10 Key SaaS Product Metrics to Track (+ Best Practices for Measuring)

Want to understand your product’s performance strategically? Track these 10 product metrics and learn the best practices to interpret them well.

10 Key SaaS Product Metrics to Track (+ Best Practices for Measuring)

Imagine driving a car with no dashboard. There’s no speedometer to tell you how fast you’re going, no fuel gauge to inform you when you’re running on empty, and no warning lights to raise alerts about any issue. 

Sounds like a recipe for disaster, doesn’t it?

Building a product without tracking relevant product metrics feels the same. You have no real sense of your product performance, customer lifetime value, and customer satisfaction. 

Ever heard the saying all the gear but no idea? It’s a lot like that, and with gear as important as your SaaS product, you want the best idea of performance that you can get.

This article will help you steer your product in the right direction with the 10 crucial metrics for product teams—along with the best practices for tracking them.

TL;DR
  • Tracking product metrics is crucial for finding growth opportunities to optimize the customer experience.

  • The effectiveness of product metrics boils down to the KPIs you choose and how well you track them. 

  • To get meaningful results from these metrics, you must set up workflows to map the data to actions for improvement.  

  • Read more to find out all about product metrics.

How to track and analyze product metrics  #

As a product manager, one of the most important tasks is choosing key metrics to assess in order to improve the product experience. The catch? Selecting the right metrics from so many options can be tricky. 

Which ones will help you identify UX issues? Which will help you ensure you remain within budget? Which will aid in prioritizing product roadmap steps? We’ll help you figure that out with these four steps for selecting and tracking product metrics.

Set goals and objectives  #

All the product management metrics work well in specific contexts—some offer visibility into the overall user experience, while others help you assess individual product features. 

To choose the most relevant business metrics, revisit your product strategy and define what success looks like in relation to your product. These goals will ultimately determine the metrics you pick and their effectiveness. 

For example, if one of your goals is improving the onboarding journey based on product feedback and customer journey, you can choose activation metrics to assess how users interact with your product after signing up. 

Choose the right metrics for those goals  #

When you’re finding the best metrics for your product and business goals, consider these two broad types of metrics:

  • Leading indicators: These are measured more frequently to test different hypotheses and adjust your product strategy to improve performance. These include feature usage, daily active users, product engagement metrics, etc.

  • Lagging indicators: These metrics help you understand the ROI of your past tactics—whether you succeeded in achieving a goal. These include customer lifetime value, churn rate, churn rate, etc.

Determine both leading and lagging indicators to stay on top of your current and past efforts. 

Get the right tools to measure and analyze #

Don’t rely on manually collecting data and tracking product metrics. You need a sophisticated product analytics tech stack to continuously collect, process, and evaluate data about your product and users. 

Here’s what a good tech stack looks like for product teams:

  • Customer feedback tools to gather insights proactively

  • Data visualization software to easily interpret all the data

  • Product analytics platform to track customer behavior and engagement

  • User session recording tool to examine how users interact with the product

At the end of this blog, we'll share our top picks for each of these tools—stay tuned!

Analyze and interpret the data according to your goals #

The final step is analyzing all the data to assess your performance against your goals. Remember to segment your users into different categories based on demographics, user behavior, etc. This will help in breaking down your analysis in order to gain actionable insights.

Compare different product performance metrics to identify opportunities and red flags instead of studying each data point in isolation. Track changes and trends over an extended period to see your progress.

5 Key types of product metrics to track  #

Customer data is the fuel driving your product-led growth engine forward. Let’s look at 10 critical data points you should look at to optimize your product, retain customers, and more.

Acquisition metrics  #

These metrics track how effectively your product can attract and convert new customers.

Customer acquisition cost 

The customer acquisition cost calculates all your expenses on acquiring new users—from marketing campaigns to sales outreach and beyond. It's measured over a specific period, typically a month or a quarter.

How to calculate CAC

Sales, marketing, and advertising costs for a period of time / total # of new customers in the same period

Use this metric to

  • Assess the efficiency and effectiveness of your sales and marketing efforts

  • Inform your pricing strategy and iterate price points for profitability

  • Forecast revenue growth by comparing this with the lifetime value

Activation Metrics  #

These metrics help you understand how quickly users experience the value of your product.

Activation rate

The activation rate measures the number of users who have performed specific actions and completed milestones within the product to indicate that they've reached their aha! moment in your product. 

How to calculate the activation rate

Number of users who have completed activation milestones / Total number of users

Use this metric to

  • Understand the effectiveness of your onboarding flow

  • Track how new users are engaging within your product

  • Measure feature adoption to see which features are most used

Time to value 

Time to value tracks the time it takes new users to reach their aha! moment within your product. It’s the moment they think: oh, wow, this is awesome. 

How to calculate time to value

Calculating time to value requires you to identify your user’s aha! moment. This can be tricky, as the aha! moment is unique to each user—or, more broadly, each persona. You want to measure the time taken by each user to find the features that’ll help them do their job better—a task best done with the help of product analytics software. 

Use this metric to

  • Better guide users to the features they’ll find most useful

  • More effectively turn free trials into paid subscriptions

  • Identify patterns in user drop-offs and dive deeper to see what’s creating user friction

Engagement metrics  #

These metrics analyze how customers interact with your product and the time they spend using different features. 

Net Promoter Score (NPS)

Net Promoter Score (NPS) tracks your product and business’s overall perception among customers. It assesses how likely existing users are to recommend your solution to others.

How to calculate NPS

Percentage of promoters — Percentage of detractors

(Promoters are those scoring 9-10, and detractors are those scoring between 0 and 6)

Use this metric to

  • Measure customer loyalty and product stickiness

  • Predict how many customers will continue using your product

  • Identify power users and collect inputs about areas of improvement to enhance the user experience 

CSAT

Customer Satisfaction (CSAT) measures how happy or frustrated your users are with your product. They share a rating for different aspects of your product through a feedback survey. This metric informs you when a customer is at risk of churn or going into the red zone.

How to calculate CSAT

Number of satisfied customers (4 and 5 score) / Number of survey responses x 100

Use this metric to

  • Evaluate specific product features and elements of UI design

  • Predict renewals and churn for the upcoming quarter

  • Benchmark product performance and modify your product roadmap

CES

Customer Effort Score (CES) calculates the ease of using your product. Users rate their experience on a scale of 1 (difficult) to 7 (easy).

How to calculate CES

Sum of all customer effort scores / Number of respondents

Use this metric to

  • Assess customer satisfaction and overall user experience 

  • Find areas for improving your product experience and engagement

  • Estimate new customer growth rate based on the ease of using the platform

Retention metrics  #

Retention metrics analyze your ability to retain customers based on the overall experience you deliver.

Churn rate

The churn rate measures the percentage of users who stopped using your product in a given duration. It’s one of the most critical business metrics to estimate monthly recurring revenue. 

How to calculate churn rate

(Number of users at the start of a month — Number of users at the end of a month) / Number of users at the start of a month

Use this metric to

  • Forecast revenue leaks and losses in the coming months

  • Evaluate product-market fit and iterate product roadmap 

  • Gauge the effectiveness of customer success and support efforts

Retention rate

Retention rate calculates the number of users you’ve retained in a given period. This metric counts the number of customers who continued using your product across the given timeline. 

How to calculate the retention rate

[(Number of users at the end of a period — Number of users during that period) / Number of users at the start of a period] x 100

Use this metric to

  • Measure customer health and estimate loyalty

  • Predict recurring revenue and business health for the coming period

  • Validate your product value and make adjustments to maximize it

Revenue metrics #

These metrics are crucial for determining your business’s profitability by calculating and forecasting your revenue potential. 

Customer lifetime value 

Customer lifetime value (LTV) calculates the economic value of every customer and your entire customer base by calculating the net profit you can earn from each user throughout their lifespan. 

How to calculate LTV

Average revenue per account / Revenue or Customer churn

Use this metric to

  • Budget your customer acquisition efforts and balance costs with revenue

  • Segment customers and implement targeted customer success tactics

  • Forecast your profitability and signal your business’s sustainability to investors

Average revenue per user 

Average Revenue Per User (ARPU) tracks the revenue generated by a single user on average. This metric takes one user as a unit and calculates your revenue per unit.

How to calculate ARPU

Total revenue / Number of users

Use this metric to

  • Make data-informed pricing decisions based on revenue per unit

  • Prioritize features depending on the features driving the most revenue

  • Track revenue trends to identify patterns for growth 

Best practices for using product metrics  #

Knowing which metrics to track is only half the battle. You need a solid framework to understand and act on these numbers in order to use them to your advantage. 

Establish a baseline  #

First things first, define a starting point for your product performance metrics. This baseline is your current state, and it serves as a benchmark to track progress. 

You can use this baseline to:

  • Identify positive or negative trends for different metrics

  • Set realistic goals depending on your existing state

  • Benchmark performance against competitors 

  • Forecast growth and challenges 

These benchmarks help you identify positive or negative growth from day dot.

Make sure the data is actionable   #

Customer data holds no value if you don’t find any actionable insights from it. Simply knowing your CSAT score is low doesn’t cut it. You have to find actionable information about what’s causing these low scores. 

If you find poor results, dig down to the root cause behind this bad performance. Back up quantitative data with qualitative research by talking to your customers first-hand and doing internal analysis with your product team. Lots of these metrics are merely a starting point—intended to flag issues in need of investigation.

Make the insights accessible to everyone  #

Don't keep your product data in silos. Work in a cross-functional setup to share these insights with every team across your organization and help them make data-driven decisions to strategize. 

For instance, sales teams can use product usage metrics to identify the most used features for every persona in order to push them in their outreach. 

3 Must-have tools for product metrics  #

Here are our top recommendations for tools to track key performance indicators inside your product.

Chameleon: for collecting contextual feedback in-app  #

Chameleon sits inside your product to engage and educate users at different touchpoints. You can use in-app micro-surveys to collect real-time feedback based on different triggers. Give these surveys a native look by customizing the style to blend into your product. 

Create targeted surveys for every page, user behavior, persona, and more. You can then integrate the tool with Slack to get rid of data silos and derive actions from the data quickly. 

It’s fully no-code and easy to use—get started today.

Mixpanel: for advanced user behavior analytics  #

Mixpanel is an advanced event analytics solution that helps you monitor and measure user behavior deep inside your product. It enables you to view the entire customer journey on your dashboard and find points of friction, and stay on top of conversion and retention for every customer.

You can also assess the impact of your newly shipped features or interface, validate the ROI, and quantify your success. The tool will help you uncover meaningful insights behind changes in metrics. 

Segment: for high-quality customer data management #

Segment is a customer data platform designed to give you a unified view of customer behavior across all touchpoints in and outside your product. You can segment your users, track behavior, and deliver targeted messages in real-time. 

The platform also helps you collect relevant data about users and ensure all teams are on the same page with a shared data dictionary.

Get ahead of your customers with product metrics #

That’s a wrap on the best product metrics and how to use them. 

Remember: driving a car without a dashboard is just as bad as having a dashboard you don’t understand. 

Start by outlining your goals for product performance, then choose the right metrics that align with these goals. Set up workflows to interpret all the data meaningfully and draw insights to make necessary modifications to your product. 

Now, it's over to you: start tracking product performance today and boost your product's growth!

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