Metrics & Analytics
North Star Metric
A single metric that best captures the long-term value your product delivers to customers. It aligns the entire organisation.
Examples:
- Spotify: Time spent listening
- Airbnb: Nights booked
- Slack: Messages sent
A good north star is: leading (not lagging), actionable, and linked to customer value.
Leading vs Lagging Indicators
| Leading | Lagging | |
|---|---|---|
| Definition | Predicts future outcomes | Measures past results |
| Example | Sign-up activation rate | Quarterly revenue |
| Use | Early signal, course-correct | Historical reporting |
AARRR Framework (Pirate Metrics)
| Stage | Metric |
|---|---|
| Acquisition | Users discover your product |
| Activation | Users have a first “aha” moment |
| Retention | Users come back repeatedly |
| Revenue | Users pay for value |
| Referral | Users invite others |
Cohort Analysis
Track groups of users who signed up in the same time period. Measure their behaviour over time. This reveals:
- Is retention improving or declining?
- Do new features actually change behaviour?
- Which acquisition channels bring the best users?
A/B Testing
- Form a hypothesis (e.g., “Simpler checkout will increase conversion”)
- Define success metrics
- Run experiment with control and variant
- Calculate statistical significance
- Decide: ship, iterate, or kill
Common pitfall: Stopping an experiment too early. Predefine sample size and duration.
Data-Informed vs Data-Driven
- Data-driven: Data makes the decision
- Data-informed: Data informs, but judgment and context matter
Great PMs are data-informed. They combine quantitative signals with qualitative understanding and strategic thinking.