The 5 Most Important Product Metrics Every PM Should Know

Why Tracking Product Metrics Is Important

In product management, data-driven decision-making is critical to building and refining successful products. Product metrics help product managers (PMs) gauge user behavior, identify trends, and make informed choices to improve engagement, retention, and revenue. Without tracking key product management metrics, PMs risk making decisions based on assumptions rather than concrete insights.

The right metrics provide:

• User insights – Understanding how customers interact with the product.
• Performance tracking – Measuring product success over time.
• Decision support – Helping teams prioritize features and improvements.
• Business alignment – Ensuring product goals align with overall company objectives.

The 5 Key Product Metrics Every PM Should Track

While many metrics exist, the following five are fundamental to evaluating a product's health and success:

1. DAU/WAU/MAU (Daily, Weekly, Monthly Active Users)

These metrics measure user engagement by tracking how many unique users interact with a product over different time frames.

• DAU (Daily Active Users): Users who engage with the product daily.
• WAU (Weekly Active Users): Users who engage at least once a week.
• MAU (Monthly Active Users): Users who engage at least once a month.

Why It Matters:

• Indicates product stickiness and overall engagement trends.
• Helps PMs determine if users are consistently returning.
• Important for SaaS, mobile apps, and consumer platforms.

2. Retention Rate

Retention rate measures how many users continue using a product over time. A strong retention rate signifies a valuable product that keeps users coming back.

How to Calculate:

Why It Matters:

• Reflects product value and long-term user satisfaction.
• Lower retention rates can indicate usability or engagement issues.
• Critical for SaaS and subscription-based businesses.

3. Churn Rate

Churn rate measures the percentage of users who stop using the product over a given period. High churn rates can indicate problems with user experience, product-market fit, or customer satisfaction.

How to Calculate:

Why It Matters:

• Directly impacts revenue and growth.
• Helps identify at-risk customers and improve retention strategies.
• Essential for SaaS businesses and subscription models.

Know more about churn rate

4. Net Promoter Score (NPS)

NPS is a metric that assesses customer satisfaction and loyalty by asking users how likely they are to recommend the product.

How to Measure: Users rate their likelihood on a scale of 0-10:

• Promoters (9-10): Enthusiastic users who will advocate for the product.
• Passives (7-8): Satisfied but not enthusiastic users.
• Detractors (0-6): Unhappy users who may churn or leave negative feedback.

Why It Matters:

• Strong predictor of customer loyalty and organic growth.
• Helps PMs identify strengths and weaknesses in user experience.
• Provides actionable feedback to improve the product.

Know more about Net Promoter Score (NPS)

5. Conversion Rate

Conversion rate measures the percentage of users who complete a desired action, such as signing up, purchasing a subscription, or upgrading to a paid plan.

How to Calculate:

Why It Matters:

• Indicates how well the product converts users into paying customers.
• Helps optimize user journeys and reduce friction in the funnel.
• Directly tied to revenue growth and profitability.

How to Measure and Interpret Each Metric

Accurate tracking and analysis of these key product management metrics require the right tools and methodologies:

• Product Analytics Platforms: Google Analytics, Mixpanel, Amplitude.
• Customer Feedback & Surveys: NPS surveys, in-app feedback.
• CRM & Retention Tools: HubSpot, Salesforce, Customer.io.

Tips for Interpretation:

• Compare trends over time rather than relying on single data points.
• Segment users by behavior, demographics, and acquisition channels.
• Identify correlations between different metrics (e.g., retention and NPS).

Real-World Examples of These Metrics in Action

Example 1: A SaaS Company Tracking Retention

A SaaS business notices that its DAU is increasing, but retention rates are declining. By analyzing user cohorts, they discover a poor onboarding experience is leading to early churn. They implement guided onboarding and see a 15% improvement in retention.

Example 2: An E-Commerce Platform Improving Conversion Rate

An e-commerce site has a high bounce rate on checkout pages. By A/B testing a streamlined checkout flow, they reduce friction and improve the conversion rate by 10%, increasing revenue.

Example 3: A Mobile App Leveraging NPS

A mobile app receives low NPS scores from power users. User feedback reveals frustration with the app's search functionality. By improving search algorithms, they boost NPS and increase engagement by 20%.

Conclusion: Using Data to Refine Product Strategy

Tracking essential product metrics allows PMs to make informed decisions, optimize user experience, and drive business success. By understanding and leveraging SaaS product KPIs, teams can:

• Identify areas for improvement.
• Increase user engagement and retention.
• Reduce churn and enhance customer satisfaction.
• Improve conversion rates and revenue growth.

For product managers, mastering these metrics is essential to developing a successful, data-driven product strategy. Start by tracking these five key metrics and continuously refine your approach to meet user needs and business goals.