Why is setting and measuring goals important?
Setting goals and then measuring progress towards them is the only way to monitor success or failure.
Secondly, goals act as the link between your roadmap and the product strategy and vision.
Thirdly, goals act as the universal currency to drive meaningful prioritisation.
Finally, metrics are the most effective tool to make goals quantifiable, and to track progress towards the goals.
What to measure and how to measure?
Measure the most important goal.
Quantify the goal with a single success metric – that is simple to understand, easy to measure, and actionable.
For example, I would use the single success metric below if I were the PM for the following teams/products.
1. Uber Rides: the number of rides with a 4+ star rating
2. PayPal: number of transactions per day
3. Netflix: number of users watching more than 20 minutes every day
All of the above are simple, straightforward, non-ambiguous.
But, they have limitations and tradeoffs. This is where health/secondary metrics come in.
1. Uber Rides: total number of rides per day, avg. transaction amount, user growth (rider and driver)
2. PayPal: % failed transactions, avg. transaction amount.
3. Netflix: daily logins, home page CTR, section-wise CTR
How to select the right goal and metric(s) to measure?
1. Understand and establish a clear goal. If you’re early stage, maybe getting more users is the goal. If you’re a mature company, perhaps improving customer experience is the goal.
2. Make all goals easy to measure and understand.
3. Define a deadline for each goal.
4. Select one (at most two) metric that quantifies the goal and measures progress.
5. Monitor other (health/secondary) metrics that measure important aspects about the primary metric.