There are lots of metrics you can track as part of your product analytics method, such as lifetime value (LTV), monthly recurring revenue (MRR), and cost of acquisition (CAC). But the numbers alone are not enough. Numbers alone don’t give you information you can act on. Clicks and page views are meaningless unless you understand how they contribute to your product’s overall value. You should use metrics as a window into the human experience of your product—your customers’ goals and needs. Frameworks give your metrics context.
Here are some frameworks to help you choose and understand what metrics are relevant to your business.
Pirate Metrics (AARRR)
Dave McClure of 500 Startups and PayPal introduced the concept of pirate metrics in 2007 to get founders to think about metrics as a reflection of the customer experience at five points in the customer journey:
- Acquisition: People visit your website or app for the first time.
- Activation: Users have their first valuable experience with your product.
- Retention: Customers come back and continue using your product.
- Referral: They like it enough to tell their networks.
- Revenue: People take actions that make you money.
What metrics are relevant to each category will be unique to your business. As an example, let’s look at hypothetical pirate metrics for a music-streaming service use case:
Pirate Metrics for Music-Streaming Service
||Conversion rate to paid accounts, songs played in first week
||Monthly subscription renewal rate, churn rate
||Percentage of customers sharing referral codes, successful referrals
||Customer lifetime value, monthly recurring revenue
||User sign-up rate, cost of acquisition
The temptation will always be to slide into vanity metrics—metrics that make you look good but don’t actually reflect the health of your product or company. Instead, focus on making sure your metrics are actionable.
The Google Heart Framework
Google developed the HEART framework as a way to organize metrics around the user experience. The acronym stands for:
- Happiness: Users feel good about your product, and they experience value.
- Engagement: People interact with your product in meaningful ways.
- Adoption: Customers try new features, or new users complete key actions for the first time.
- Retention: Users continue to come back to your product over time.
- Task Success: People complete important events without problems.
To keep your metrics relevant, Google recommends tying them to goals with the following matrix:
HEART Matrix for Music-Streaming Service
||For customers to enjoy the user experience and music played
||Content star ratings, Customer satisfaction surveys, Support tickets
||Net promoter score, Percentage of resolved support tickets
||For users to play music
||Time spent streaming, New songs played
||Average session length
||For users to sign up for paid subscriptions
||Percentage of free users converted
||For customers to renew their monthly subscription
||The number of returning customers
||Retention Rate, Churn rate
||For customers to complete a song (defined as 60% played)
||Number of completed songs
||Average songs played per session, Crash rate
For this hypothetical music-streaming service, the metrics are directly related to product and UX goals, keeping you focused on the signals that matter.
North Star Framework
The North Star Framework organizes your product team around one key metric, the “North Star Metric.” That metric should encapsulate three things:
- A measure of customer value
- A representation of your product strategy
- A leading indicator of revenue
Some examples: Netflix’s North Star Metric is monthly retention. It indicates that customers like the product enough to keep using it, it’s directly tied to their revenue model, and it is at the core of their product strategy. Facebook’s early North Star Metric was the number of users who added seven friends within their first 10 days on the platform.
North Stars can change. LinkedIn abandoned their North Star Metric for the endorsements feature when they discovered that it didn’t improve the product experience. At Amplitude, we shifted our North Star from “weekly querying users” (WQU) to “weekly learning users” (WLU) to better reflect the core value we wanted our customers to get out of our product.
Yes, some teams may have more than one North Star, but the point is to keep your team focused and accountable to an outcome. More than two or three North Stars and you risk distraction. Get started on finding your company’s North Star Metric by running a workshop.