So you have finally released that digital product that you have been working on for months.
You and your team are proud of your work and anticipate that it will resonate with consumers. However, you are not quite sure what the best way to measure the success of your digital product is.
Sound familiar? If so, then you have come to the right place.
In this post, we’ll show you which metrics to use if you want to accurately measure the success of your digital product and take it to the next level.
Do They Love It?
Before the rise of modern analytical tools and advanced metrics tracking, it was tough to quantify whether your product was a hit with consumers or not.
Businesses had to rely on small sample sizes and customer feedback.
Fortunately, that is no longer the case. You can get a true sense of whether your digital product is a hit by assessing key metrics, such as:
Monthly Recurring Revenue
MRR, or monthly recurring revenue, is one of the best key performance indicators (KPIs) to determine how a product is performing.
MRR is easy to calculate and will let you know whether your product is trending upwards or losing steam.
In order to calculate MRR, add starting revenue, new revenue, and funds generated from customers that upgrade to a higher service offering. Then, subtract customers that downgraded service or failed to renew altogether.
You should review your MRR every single month for the best results.
This will give you time to make adjustments to your advertising strategies and sales tactics if your product is not performing as expected.
You can also measure your MRR against your product roadmap and release cycle. If you have a quarterly release cycle, how is the MRR affected every quarter?
Ideally, you’re shipping product features that contribute positvely to the MRR.
Number of Active Users
While it is great to track revenue, you also need to know who is buying your product. You need to track how often they are engaging with your product.
Generally, we recommend tracking your total number of customers. This figure should be divided into two categories: Renewals and new customer acquisitions.
Retaining consumers is less costly than acquiring new customers. We subscribe to Joseph Jaffe and Kevin Kelly theses building for your superfans. Reward your customers and they’ll advocate on your behalf.
Also worth noting that a low renewal rate may indicate subpar satisfaction with your product. This could mean revisiting the product roadmap to understand what’s not working so well.
Once you have compiled your total number of customers, it is time to look at usage.
Advanced metrics allow you to track how often consumers are logging in to their accounts. You can even find out how much “active time” they spend engaging with the product.
Frequent sign-ins, high usage hours, and a strong renewal rate all indicate that your digital product is performing well.
Net Promoter Score
Your digital product’s net promoter score is a simple, but effective way to determine whether consumers are loyal to your brand.
Net promoter scores are derived from surveys that are easy to complete. For example, your NPS survey may ask “How likely are you to recommend our service to a friend?” Users are asked to give an answer on a scale of 1-10.
Generally, consumers that select a top score of 9 or 10 are considered to be promoters of your product.
Customers that give your product a score of 7 or 8 are considered to be neutral. Users that give your digital product a score of 6 or lower are categorized as detractors.
Your NPS is derived by subtracting the percentage of detractors from promoters. Scores range from -100 to +100, depending on the outcome of NPS survey responses.
Ideally, you want consumers to be so excited about your product that they share their experience.
Additional Ways to Gauge Digital Product Success
While the metrics outlined above are the best ways to measure the success of your digital product, there are some other KPIs that deserve your attention. These include:
Customer Lifetime Value
Customer lifetime value (CLTV), allows you to determine how much money a user generates long-term.
It allows you to determine the average profits that you make from a single user before they cancel a subscription.
Customer Acquisition Cost
Customer acquisition cost (CAC) allows you to cover all of the costs that are involved in attracting customers.
CAC accounts for marketing expenditures, sales team hours worked, and general advertising.
There are several formulas that you can use to track CAC, depending on which costs you are assessing.
Bounce rate measures the percentage of users that only visit one page of your app or website.
They view that single page and then “bounce” to another website or app.
A high bounce rate is a sign that your content or product features are not engaging enough with users.
For more on how to build engagement into your product, see our case study for HEED Mobile where we used gamification to increase user engagement.
Qualitative User Research
These metrics are very powerful as they allow you to understand where in your user journey users are tripping up or leaving.
A good approach is to complement these findings with qualitative research to understand the why behind the what.
For example, through the bounce rate, you might see that most users drop off at the final step of onboarding.
But this metric will only tell you where it’s happening.
By conducting unmoderated reseach or user interviews with users or panelists that represent your users, you can understand why those users are dropping off.
This will help you reduce the guess work and rework required when optimizing experiences.
Qualitative user research can take several forms. The most common ones related to digital product design and optimization are:
- Usability research
- User interviews
- Diary studies
- Card sorting
- Tree testing
- Message testing
- 5-second tests
With Pulp: Building Digital Products People Want
Ideally, analyzing these various metrics would reveal that your digital product is exceeding expectations. However, there is still hope, even if your digital product is falling short.
With Pulp is a collective of innovative digital product strategists, designers and developers. We design and develop digital products that people love to use!
Contact us to book your free consultation with one of our digital product development experts today!