Webinar: 10 Metrics Every SaaS PM Should Use by fmr Facebook Product Leader, Anand Arivukkarasu

hello um um good day all uh yeah welcome to the product school session today um i'm anand ariva karasu i'm heading product at uh refurshim uh it's a fast growing rocket ship focused on influence and affiliate marketing and i wanted to talk about the metrics that every sas pm should use and care for uh for the today's session um i hope that you find a lot of value in my session today and get most of out of it um let's go into the session um quick introduction about myself i've been uh in the tech space

for last 15 years started as a software engineer um kind of like was curious about why and how things were going to be built then ended up working as a product manager i started as a product manager 10 years ago uh in startups in in the valley and was lucky enough that both the startups that i worked was um acquired um uh and and uh as an example the company that i worked mongol was later acquired uh for um for eight hundred million dollars um and then i uh i was i was in product roles

with them and most of that were martech and edtech and then i went on to work with facebook um as a product growth leader there um and i've had the opportunity to be part of a few successful launches there one was messenger uh messenger business to people platform i was a key part of that uh product and then i went on to also work for commerce areas uh later part of it uh including instagram and uh then i actually uh ended up taking on coming back to startups and building companies from scratch and that was

uh what my journey is today is to help build early stage startups to late stage and been uh go so far going good i started with a company called grand after instagram uh and and facebook and uh it was good the company is in a really good place today and now i'm building a company called refusion for the past six seven months building both the product and design teams here we are a rocket ship growing really fast on the side i also advise and mentor a lot of people both helping them understand product management also

uh be cracking interviews or like also supporting a lot of accelerators on the side uh especially early stage startups to understand and build their product journey and some of them are now late stage as well so that's a little bit about myself um and and uh been experiencing sas for a while um being at even at verizon when they were providing some sas solutions out there later at some of the companies like pinside which is called business service providers so being a part of the search sas journey for a while i've seen a marked shift

in how sas has been doing people call it consumerization of sas or the the moment the slack moment that happened where sas companies have now become um there is a there is a it's no more boring it's it's like really intuitive and helping users achieve their final goal um so there's a big marked shift in how sas companies are being built and uh you know being there and helping companies build it um love to talk about that and help you guys focus today on the metrics aspect um so i want to start with uh the

10 metrics that i think uh that every sas pm should know or like work to build on their dashboard are these these are the 10 metrics so i classify them into three categories i call them the business metrics that is focused on the business or the company that you're part of and then the product metrics the actual product that you're leading or the the entire product suit and then last but not the least the customer metrics i i classify them for a reason a lot of product managers i understand either coming from b to c

or b to b side focus a lot of their time on product metrics alone which is how their products are being used and mau's daus and things like that but there is so much more valuable information that they can get if they can bring their perspective a little bit more wide and then in the interest of time i just want to focus on 10 of these metrics there's definitely more metrics that i could talk about um i took uh i took the liberty to put together you know a sketch format uh on all this uh

took some time but i thought it'll be more intuitive and helpful as you learn about these metrics um this session is really good for people who are either uh early stage product managers late stage product managers even product leaders in sas companies who are getting to build their dashboards and understanding what should they track so let me start with business metrics right i look at business metrics there are four key metrics that i look at that are important to track the monthly recurring revenue customer lifetime value customer acquisition cost and churn uh that can also

touch a little bit on retention rate so on the on that side i want to talk about what does these metrics mean and then like why is it important for a product manager or a product leader to know about these metrics uh the same thing i wanted to do on the product metric side i think which most of upns are already aware of but i want to give a little bit more dimension and color here beat on the usage stickiness on the feature level adoption retention and the quality and efficiency of your product last but

not the least i want to talk about customer metrics and the last metric that i want to talk about is mission metric i don't think this is used extensively i i'm a huge uh proponent of this i'll probably i want to in fact find this term in and make every sas company use it i'll tell you why um as we go into that so first i want to start with business metrics the first one i wanted to focus is uh monthly recurring revenue we call them mri or like some of the companies measure arr which

is annual recurring revenue what does that mean it's actually telling you how much is your company making month over month so the amount that you're building your customers monthly to the number of customers um you might ask hey my company might have several plans there is a free plan there is a premium plan premium plus plan so we take into account in this case all the paying customers uh depending on the plan they are in and then multiply the corresponding building amount that you do for that particular category and then sum them up as you

can see here uh it's very important um this metric is tracked at the company level we all know that but it's also important um for a pm to understand this metric not only not only because it gives you a glimpse on whether your company is generating revenue or not right which means uh users are staying and paying for the product that you've built but also it's a very good indicator of how uh how are things performing and and also could be a great indicator for growth um so um it helps you build features um that

customers would want right like you're building a certain feature and people are using it and paying for it and that's growing which is a strong indicator that what you're building uh people are willing to pay for what you're building so this is a very important uh the first metric that i will i would definitely put it in my dashboard the second thing i call them customer lifetime value right customer lifetime value again lifetime value is how much a particular user or a customer is paying to the business over time so which is nothing but average

value of sale from that customer number of transactions that they're making in a year and then the amount retention times the total amount of time that they're staying in are coming back to buy and then the overall profit margin coming from them so that all uh tells me how much is the customer worth so that's customer lifetime value why is this metric so important uh this actually helps me prioritize a couple of things right as a pm so if a certain high value customer is asking for uh you know certain feature it'll be it should

be given higher priority based on other things as well like you're looking at the mission mission of the company and the direction you want to go but also wanted to uh take in feedback from different customers at different levels uh and and prioritize them accordingly and this is a huge metric to use uh for that reason right so this also like helps you allocate resources on certain things these customers are asking for a high value ltv customer is asking for compared to a low value customer who is trying to just use the product for the

minimal value it is giving so that's why this metric is very important um i want to talk about the third metric which is customer acquisition cost uh this is heavily like very broadly looking at this this is like the total expense of the company does to acquire a certain acquire customers right that is net net uh the caches the total sales expense marketing expense the company is spending to the total number of customers it has acquired which tells me on average how much does it cost to get a customer this alone in itself might look

like you know it's a marketing and a sales metric why should i care as a pm but if you combine this metric to the ltv metric then you can actually learn a lot about what type of customer segments we should go behind and what kind of products and features should be prioritized for that um so when you combine this you want to be able to understand that the customer lifetime value should be much higher than the cap that you're spending this is an important ratio that you need to be looking at on a constant basis

now that you understand these two three metrics on the business side i want to talk about another important metric that you look at on the business side at the customer level not necessarily at the user level when i say user a particular brand or a customer logo we call it will have multiple user seats available on your product so i want to look at the business to understand the broader direction and then when i go into the product i'll go more deeper on the user level as well so the the other important metric is to

understand churn and retention rate these are like kind of um you know opposite to each other in some sense uh to understand um how many users are churning to the number of users that are being acquired like what is the exit rate this is the in rate of acquisition so that's one thing but also like the of the people who are acquired what is their retention rate look like how long how often do they come back to visit our product and find value in our product it could slightly vary by product to product um some

sales products uh there is a need to come on a daily or a weekly basis some sas products you set up things and go and people can come on a monthly basis so you you you based on your product you take either a weekly or a monthly retention rate um to measure um the success of this metric this is a very important metric to understand again uh from a from a business standpoint for a pm because it will help you decide which features will help you do better retention and actually build a score on this

one now i want to go touch a little bit about product metrics right before i go there i want to consolidate what i said about the business metrics so the first thing is as i mentioned is the monthly recurring revenue uh the second one i i wanted to uh i touched about was customer acquisition cost and customer lifetime value and last but not least their churn and retention rate uh these are not the only four business metrics we should be aware of these are the top ones there are a couple of more that comes to

my mind uh one is called quick ratio uh which will also help to understand how much of these users who are coming in are actually retaining and adding value and also spending on you so things like that there are a couple of a few more business metrics i want to touch but i want to since we are prioritizing here and staying in the top 10 metrics um i'm going to stop here and move into the product matrix area so on the product matrix area the first metric that we all know i think you all will

be using on a regular basis is the product usage metric um in general like how many how long the users are spending time in a product to all the way from how many users are using my key features and things like that the way i look at product usage i classify that into four big buckets one is the breadth dimension the depth dimension the frequency dimension and the usability of my of the product um i kind of like build this framework looking at different aspects um from different tools that i've used before um you know

kind of being a good example of a tool that i've used before or like i've used heap metrics as well they're like amazing tools to use so the first thing is understanding breadth like total number of users right total number of users or active in your product or like total number of users for a given customer who are using your system right measurement one of the example of measurement would be number of active users for a given customer in the last 30 days depth is something about like what exactly are they using the product for

which is let's say we identify certain key features in the product and then we want to measure number of customers a percentage of customers that are regularly using these key features uh frequency is like something like how often they access it how often they come to find value it's a good metric it's actually a leading indicator for retention um and also would also tell you like if a customer is going to churn out or not if you're not finding value and then you're billing them on a monthly basis at some point they're going to turn

around and say hey i'm not using the product enough and and leave the product so how often they access the product is a very good product metric could be number of logins that they're doing across their users or like number of sessions that they're having last but not the least is the usability method um how long does it take to for a customer or a user to complete the set of tasks let's say understand your product as a funnel and see like from this point to this point how long does it take how easy it

is for them to infer certain things before they like um exit or they reach out to ask customer success or they trace tickets like any of those hurdles or like any of the product hurdles that they have it's very important to understand over time is the usability aspect of your product so overall from a usage standpoint if you're able to get these metrics built in your dashboard that will be amazing for you as a product manager and i think like this is one area that i don't have to tell why this is important as a

product manager this is probably one of the most important areas that you have to build and and understand the next important metric i kind of would watch for is the product stickiness is like off the number of daily active users are coming into your product how many of them are coming back on a monthly basis right it's it's retention not at the customer level but you can put it at the user level right within a company there are multiple users using a product understanding how sticky use your product right how often they come and work

at it and use it um is a very important metric to understand um there's a couple of reasons right like also understanding which features they're using and and coming back again and again will be a good indicator as well to prioritize certain features or like doubling down on certain features so that's why i call product stickiness is a very important metric i mean i'm repeating in in certain ways right stickiness is connected to somewhat connected to churn and so this is all very important for you to build as your product is maturing uh you know

from that early charism of uh product market fit into a later stages the next other important metric this is i think most people will be already using in your launch kpis and all of that is your feature adoption how many users are adopting the features that you're saying how frequent they are using it and then how often do they come back and use it right by different feature sets you can call them product lines feature sets or product groups any of that right overall to understand which of them should i continue to build on which

of them i can actually even remove it out of the product at some point and say like okay we are not going to support those as there is less number of adoption for these features it's a constant learning about your customers so this is one of the metrics you also use for your goals and kpi as you launch any particular product and see what is the adoption look like how much value they're finding are they coming back and using it or not the next most important metric in my mind from a product standpoint uh there

are many more metrics from for me the next most important metric is actually being quality and efficiency you might release a lot of good features and everything but if it's fully of it's it has a lot of bugs and people are reporting on it it actually annoys the user a lot and then you might actually remember this right your early product adopters are the people who trust you and come and use your product and they're willing to take some level of bugs and issues but the more you're going to put these bugs and issues on

them they're not going to find the right value on time and then they have to reach out to customer service you're going to make their life harder and that's actually not a good sign so it's very important to understand what is your bug reduction rate like how fast are you able to fix bugs how fast for the number of bugs that are open to the number of bugs that are getting fixed in any given quarter how quickly are you able to do that right and also the other thing to understand is breaking your product into

feature sets or product lines and looking at which of these areas are bug very highly buggy and and trying to put more engineers or more resources on the on to that and fix it over time will help more will help the customer start using that feature more so that um these are the two areas that i will look at right the bugginess by features and then the overall um bug reduction rate um to understand how good you're moving in terms of quality and efficiency um there are two or three more metrics that i would think

about when i look at product as well uh one other metric is product deliverability metric or predicting your delivery over time this is helpful for marketing sales teams uh the other metric i would also look at is i coined this term ecosystem metric if you're connecting your product with more apis and more other other partners you want to measure how often these apis and metrics are being used so you can actually double down on some of them and remove some of them so you can make your customers life easy also think about how you can

build your roadmap based on that so i think like the ecosystem metric is another one that i consider again even these are the four top priority metrics i would use for product coming to the last section which is customer metrics right so there are two important metrics that i would measure on the actual customer side getting direct inputs from them one is the nps some companies measure csat i feel it both of them will help us get a very strong signal from the customer on what they think about your product we in fact some companies

use this as a very important metric and and rightfully so it not only gives you the metric aspect but also gives you a little bit of the quality aspect so how does this metric gets calculated what is net promoter scope so you sent a survey of one to ten on whether your customer likes your product and would recommend to somebody else and one being the least uh favorite and then ten being they would definitely go ahead and do it so if you send this over time and build this metric over time then you will get

a signal on uh you know like who your promoters are people who are scoring at nine and ten and then who your retractors are people who kind of moderately like your future or don't like your product at all they're just using it because their company bought bought the service so people are scoring you zero to six so basically getting the percentage of your product promoters minus your product percentage of detractors will help you get an nps this ranges from -100 to plus 100 so the more positive you are in the score over time on a

statistical significance basis you can understand that you're moving in the positive direction so start building this metric and throwing it out there to start collecting this data point one this takes over a long time to build this metric so start this could be one of those metrics you have to start triggering it out and sending it out sample your audience send it to a sample in any given time and start collecting the metric over time um you could also collaborate with your customer success because they also love to understand this metric so the two important

levels here are customer success and product team both gets benefited out of this metric the last uh and most important metric that i think a lot of companies don't measure and also i've not seen in many uh product analytics boards is the customer mission metric why this to be to explain this uh very clearly is your product able to help your end customer or not right um are they coming to you are they able to find success for the reasons they have reached out to you or for the value that they've gained out of you

right for example you're providing a marketing tech product where they're coming where a particular company or a business is coming and using your product to promote and get more sales so if you have a way to understand how much sales you're creating and minus the cost that is incurred in including the software sas price including the reach out cost or the ads cost and also the product cost then you can kind of understand the net revenue that they're able to get out of your product and you have to look at the different customers and see

who are using your product wisely and not wisely and then see like what percentage of your customers are actually succeeding and by what level they are succeeding this is very important to track over time because it also gives you a strong proof point that your product is working for someone and then you go understand and build case studies on them and understand some of the best practices and start making it available for more of your customers to make your product work for them and for me if you ask me one metric off of your 10

metric that makes sense i would say this is the one metric is your actual customer end of the day is feeling successful with your product or not or is actually finding value in your product or not doesn't matter how much they use they might not use it fully they might use it less doesn't matter all of that if your end customer is not finding success in your product so if you ask me one metric that you would goal yourself on or start building an understanding that would be this there could be some leading indicators that

you can also build on this so that said these are the top 10 metrics in my mind that every product manager should build a dashboard over time on and start tracking um as a conclusion i wanted to say a couple of things right like these are the top 10 metrics these are the not the only metrics that you should care about there are other metrics that you should be also be thinking uh which i kind of broadly listed and we should talk about as well but um but as a pm these are the minimum things

that you should be understanding over time and putting it as part of your dashboard before i come to conclusion of the session i hope you found a value in understanding these metrics i want to talk about a couple of things one is things to avoid while building these metrics uh there's been a thing that i've seen over time that this approach on one north star you build and then you always stick to that in irrespective of other things that are happening could be a dangerous area um we i've done that myself like built an art

style and stuck this is the one not start then i realized there could be other guardrails that you need to build there could be other metrics you have to keep a site on and not just go with one metric that matters approach you should you should have a you should you can go against one metric but you should have a whole set of other secondary metrics that you should be tracking and having and thinking about as god rates so don't fall into this approach hey this one metric is everything and imagine there's a hundred different

ways that people could gamify that metric as well the second thing i would say is i've also seen is like not having the right measurement systems in place could cause a lot of issues so it also depends on the right of right tool choices right way you set it up is very important and i've seen like definitions are also varied by the companies and tools you use so working with them to make sure that you are comfortable with those tools and techniques is very important or choosing the right partner in helping you measure is also

important the last but not the least these quantitative metrics are awesome to measure over time um but i would also keep my eyes on some qualitative signals some surveys that we do and direct one-on-ones that you have with your customer try to also have that regular call with customers at least you know twice and once and once in a week to different customers to get a sense of what they are saying what they're doing that quality in signal is very very important because metrics can only tell you so much so having a idea of qualitative

signals with the quantitative metrics approach will balance it both um yeah that comes to uh the end of session for today uh i hope you guys enjoyed and got a ton of value out of this session um yeah thank you again thank you product school for organizing this session uh and helping me you know like share my two cents with the product community um feel free to connect and follow and connect with me in my linkedin uh in short like it's uh www in slash anandarivu feel free to reach out to me i'm also working

on building a book in a similar area very soon would love to share more inside steps on these areas as you build yourselves as a product leader in any sales organization uh thank you thanks again for all the patience and listening to me for this whole session i i hope you find found a lot of value and meaning in the session have a great day guys [Music] you