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How do you know your products are successful?
Measure what matters.

Eileen Licitra - Director, Product Marketing - Iteris, Inc.

Depositphotos_84010934_s-2015-crpd.jpg

 

The old saying, “What you can’t measure, you can’t manage,” is particularly true with B2B products. A successful product portfolio is key to your organization’s long-term growth strategy, and success depends largely on capturing and acting on key performance indicators (KPIs) that lead to revenue, market share and profitability.

While there are many things you can track and measure, you don’t have time to track everything, so choose wisely. Here is what you should keep in mind when selecting your KPIs:
 

                  •  Make sure they are quantifiable and easy to track

                  •  They allow you to take action to improve results

                  •  They fit the stage of the product lifecycle

Something to remember is that your product metrics will change over time. This means that the KPIs that you focused on during product launch will not necessarily be the same once you’ve established a customer base.

For example, if you are launching a new software-as-a-service (SaaS) product, you’ll want to focus first on new customer acquisition and conversions from trial or free plans to paid, and premium plans.  At this stage, overall revenue may not be the best metric to measure success.

Once your product has a large base of customers, you’ll want to focus more on revenue and customer retention. Although revenue growth is the metric most senior level executives focus on, here are others metrics to consider: 

  • Speed-to-market: If you are in a highly competitive industry, getting new products developed and launched quickly may be necessary. However, be sure that in the quest for speed you don’t skimp on steps that negatively impact product quality, launch success, or sales enablement. 
     
  • Conversions: Do you offer a free trial or a freemium model? The percentage of people converting to a paid plan will tell you whether your overall solution meets a critical need among the market segments you’re targeting.
     
  • Frequency of usage: If you offer a web-based product or service, how often are users logging on to use the product? Which features are used most frequently, and by which customer segments? Which features are rarely used? This will help you shape your product roadmap and create more value for your target customers.
     
  • Share of wallet: What percentage of your customers’ spending is going to your company’s products? What percentage is spent on competitive products? As you build your customer or user base, you’ll want to be sure you’re maximizing revenue potential per customer or user.
     
  • Contribution margins: It won’t do your company much good if people love your product, but the product doesn’t generate enough profit. Can you modify the pricing model, or streamline some of the processes that go into delivering the product?
     
  • Market share: This is one of the best indicators of great product-market fit. If you are not gaining market share, go back to your original assumption of problem-solution fit: Did you validate the key issues, pain points and problems most important to your target customers? Does your product deliver more operational and economic value than competitive products?
  • Customer retention and renewals: Are you keeping more customers than you are losing? Tracking this metric, and drilling into the details, will help you pre-empt customer defection. It costs seven times more to gain a new customer than it does to retain an existing customer.

By tracking and acting on a combination of the right key metrics, you’ll influence the most important metrics of all: Revenue growth and customer satisfaction.

I welcome your comments below, and invite you to share this information.

Photo - Eileen Licitra - Concentric Focus Eileen Licitra, Director, Product Marketing
Iteris, Inc.

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