer acquisition cost (CAC)
Customer acquisition cost tells you how much it will cost to acquire a new customer. In other words, it helps you determine how much you spend on selling your product.
Knowing your customer acquisition cost is vital in determining when to change pricing. It also helps you manage your marketing budget effectively.
Active user percentage (DAU / MAU)
The number of active users shows how many people actively use your product daily or monthly. The ratio of your daily active users (DAU) to monthly active users (MAU) is needed to determine whether interest in your product has changed. It also assists in forecasting and decision-making regarding product development.
Traffic
In some cases, just focusing on daily or monthly users may not be enough. In addition, you need to keep track of both the amount and the quality of the traffic you’re getting.
Traffic allows you to see how many people visit your website. This metric is divided into paid and organic. Thus, it reveals whether users found your website through a search or visited it from a paid source.
MQLs and SQLs are good indicators of the quality of your traffic. This shows how many of your potential customers are ready to buy. The more users that pass to the SQL stage, the better quality traffic you have.
Churn rate
Churn rate refers to the percentage of users who stop using your product or cancel their subscription within a period. This ratio can give you an idea about customer satisfaction.
Net promoter score (NPS)
The net promoter score is a metric that helps you measure your customers’ overall satisfaction with your product. To determine this, you must first create an NPS survey. This survey asks customers to rate your product or feature out of 10. If a client gives you a 9 or 10, that client is the promoter. Customers who rate you between 0 and 6 are detractors.
You find your NPS ratio by subtracting the percentage of detractors from the percentage of promoters. This ratio can vary between -100 and +100.
Does success look the same for every product?
Every product is different. They aim to solve various problems and are aimed at different markets. So, the definition of success for each product is different. Naturally, the metrics that define success also differ product to product.
For example, if your company considers revenue to be the major indicator of product success, you should probably focus on ARPU. On the other hand, if your company considers a successful product to be one product that your users will be most satisfied with, your key metrics will probably be NPS and churn rate.
Using customer feedback to evaluate product success
User satisfaction is directly linked to the success of your product. That’s why listening to customer feedback all the way from the time your product is launched is vital for product success.
Let’s take a look at some of the areas in which gathering feedback can help you:
#1 Understanding product-market fit
Product-market fit is when your product aligns with the market. In other words, the right product-market fit means you have the right value proposition for the right target audience. If your product does not solve the needs of the target market, it has little chance of being successful in the market.
So how do you know who your customers are and what they need?
The answer is simple: with the feedback you collect regularly. Feedback is one of the best ways to understand what value customers expect to find in your product. You can increase your chances of product success by adjusting your value proposition in light of this feedback.
#2 Testing new concepts
According to the Harvard Business Review, products that involve customers in the design are 20% more successful.
SaaS and digital products are often for a specific customer segment. That’s why getting to know customers and giving them what they want is very important. To do this, you need to be able to answer questions such as:
- What kind of solutions are your customers looking for?
- Does the current product solve their problems most effectively?
Also, there is another element that you need to pay attention to for success: Competition.
- Is there a similar product on the market?
- What makes your product different from others (unique selling proposition)?
Customer feedback enables you to make necessary changes before your prototype is launched. In addition, thanks to the feedback, you will find the opportunity to test the features you plan to add to your product beforehand.
When you incorporate what you learn from your potential customers, the product is more likely to be successful.
#3 Adapting the product constantly
Your product development and marketing teams have a certain goal in mind with regards to the product. As a result, they can sometimes overlook flaws. However, as customers interact with the final product, they notice issues that may not be apparent to those deeply involved in creating and selling the product. Customer feedback is excellent for catching these issues as soon as possible.
Since market trends and customers’ expectations are constantly changing, you need to constantly rely on customer feedback to improve your product. A streamlined system of customer feedback can help you quickly adapt to these changes, allowing you to reduce risks and have a more successful product.
What role does product management play in a successful product?
Product management is deeply tied to all the stages of the product development lifecycle. Effective product management ensures that the product adds value and that the company can maximize revenue from the product. Thus, product management has a fundamental role in product success.
So, what roles does product management play in ensuring product success? Let’s take a look at the benefits it brings to the table.
Improves the customer experience
Product management involves considering the target audience’s needs and requirements throughout the product development stages. It enables the product to be developed within the framework of these features, thus improving the customer experience.
A better customer experience means higher customer satisfaction. Customers feel valued and continue to buy the product. This will increase your retention rate and your product success.
Improves resource allocation
Product management assists product development by identifying features essential to the product and defining priorities. With the data provided by product management metrics and KPIs, you can determine strategies to maximize success by taking the least risk.
Promotes collaboration between teams
Product managers also contribute to product success by promoting collaboration between teams among themselves and other departments. Teams shouldn’t disconnect from each other for a successful product management process. Each team is part of the big picture. They must be aware of their role in this picture for product success.
When everyone works together, you can launch your products faster and more harmoniously. You can also collect and process feedback more quickly.
Measure product success with HockeyStack
You need to consider many factors for product success: Dozens of metrics and KPIs, customer feedback that you need to collect constantly, goals that you need to set based on these…
Need to streamline all of your product success efforts? HockeyStack can help! HockeyStack allows you to easily manage all these processes you need for product success on a single platform. Let’s take a closer look at how it does that:
Easy-to-use dashboards
Examining all the metrics required for product success together allows you to get the best insights. HockeyStack lets you combine all these metrics in seconds with easy-to-use and easy-to-understand dashboards.
If you’re new to creating dashboards and have no idea where to start, don’t worry! HockeyStack offers you many different templates that you can use. You can choose the one that best fits your needs from these templates and customize them as needed.
Surveys
In the article, I repeatedly mentioned how important customer feedback is for product success. And what’s the easiest way to collect user feedback? Surveys, of course!
HockeyStack helps you create the right surveys for any situation. This way, you can collect feedback for every product lifecycle stage. In addition, you can use templates in surveys, just like in dashboards. This makes your job much easier.
With HockeyStack, you can also analyze survey results in detail as if you were analyzing a funnel. You can also evaluate the answers of each segment separately. In this way, you can better examine the expectations and feedback of your users. You can also create more meaningful insights and maximize the chances of product success.
Convinced of the benefits? Check out our live demo or get a free trial to try HockeyStack for yourself!
FAQ
How do you define product success?
The definition of product success varies from industry to industry and from product to product. However, in general terms, a product can be successful if it has solutions that add value to users and gain a solid place in the market.
What tools can be used to measure the success of a product?
An analytics tool can be used to measure product success and track key metrics. A survey tool will also come in handy to collect user feedback.
