How can you prioritize product metrics based on customer value?

1 What is customer value?

Customer value is the perceived benefit that your product provides to your customers, relative to the cost and effort they invest in using it. Customer value can be measured by various metrics, such as customer satisfaction, retention, loyalty, referrals, revenue, or profitability. However, not all metrics are equally important or indicative of customer value. Some metrics may be more relevant for certain product stages, goals, or segments than others. Therefore, you need to align your metrics with your customer value proposition and your product strategy.

3 How to align your metrics with your customer value proposition?

Once you have defined your CVP, you need to identify the key metrics that reflect how well your product delivers on your promise to your customers. These metrics should adhere to the SMART criteria and be aligned with the stages of your customer journey and the actions that your customers take to achieve their desired outcomes. For instance, if your CVP is to help freelancers manage their projects and invoices more efficiently, some metrics you could track are acquisition (number of sign-ups, conversion rate, cost per acquisition), activation (number of projects created, number of invoices sent, time to value), retention (number of active users, churn rate, retention rate), referral (number of referrals, referral rate, net promoter score) and revenue (average revenue per user, lifetime value, customer acquisition cost).

4 How to prioritize your metrics based on customer value?

After you have selected the metrics that match your CVP, you need to prioritize them based on their impact on customer value and your business goals. Using a simple matrix to plot your metrics along two axes – customer value and ease of implementation – can help you categorize them into four quadrants. High value, high ease metrics should be your top priority as they have a high impact on customer value and are easy to implement. High value, low ease metrics should be your long-term goals as they have a high impact on customer value but are hard to implement. Low value, high ease metrics should be your quick wins and low-hanging fruits that can boost product performance and confidence. Lastly, low value, low ease metrics should be your last priority and avoided unless they are essential for product viability or compliance.