Key terms in Product Management
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Basic Product Metrics
1.Activation Rate
Definition: The percentage of new users who complete a key action within a given time period, indicating that they find value in your product.
Application: To measure the success of the onboarding process, that is, the first interaction of new users with a product, and the level of user involvement in the early stages of their life cycle. This helps you understand how effectively users get through the initial stages of using a product and how actively they interact with its features immediately after registration.
2. Annual Recurring Revenue (ARR)
Definition: Annual recurring revenue from subscriptions or other recurring payments, often used to assess the financial health of a subscription-based business.
Application: To measure long-term revenue potential in subscription-based business models such as SaaS (software as a service) or other recurring payment services. This metric helps you understand how much revenue you can expect from current subscribers in the future, taking into account the length of the subscription, recurring payments, and the likelihood of renewal.
3. Average Revenue Per User (ARPU)
Definition: Average income generated per user over a given period of time, used to evaluate the earning potential of each user.
Application: To measure customer profitability and value, allowing you to understand how much each customer generates revenue for the business compared to the cost of acquiring and retaining them. This metric helps evaluate how efficiently a company is using its resources, as well as determining which customer segments are most beneficial to the business in the long term.
4. Bounce Rate
Definition: The percentage of users who leave a site or application after viewing only one page without interacting further.
Application: To measure the level of user engagement on a site and determine how effectively landing pages are performing in attracting and maintaining attention. A high bounce rate may indicate that users are not finding the content interesting or are not receiving the information they expected, which may indicate a need to optimize content, improve design, or improve the relevance of information on landing pages to entice users to engage further.
5. Call to Action (CTA)
Definition: A button, link, or message designed to encourage users to take a specific action, such as “Sign Up” or “Learn More.”
Application: Websites and apps use elements such as buttons or links to direct users to targeted actions that lead to conversion, such as registration, subscription, or purchase. These elements guide users along a predefined path that takes them from their first interaction to completing a targeted action. A well-designed call to action (CTA) improves user experience and increases conversion rates because it makes the process of moving to the next step more intuitive and simple.
6. Churn Rate
Definition: The percentage of customers or users who stop using a product within a certain period of time.
Application: To measure user retention and determine how successful a product is in maintaining long-term engagement. High churn rates may indicate problems with customer satisfaction, product quality, or product relevance. Measuring churn helps identify weaknesses and improve the user experience, increasing their loyalty and engagement.
7. Conversion Rate
Definition: The percentage of users who take a desired action, such as making a purchase or registering, out of total visitors.
Application: To measure how effectively marketing and sales campaigns convert visitors into customers. A high conversion rate indicates that the target audience is properly engaged and interested in the product.
8. Customer Acquisition Cost (CAC)
Definition: The cost associated with acquiring one new customer, usually through sales marketing efforts.
Application: To evaluate the profitability of marketing campaigns, determining how much money needs to be spent to attract a new customer. This allows you to understand how effectively marketing budgets are being used and whether the investment is paying off. Reducing customer acquisition costs (CAC) while maintaining or increasing the quality of attracted customers indicates successful campaigns and improved financial performance of the business.
9. Cost Per Installation (CPI)
Definition: The cost of acquiring a new user through installing an application, which is commonly used in mobile marketing.
Application: For a more detailed assessment of the effectiveness of mobile application marketing campaigns. This metric helps you understand how successfully and cost-effectively you can attract new users through paid installations. Comparing these costs with revenue from users allows you to determine how justified the investment in mobile advertising is and which promotion channels work best.
10. Customer Lifetime Value (CLTV)
Definition: The total income expected from the client over the entire period of his interaction with the company.
Application: To determine the long-term value of customers and assess whether the cost of acquiring them is justified. This indicator helps the company understand how much income one customer can bring throughout the entire interaction period, which allows you to effectively plan marketing budgets and optimize acquisition costs. Knowing customer lifetime value (LTV) also helps determine which audience segments are most profitable and what retention strategies should be used to maximize revenue.
11. Daily Active Users (DAU)
Definition: The number of unique users who interact with your application or product daily.
Application: To track user engagement and activity levels to understand how often people use the product on a daily basis. This metric helps determine how engaging and useful users find a product and identifies trends in their behavior. A high number of daily active users (DAU) indicates that the product is successfully retaining audience interest and promoting regular interaction, which is an important indicator for assessing the success of the product and planning its development.
12. Gross Margin
Definition: The difference between sales revenue and cost of goods sold, usually expressed as a percentage.
Application: To assess the profitability of a business and the effectiveness of its core activities. This indicator helps to understand how successfully a company generates profit after deducting the direct costs of production or acquisition of goods. A high gross margin indicates a good ability to control costs and generate revenue.
13. Key Performance Indicators (KPI)
Definition: Measurable metrics used to evaluate the success of a business or project in achieving its goals.
Application: All business units use measurable indicators to monitor and track their performance. This helps assess how well each part of the organization is performing its tasks and achieving its goals. Using these metrics at the departmental level allows you to compare their performance, identify problem areas, and adjust strategies to improve overall company performance.
14. Monthly Active Users (MAU)
Definition: The number of unique users who interact with your app, product or service at least once during a given month.
Application: To track user engagement levels and measure the overall growth of a digital product by determining how many unique users are actively interacting with the product each month. Monthly active users (MAU) helps you understand how consistently your audience is growing and how well a product is attracting new users and retaining existing ones. It also gives an idea of the popularity of the product.
15. Monthly Recurring Revenue (MRR)
Definition: Total predictable revenue generated from subscriptions or recurring payments on a monthly basis.
Application: Monthly recurring revenue (MRR) helps understand how successfully a company is growing its customer base and retaining existing users. This metric also allows you to plan financial forecasts and make strategic decisions aimed at improving growth and profitability.
16. Objectives and Key Results (OKR)
Definition: A technique for setting measurable Objectives and tracking progress using Key Results. It is used to align team goals with the overall goals of the company.
Application: In organizations, the methodology is used to define and measure progress towards strategic goals, helping teams focus on specific tasks and results. This promotes employee transparency and engagement, ensuring alignment between individual teams and the overall company mission. This approach helps to effectively allocate resources and monitor the implementation of key initiatives aimed at achieving meaningful results.
17. Retention Rate
Definition: The percentage of users or customers who continue to use a product or service over a specified period of time.
Application: To measure customer loyalty and long-term satisfaction with a product, which provides insight into how well the product meets users' needs and encourages them to continue using it. A high customer retention rate indicates that users are satisfied with the product, find it valuable and useful, and are less likely to switch to competitors. This metric helps identify successful aspects of a product and areas for improvement, which is important for sustainable business growth and increased customer loyalty.
18.Session Duration
Definition: The average time a user spends interacting with a website or application in one session.
Application: To measure the level of user engagement and the quality of their interaction with a website or application. A long stay in one session indicates that users find the content or functionality interesting and useful. This metric helps you identify how effectively a site or app is meeting user needs, improving the user experience, and determining which sections or features are generating the most interest. A decrease in average time may indicate problems with content, navigation, or loading speed.
Basic Processes and Artifacts
1. A/B Testing
Definition: A method of comparing two versions of a product or feature (version A and version B) to determine which performs better based on user interaction or engagement.
Application: The method is used to optimize product features, website layouts, and marketing campaigns to determine which changes provide the most benefit in terms of user experience and business results. A/B testing allows you to test different variations of interfaces, text, buttons, or other elements to identify those that most effectively increase engagement, improve conversions, or improve user satisfaction. This helps you make informed decisions based on data and gradually improve your product or campaign, minimizing risk and increasing its effectiveness.
2.Backlog Refinement
Definition: A regular process of reviewing and updating the product backlog to ensure that items are well defined, prioritized and ready for the next sprint.
Application: Agile and Scrum frameworks use this process to maintain a clear and actionable backlog so that development teams can effectively plan and execute tasks in upcoming sprints. Regular backlog refinement or grooming helps ensure that all items are clearly defined, ranked by complexity, prioritized according to product goals, and in sufficient detail for the team to work on. This allows you to minimize uncertainty, improve forecasting and increase operational efficiency at every stage of development.
3.Feature Prioritization
Definition: The process of determining which product features to develop or improve first, second… last, based on factors such as customer needs, business goals, and technical feasibility.
Application: Product management uses this process to focus development efforts on the most valuable features that provide the most value to customers and support business goals. Prioritization helps you make informed decisions about which tasks should be completed first, given resource and time constraints. This allows you to optimize the development process, increasing user satisfaction and ensuring the achievement of the company's strategic goals.
4. Product Analytics
Definition: The process of tracking, measuring, and analyzing data related to how users interact with a product to gain insights about user behavior and product performance.
Application: Product management uses this process to make data-driven decisions and improve the user experience by analyzing how users interact with the product, which features are most in demand, and where problems arise. Collecting and analyzing user behavior data helps you identify usage patterns, evaluate the effectiveness of new features, identify bottlenecks, and make informed decisions to improve your product. This contributes to more accurate task prioritization, product adaptation to the real needs of users and, ultimately, increased customer satisfaction and retention.
5. Product Backlog
Definition: A prioritized list of features, tasks, and improvements that the development team should work on. The backlog is constantly updated as the product evolves.
Application: In Agile and Scrum methodologies, a backlog is used to organize and prioritize the team's work to provide clarity and direction to the development process. It is a flexible and dynamic task list that is regularly reviewed and updated according to changing product requirements and priorities. This helps the development team focus on the most important and valuable tasks, plan sprints, and ensure workflow transparency for all participants. The backlog includes new features, technical debt, bug fixes and improvements necessary for the successful development of the product.
6. Business Requirements Document (BRD)
Definition: A document that describes the functional and technical requirements of a product or feature, serving as a guide for development teams.
Application: In product management, such a document is used to ensure clarity about what exactly needs to be created and consistency among all stakeholders. It helps developers, designers, and other team members understand the product's goals, functionality requirements, technical limitations, and expected results. This document provides a unified vision of the product, minimizes the likelihood of misunderstandings and facilitates the process of planning and executing tasks. By clearly defining requirements, the team can work more effectively to create functionality that meets user expectations and business goals.
7. Product Roadmap
Definition: A high-level visual representation that depicts the vision, direction, and priorities of a product over time.
Application: In a product strategy, such a document is used to effectively communicate the long-term product development plan to stakeholders, including development, marketing, management and other stakeholders. It helps visualize key milestones, priorities and goals, and provides insight into how the product will evolve over time. This facilitates discussion and agreement on strategic initiatives, helps set clear expectations, and creates a shared context for decision-making. With this visual representation, everyone involved can be on the same page about the future of the product, helping to work more cohesively and maintain focus on strategic goals.
8. Product Strategy
Definition: The plan and approach a company uses to develop, market and deliver a product that meets the needs of its target audience.
Application: In product management, this plan and approach is used to ensure that the product meets the business goals and requirements of the target audience. It involves analyzing the market, understanding user needs, identifying competitive advantages and creating a clear positioning strategy. This allows development and marketing teams to work with a unified vision, focusing on tasks that deliver the most value to the business and customers. Aligning the product with business goals and market needs contributes to successful market adoption, increased competitiveness, and long-term company success.
9. Product Vision
Definition: A high-level statement that describes the future state of the product and what it aims to achieve in the market.
Application: In product management, such a statement is used to guide a product's long-term strategy, providing a clear picture of where the product is heading in the future. It serves as the basis for making decisions, prioritizing tasks, and aligning team actions, helping everyone on the project have a shared vision. It also informs marketing and positioning strategy by determining what problems the product solves for the target audience and how it differentiates itself from competitors. A clear description of the future state of the product helps you focus on achieving key goals and increases the likelihood of success in the market.
10. Release Notes
Definition: A document that details the changes, improvements, and fixes included in a new version of a product.
Application: This document is used to inform users and interested parties about new features, improvements and fixes that have been introduced in the latest version of the product. It helps create transparency and understanding of what has changed and how it may impact users. This approach helps improve customer interaction, increasing their satisfaction and trust in the product. In addition, the document can serve as a basis for discussion and feedback, allowing users to understand how they can make the most of new features. Communicating changes in a clear and accessible manner helps ensure a smooth transition to the new version and reduces the likelihood of confusion or misunderstandings.
11. Spike
Definition: An exploratory task or time-limited activity used to explore uncertainties and gather information before deciding on a larger development.
Application: In Agile frameworks such as Scrum and Kanban, these exploratory tasks help teams understand the uncertainties and risks associated with future tasks or features. These temporary activities allow you to experiment, collect data, conduct user research, or test ideas before investing significant resources into full development. This minimizes the likelihood of errors and improves understanding of user needs, which in turn helps teams make more informed decisions.
12.Use Case
Definition: A detailed description of how a system or product will be used to achieve a specific purpose, including interactions between users and the system.
Application: In system design and product development, such a description is used to clearly articulate the functional requirements necessary to achieve a specific goal. It includes details about how users will interact with the system, what actions they will perform, and what results are expected. This helps development teams better understand user needs and expectations, which in turn allows them to create more intuitive and efficient interfaces and features. Detailed descriptions of interactions also serve as the basis for testing and validating the system against specified requirements, which minimizes risks and increases the likelihood of successful product implementation.
Market and Customer Analysis
1. Competitive Analysis
Definition: The process of assessing the strengths and weaknesses of your competitors to understand the market situation and identify opportunities to differentiate your product.
Application: In product development and marketing, this process is used to formulate strategies that provide competitive advantage by providing a deeper understanding of the market situation and the position of competitors. Competitor analysis involves studying their products, services, pricing strategies, promotion methods and customer reviews, which helps identify both their strengths and weaknesses. This information allows your team to better tailor the product to the needs of your target audience, highlighting unique benefits and features that might attract users. In addition, understanding the competitive landscape allows for more effective positioning and development of marketing campaigns aimed at attracting and retaining customers. Ultimately, such analysis helps create a more focused and successful business that can effectively respond to changes in the market environment.
2. Customer Development
Definition: The process of identifying and testing customer needs to ensure that the product meets market requirements. Typically used in early-stage startups to reduce the risk of creating products that no one wants.
Application: In the Lean Startup methodology and in the early stages of product development, the process of identifying and validating customer needs is used to ensure that the product being created actually solves real problems for users. This approach involves conducting customer interviews, surveys, testing prototypes, and collecting feedback. The goal is to minimize the risk of creating an unnecessary product that will not be needed in the market. By deeply understanding customer needs and pain points, teams can make informed decisions about functionality and priorities, resulting in a more relevant and successful product. Thus, this process helps to shape a product that truly meets the needs of the market and is capable of achieving long-term success.
3. Customer Journey
Definition: A visual representation of the complete experience a customer has with a product or service, mapping every touchpoint and contact from awareness to loyalty.
Application: In product management and marketing, visual representations of the complete customer experience help understand how users interact with a product at every stage of their journey, from initial awareness to loyalty. This process includes mapping all touchpoints such as advertising, website visit, purchase, product usage and customer support. Analyzing these interactions allows teams to identify customer experience strengths, weaknesses, and opportunities for improvement. For example, you can identify where users are struggling or losing interest and make changes to improve those areas. This, in turn, can lead to increased customer satisfaction, increased conversions and strengthened brand loyalty, which is key to the long-term success of the product.
4.Market Research
Definition: The process of collecting, analyzing, and interpreting market information, including data about potential customers, competitors, and overall industry conditions.
Application: The process of collecting, analyzing and interpreting market information allows companies to better understand the needs of potential customers, identify the strengths and weaknesses of competitors, and monitor current and future industry trends. This information helps to create unique selling propositions, adapt products and marketing strategies to the requirements of the target audience, and assess possible risks and threats to the business. As a result, companies can make more informed decisions and develop effective strategies, increasing their chances of success and promoting sustainable growth.
5. User Persona
Definition: A view of a key segment of your users based on user demographics, psychographics, needs, areas of interest and pain points, used to gain a deeper understanding of customer behavior and preferences.
Application: Using user personas, or personas, in product development and marketing helps teams better understand the needs and motivations of target segments, which in turn allows them to create more relevant and engaging products and campaigns. Based on demographic and psychographic data, companies can develop features that match users' interests and preferences, and develop marketing messages that resonate effectively with their audience. This not only improves the customer experience, but also increases the likelihood of successful market introduction of products as they become more tailored to the actual needs of users.
6.Product Discovery
Definition: The process of understanding user needs, market demand, and business goals to identify and validate the right product to create.
Application: Early in the product development process, this approach is used to ensure that the product being created actually solves real user problems and meets their needs. This helps minimize the risks of creating an unnecessary or ineffective product by focusing on what really matters to the target audience. Understanding user needs and testing hypotheses through research and testing allows developers and managers to make informed decisions about functionality and priorities, which increases the chances of a product's success in the marketplace.
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Link to article 1/3: https://habr.com/ru/articles/847250/
Link to article 2/3: https://habr.com/ru/articles/847254/
