How can you use KPIs and product metrics to grow your user base?

KPIs and product metrics help measure our product's success. If we aim to grow our user base, we might monitor metrics like sign-ups, how many newly registered users become active, or how many users recommend our product to others. Imagine you're playing a game. Your KPI is your high score goal, while product metrics are the points you earn in different ways, like collecting coins or defeating enemies.

There is one reason you're building a product or feature. Moving a KPI or a metric. Someone (maybe you) decided there is value in pursuing an hypothesis, that will return more value than the investment. The way you measure whether the hypothesis is true is the KPI or product metric. Moving that metric, KPI or measurement is what you're seeking to influence via your product decisions. These metrics should be adjusted to the stage (eg Product Market Fit, retention, margin) and type of product (eg SaaS might be MRR, marketplace might be take rate, etc) otherwise they will be vanity metrics.

Start with the end in mind: What's our goal? Ensure metrics align with our objectives, and keep them actionable. Don’t drown in data; instead, focus on meaningful metrics that guide decisions and drive impact. Quality over quantity always. And remember, periodically revisit and refine.

There are three concepts that matter when choosing KPI: leading vs lagging indicators, stage-metrics, and vertical metrics. Here I'll focus on the first: Leading indicators are metrics that you control and influence in the short term. Lagging indicators are goals you can't control and react based on past actions. Your end goal is a lagging indicator, and you can measure progress by measuring leading indicators. Both matter. You need to choose your leading and lagging indicators considering the product, industry, and the stage of it (pre PMF, post-PMF, growth, etc)

First, determine clear data sources. Whether it's user surveys or system analytics, ensure consistency. Then, employ tools that aid in gathering and visualizing this data. As we dive into analysis, look for patterns, anomalies, and actionable insights. Keep questioning: "What does this tell us?" And always connect findings back to our goals.

Avoid analysis paralysis Refrain from overthinking problems in the presence of too much data. It'll result in an inability to make a decision. 1️⃣ Define clear hypotheses and related metrics 2️⃣ Validate the hypotheses with the data 3️⃣ Make a decision and move on No need to boil the ocean analyzing everything. Stay focused on key questions. Collect just enough data to test hypotheses. Then, decide and execute. ✅ Even imperfect decisions are better than no decisions. Analysis should enable, not block.

User growth is about actionable insights. Set clear objectives rooted firmly in the product's vision. For instance, if you're running a streaming service and your goal is to increase monthly active users, your KPI is the number of new sign-ups. Dive into the growth funnel to figure out, say, at what point potential users drop off—maybe they’re deterred by sign-up complexity. Then, when brainstorming solutions, use the ICE scoring. Let’s say you think of simplifying the sign-up process. You’d rank the potential Impact, how easy it is and the Effort required. If it scores high, that’s your green light! Remember, metrics guide the ship, but strategy sets the direction. Always ensure alignment, clarity, and focus in your approach.

A product is a process of learning, in order to uncover whether an hypothesis is true, and value can be extracted, ideally larger than the required investment. Your KPIs and product metrics indicate whether you're progressing in achieving that. When you ship a feature or iterate on the product, you're testing an hypothesis. The data tells you whether that was a good investment or not. These metrics need to align with your strategy and vision, as they are the data representation of progress. If they don't move, you need to re-think your approach and iterate the product.

Think of it like a monthly financial report. For instance, let's say our target was a 10% user growth for the month. We pull data, see we've achieved an 8% increase, and spot areas for improvement. It's key not just to track, but also to transparently share with the team. This ensures everyone knows where we stand, can cheer on successes, and collectively strategize on areas of challenge. Regular check-ins and clear dashboards can be our best friends here. Let's keep everyone informed and marching to the same page.

Follow step-by-step method: 1) Be clear. - Know the products, what they do. - Understand mission, vision, values. - Come prepared with research 2) Find the Northstar. - Understand primary goal. What are you trying to achieve? - Find out which one metric outperforms all the others? 3) Think of other metrics that you can consider. - Highlight other metrics that unite with your Northstar & would help in the better assessment. - Some metrics include revenue, retention, acquisition, active users, churn rate 4) Countermetrics. - Countermetrics are metrics that should not get affected because of the new feature, product, improvement - For example, if you want to increase number of signups, the countermetric can be the number of uninstalls.