How to measure your product's success
Lessons behind unlocking success at Airbnb, TikTok, Spotify, Slack and more. How measuring your product will lead to success as a designer & product manager.
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Q: I launched a product. What metrics can help me measure how successful my product/design is?
Product designers and product managers are tasked with creating products that customers love and that drive business results.
But how do you define success for a product, and how do you measure it accurately? In the fast-paced world of consumer tech, these questions are more important than ever.
1. What is product success?
When it comes to defining success, you should focus on identifying a clear and measurable goal that aligns with your company’s mission. This goal should be:
Relevant to the product or service being offered
For example, a mobile app might define success as achieving a X number of daily active users within a Y time frame. Alternatively, a SaaS might define success as achieving a level of customer satisfaction or retention rate.
2. What are examples of success metrics?
Different companies will prioritize different metrics depending on their goals and business model. Here are some examples of success metrics that companies might use:
Customer acquisition: The number of new customers acquired within a specific time period.
Customer retention: The percentage of customers who continue to use a product or service over time.
Engagement: The frequency and depth of user interactions with a product or service.
Revenue: The amount of money generated from sales or other sources of income.
Net promoter score (NPS): A metric that measures customer loyalty and likelihood to recommend a product or service to others.
Lifetime value (LTV): The estimated value of a customer over the entire duration of their relationship with a company.
By focusing on these and other key metrics, you can gain valuable insights into their performance and make data-driven decisions to drive long-term growth and success.
3. What are ways to measure it?
Once you defined your goal, the next step is to measure progress toward that goal. This can be done using a variety of tools and techniques starting with:
Quantitative insights (Cohort retention, activation rate, etc)
Qualitative insights (User feedback, testing, surveys, etc)
(Quantitative) By tracking user behavior and engagement, you gain insights into how users are interacting with your product and where improvements can be made.
(Qualitative) Surveys and user testing are also effective ways to measure success, as they provide direct feedback from users on what they like and dislike.
How the fastest growing companies measure success for their products?
1. Airbnb (Nights booked)
One company that has excelled at defining and measuring success is Airbnb. When the company first launched, the founders focused on one key metric: the number of nights booked through the platform.
This was a clear and measurable goal that aligned with the company's mission of helping people "belong anywhere." As the company grew, so did its definition of success. Today, Airbnb looks at a range of metrics, including customer satisfaction, host retention, and revenue growth, to evaluate the success of its products.
2. TikTok (Engagement)
The social media platform, which allows users to create and share short-form videos, has experienced explosive growth over the past few years. One of the keys to its success has been its focus on engagement metrics, such as daily active users, time spent in the app, and shares per video.
By prioritizing these metrics, TikTok has been able to create a highly engaging platform that keeps users coming back for more.
3. Peloton (Active users & Churn)
The company's flagship product is its exercise bike, which is equipped with a screen that allows users to participate in live and on-demand fitness classes.
Peloton's success is measured primarily by two metrics: monthly active users and monthly churn rate. The company has set ambitious targets for these metrics, and has been able to consistently meet or exceed them, which has helped drive its rapid growth.
4. Slack (Messages per day)
The company's success is measured primarily by engagement metrics, such as daily active users and time spent in the app, as well as customer retention and revenue growth.
One key metric that Slack uses to measure success is the number of messages sent per user per day, which reflects the platform's value to facilitate productive communication and collaboration.
5. Spotify (Subscriber retention & revenue)
Spotify is a music streaming household name. The company's success is measured primarily by two metrics: monthly active users and monthly premium subscribers.
These metrics reflect Spotify's ability to attract and retain users, as well as its ability to monetize its user base. Spotify also uses engagement metrics, such as time spent listening and number of songs streamed, to evaluate the success of its product and improve the UX.
To have a clear and measurable definition of success.
To regularly evaluate and adjust your definition of success as your product grows and evolves.
To focus on metrics that are aligned with your product's value proposition and that drive long-term business success.
This topic is a critical challenge for product designers and product managers in fast-growing companies. By studying others, we can learn valuable lessons about how to set clear and measurable goals, prioritize the right metrics, and drive long-term growth and success.
If you’ve got a story of a product going through this phase, I’d love to hear it 👇
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Felix from ADPList
Curious, what other interesting ways/stories companies are measuring success? (Anyone from Netflix - I heard proxies work very well there)!