Think you just can use any metric to measure your product’s performance? Think again. PLG companies need to use product analytics that combines growth and user experience. Here’s how.

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Have you recently changed from a sales-led to a product-led model and are still using the same metrics to analyze your products?

If you have not yet switched to a PLG strategy:  What are you waiting for to implement PLG? Learn more about the product-led strategy in our recent article.

If you have already started using a product-led growth methodology, but are still looking at the same metrics: join us in this article to review your approach.

Not every sales-led metric is right to measure your product’s performance. Product teams need to focus on a few specific metrics to analyze and improve the features of the product. 

Why product analytics matter? 

Even if you are just starting your business or if you have been in the market for 20 years, you must collect all the data you can about your product and your users.

Data is the foundation stone that will allow you to build the rest of the product and the strategies for your teams to maintain and improve it.

With the analysis of the product data, you will be able to fully understand how your users use your product, which functions are the ones that hook them the most or which they dislike and make them drop off the flow.

Trying to improve your products without data is the worst thing you can do. One of the cardinal sins of product teams is often assuming they think they know something about users rather than verifying it.

In summary, product analytics provide us with revelations about the true behaviors of users and not simply those that we wish, or want, to validate to corroborate our hypotheses.

But another very important mistake made by companies is using the same metrics that are used in marketing or sales to measure the performance of technological applications or products.

Product analytics you need to start prioritizing 

Among all the metrics that exist to observe, product teams must prioritize some of these in order to know that they are going the right way.

Free to pay

To see how users go from using free apps to paying for them (which is the main goal), we can look at the engagement metric.

Engagement allows us to look for signs of a deeper commitment to the product. This is not just using features, but also for how much time it is used (minutes, hours, days),  and the speed and ease with which an action is completed within the circuit.

Music apps, for example, could measure the number of minutes users listen to songs during a period of time. 

But for the engagement measurement to be relevant, you must face it against the number of active users currently in the application. It is not the same to have 50 minutes of song listening time divided by 5 users than divided by 2 users.

Sign in to conversion

To improve the percentage of visitors who immerse themselves in the product trial, we must look at the activation metrics.

Activation metrics measure when a new user becomes an active user. For example, if you have a music app your conversion goal will be that the person who signed up listens to 5 songs or makes a playlist in a specific period of time. 

These kinds of actions are key to determining that your visitor is now a user who will continue using the app’s features in the long-term. 

This metric allows you to know the growth of the user better than just counting the number of new users who joined your app. 

Occasional to active user 

Your users signed up, activated the product, used it once or twice. That’s great, but what happens next?

To measure the next phase you can use the “active users” metric.

Your users can be considered “active users” when they have found value in the product you offer and have used it continuously in the short term.

If your product is not delivering value to users, you will clearly see a low percentage of active users.

In the event that your activation metrics are good but your active use metrics are not, it is possible that your product is attractive but is missing something in the design or in the way in which you display the content.

You can use different tools to find out why this is happening. Palabra was built to make it easier to see how users move towards value. Whether you use our tool or not, we highly recommend you look into the steps users need to take towards a desired outcome, and find where most of them are falling out.

It’s also advisable to look at the retention metric

Maybe you need to analyze which is your engaging feature, which is your star product, and which are the issues that scare your users away. 

The retention metric is the number of users you retain over a period of time. This is one of the most important metrics when you have a subscription-based business. Even if this is not your case, retention is a way to maintain your business profitable, given that getting new users is far more expensive than maintaining them. 

Keeping your retention metrics up to date will ensure the possibility of performing the necessary iterations to increase the success of your product

Reach

Don’t forget to watch your total number of users. 

It would let you see the total number of people who pass through your app (either active users or not). 

This metric allows you to define the percentage of active users and estimate the maximum capacity of active users that you can obtain given a certain period of time. If your reach is high, but your other metrics are low, you need to revisit your product and your user flows to find what’s going on. 

Final thoughts 

As you can see, when we work with technological products, the metrics that we must observe may be similar to some that we have already been using, but with a different approach.

Product teams should focus on improving usability so that it has a positive impact on the rest of the metrics, and not focus so much on profit or increasing the number of users just because.

Offer your team much more than just Google Analytics. Schedule a demo of Palabra and let them see for themselves the value it can bring to their workflow.