What Are the Most Important Product Analytics KPIs to Track?

It is 9/10 impossible to understand why users leave or stop engaging with your product without tracking important product analytics KPIs like retention rate and churn. Most businesses fear wasting money to acquire new users when the real problem lies in keeping the ones that they already have.

Measuring product analytics KPIs is important because these metrics allow you to track user behavior, make decisions based on data, and improve your product features so it yields good ROI.

In this article, we'll discuss the most important product analytics KPIs to track, why you should track and how you can identify the right metrics to track. Hey, firstly what does the term product analytics KPIs mean?

What are Product Analytics KPIs?

Product analytics is the practice of collecting and analyzing data to understand how well your product is performing. Product analytics KPIs are the key numbers you track within this process to measure success, identify areas for improvement, and make data-driven decisions.

For example, you might track how many people try your product (conversion rate), how often they come back (retention rate), or if they’re using certain features (feature adoption). Businesses that prioritize customer analytics are 2.6 times more likely to have a significantly higher ROI than competitors.

The Importance of Product Analytics KPIs

Basically, product analytics KPIs helps you identify what's working and what’s not. These key performance indicators (KPIs) help product teams, for example, track “features adoption rate” to know if customers like your new update or if it still needs improvement.

Also, KPIs like “churn rate” or “conversion rate” indicate how users have interacted with your product. Instead of trying things out based on your gut feeling, you should prioritize analytics KPIs to understand users, improve products and achieve sustainable growth.

Optiblack helps you seamlessly track and analyze these KPIs with data-driven insights that improves business growth. Learn more about our analytics solutions today.

Top 13 Product Analytics KPIs to Track

We know the importance and advantages of tracking our products' performance. However, you might not know the most important of product analytics KPIs to track.

So, I created a list of the top 13 best product analytics KPIs to track:

1. Daily Active Users (DAU)

You can measure DAU by counting the number of unique user IDs that interact with your product each day.

So, let's say a gaming app sees 50,000 DAU. This means 50,000 users log in and play daily. Each user is counted only once, regardless of how many times they access the app or perform actions like playing or scrolling.

2. Churn Rate

You get to know if customers aren't satisfied with your product by tracking churn. The formula to measure churn rate is:

Churn Rate(%) = (Lost Customers ÷ Total Customers at Start of Period) × 100.

For example, if you start with 1,000 customers but lose 200 within a month. The churn rate is (200/1000) × 100 = 20%.

3. Net Promoter Score (NPS)

This KPI metric indicates user satisfaction and the likelihood of word-of-mouth referrals.

NPS is measured by, for example, Surveying customers “How likely are you to recommend our product to a friend?” on a scale of 1–10. Subtract the percentage of detractors (0–6) from the percentage of promoters (9–10).

That is to say, A software company surveys 100 customers: 70 promoters, 20 passives, and 10 detractors. NPS = 70% - 10% = 60. The NPS is calculated by subtracting the % of detractors from promoters.

4. Customer Lifetime Value (CLV)

CLV helps gauge the long-term profitability of acquiring and retaining customers.

So, to measure the CLV: Multiply the average purchase value by purchase frequency and average customer lifespan. For instance, An online retailer’s customers spend $50 monthly for three years. CLV = $50 × 12 months × 3 years = $1,800.

5. Feature Adoption Rate

Feature adoption rate shows if new features meet user expectations and add value.

How to Measure It:

(No. of Monthly Active Users of the feature ÷ Total Monthly Users) × 100. Maybe, a task management tool introduces a calendar view, and 3,000 of 10,000 users use it within the first month. Feature adoption rate =  3000/10000 × 100 = 30%.

6. Customer Retention Rate (CRR)

Retaining customers leads to repeat purchases and upselling opportunities which basically increases CLV.

CRR(%) = (Customers at End of Period – New Customers acquired ÷ Customers at Start of Period)

 × 100. That is to say: An app starts with 7,000 users, adds 366 new ones, and ends with 5,700 users. CRR =  (5700 – 366 ÷ 7000) × 100 = 76.2%.

7. Conversion Rate

Conversion rate practically shows how effectively your product moves users toward profitable key goals.

To measure Conversion Rate, here's the formula:

Conversion Rate: (Total Number of Conversions ÷ Total Visitors) × 100. For example, if Optiblack gets 4,000 visitors in a month, and 200 make a purchase. Conversion rate would be =  (200 ÷ 4000) × 100 = 5%.

8. Average Revenue Per User (ARPU)

It is an important product analytics KPI metric to track that provides a clear view of how much value each user contributes to your company.

You can measure the Average Revenue Per User with this formula:

Total revenue ÷ Total active users.

For instance, an email marketing platform earns $175,999 in revenue from 5,683 users in a month, the ARPU would be = $175,999 ÷ 5,683 = $30.99.

9. Session Duration

It's an important marketing metric that shows how engaging and valuable your product is to users.

How to Measure Session Duration:

Total session time ÷ Total number of sessions.

Let's say:

An ecommerce blog in a week has a Total Time Spent on Blog as 150,000 minutes and a Total session of 30,000. The Session Duration would be = 250,000 ÷ 35,000 = 7 minutes.

10. Bounce Rate

This metric shows potential issues with user experience or relevance.

To measure bounce rate, here's the formula:

Bounce Rate(%) = (Number of Single Page Sessions ÷ Total Number of Sessions) × 100. So, let's say my course sales page gets 1,000 visits, and 524 leave without interacting further. The Bounce rate would be= (524 ÷ 1000) × 100 = 52.4%.

11. Activation Rate

Activation Rate measures how effectively your product delivers value early on to your customers.

The formula is:

Activation Rate(%) = (Number of Completed Milestones ÷ Number of New Users) × 100. If a streaming service has 5,000 new users, and 3,500 add their first movie to the watchlist. Activation rate = (3500 ÷ 5000) × 100 = 70%.

12. Engagement Metrics

These metrics reveal what users enjoy and engage with the most.

How to Measure It:

Track actions like button clicks, shares, and time spent on pages. For instance, an Instagram page decides to track its comments and shares in a month and recorded 100,000 comments and 50,000 shares and this indicates high engagement.

13. Monthly Recurring Revenue (MRR)

MRR shows you an overview of your product’s financial health and growth potential. It helps you forecast revenue, identify trends, plan budgets effectively, etc.

How to Measure It:

Monthly Recurring Revenue (MRR) = Number of active subscribers × Average Revenue Per User. So let's say, a SaaS company has 500 subscribers paying $20 per month. MRR = 500 × $20 = $10,000.

How to Identify the Right Product Analytics KPIs to Track

To choose the right product analytics KPIs to track, start by thinking about your product’s purpose, ask yourself: What do I need to know to improve this product?

For example, if you’re running a subscription service, you’ll want to track metrics like Churn Rate to understand how many users you’re losing and why or if you’re managing an online store, focus on Conversion Rate to see how many visitors turn into paying customers.

If you're struggling to identify the right KPIs for your product, we at Optiblack help you simplify this process. See how we helped 50 firms plus you optimize product performance.

Focus the KPIs to Your Product’s Goals

Every business and product has unique goals. Some SaaS companies might prioritize metrics like Churn Rate or Net Promoter Score (NPS) to assess customer satisfaction and loyalty.

Meanwhile, an eCommerce store might focus on Conversion Rate or Average Order Value (AOV) to monitor sales performance. So the catch is ‘focus on the most important goals for you product’ start by answering these questions:

• What is the main goal of my product (e.g., increasing user engagement, driving sales, retaining customers)?
• Who are my target users, and how do they interact with the product?
• What stage is my product in (e.g., launch, growth, maturity), and what metrics reflect success at this stage?
• Which actions or behaviors indicate users find value in my product?
• What challenges am I trying to solve (e.g., low retention, poor conversion)?
• How does my product generate revenue, and which metrics show financial health?
• What specific decisions or improvements will this data help me make?

In conclusion, tracking the right product analytics KPIs helps you understand what’s working, what’s not, where to improve, etc. Focus on important metrics based on product goals and business aims like retention rate, churn rate, MRR, CLV, feature adoption rate etc.

The KPIs metrics listed here are the most important for any business. So take the guesswork out, improve your product with Optiblack today and see how our firm helps you track, analyze, and grow your product.

FAQ

1. What are product analytics KPIs?

Product analytics KPIs are key performance indicators used to measure how well your product is performing. These metrics help businesses track user behavior, identify areas for improvement, and make data-driven decisions to improve ROI.

2. Why should I track product analytics KPIs?

Tracking product analytics KPIs helps you understand what's working, what’s not, and how to improve your product. It allows you to make informed decisions about product features, user retention, and your overall business growth.

3. What is churn rate, and why is it important?

Churn rate is a product analytics KPIs that measures the percentage of users who stop using your product over a specific time. It is important because you get to know if customers aren't satisfied with your product by tracking churn.

4. How do I measure customer lifetime value (CLV)?

To measure CLV, multiply the average purchase value by purchase frequency and the average customer lifespan. This gives you the total revenue a customer will generate during their relationship with your business.

5. What is Feature Adoption Rate, and how do I measure it?

Feature adoption rate is the percentage of active users who start using a new feature within a given time. It’s measured by dividing the number of users who adopt the feature by the total number of users, then multiplying by 100.