Usage Metrics

Distinguish between vanity metrics and true user value.

Author

Mark M
May 25, 2023

If you run a restaurant counting how many people walk through the door doesn't tell the whole story of how well your business is doing.

  • Do they order anything?

  • Are they just lingering?

  • Do they order from the main menu or just appetizers?

  • Do they come back?

Usage metrics are like having a detailed diary of every diner's experience. They tell you who's showing up and how they interact with what you're offering.

Usage Metrics

Usage metrics solve this by providing clarity on how, when, and how often people engage with your offering. They help you distinguish between vanity metrics and true user value.

Usage metrics are grounded in the principle that value is created through actual use, not mere possession. They align with the concept that successful products become habits or essential tools for users. These metrics help validate that you're not just creating something people acquire, but something they rely on and integrate into their lives or workflows.

Importance of Usage Metrics:

  1. They indicate whether your product is actually solving a problem for users.

  2. They can predict future behaviors like churn or upsell opportunities.

  3. They provide insights for product development and feature prioritization.

  4. They can be early indicators of product-market fit.

  5. They help in identifying power users and understanding what drives engagement.

How it works:

Start with basic usage metrics like:

  • Daily Active Users (DAU) and Monthly Active Users (MAU)

  • Session length: How long users spend on your product per visit

  • Frequency of use: How often users return to your product

Next Steps:

Dive deeper with:

  • Feature adoption rates: Which features are being used most/least

  • User flow analysis: How users navigate through your product

  • Cohort analysis: How usage patterns differ among user groups

  • Stickiness: DAU/MAU ratio to see how many of your monthly users are daily users

Extra Steps:

Implement advanced usage analytics:

  • Predictive usage modeling: Use machine learning to forecast future usage patterns

  • Multi-touch attribution: Understand which features or interactions lead to key outcomes

  • Custom event tracking: Create specific metrics unique to your product's value proposition

  • Real-time usage monitoring: Set up alerts for unusual usage patterns or drops in engagement

Get it Done:

  1. Identify the key actions that represent value in your product.

  2. Set up analytics tools to track these key actions (e.g., Google Analytics, Mixpanel).

  3. Establish baselines for your core usage metrics.

  4. Create a dashboard to monitor these metrics regularly.

  5. Set goals for improving key usage metrics over time.

  6. Analyze patterns and anomalies in your usage data.

  7. Use insights to inform product development and marketing strategies.

Objectives & Actions:

  • Learn how to identify and track relevant usage metrics for your specific product.

  • Recognize the relationship between usage metrics and other business outcomes.

  • Analyze how different usage patterns might indicate different levels of user satisfaction or value.

  • Evaluate the balance between breadth (number of users) and depth (intensity of usage) of engagement.

  • Consider how usage metrics can inform decisions across product, marketing, and customer success teams.

  • Implement tracking for at least three key usage metrics in your product.

  • Develop a hypothesis about what drives usage in your product and test it using your metrics.

  • Create a plan to improve one key usage metric by 10% over the next month.

Happy Building!

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