June 1, 2023
Unlocking Your Product Potential: a Pirate’s Guide to Product-Market Fit
How can you make sure that what you offer is what your clients want? Try the pirate’s way.
How can you be sure that your product satisfies the market and users’ needs? Well, you may have guessed, but you may monitor it – sucessfully. During the recent Product-Market Fit event at Factory Berlin, Ula Augustyniak, Product Designer and leader of the Measure & Learn Chapter at Boldare, presented metrics that can help you reach your product potential. Here is a quick guide on how to make the most of them.
It’s always about “why”, but also about “how”
It goes without saying that metrics are crucial when evaluating your product potential. Why? Because thanks to them companies can not only verify where conversion is the lowest and the product needs optimization, but also they allow us to make quick and accurate decisions based on specific numbers.
“It’s important to analyze and set up how we should measure our product properly. ”
Pirate metrics may guide you
There are many tools and ways to gather data and set up metrics, but you need to know what information and numbers to look for. So what metrics should one focus on? AARRR metrics (also called pirate metrics) can come in handy while assessing product-market fit.
AARRR stands for acquisition, activation, retention, referral, and revenue – the stages of the customer life cycle for a startup. It’s an approach to analyzing business performance that focuses on customer satisfaction. The framework was developed by Dave McClure — the successful entrepreneur and co-founder of 500 Startups. According to him, a founder or CEO should focus on just five key metrics, or KPIs, to be successful.
“You can measure every aspect of your product, but how many of your metrics really matter? That’s why pirate metrics are so useful because they help business owners and marketers focus on the most critical metrics.”
5 tips for each stage of pirate metrics
Acquisition
The acquisition stage presents how users get to know about your product and where they come from. This metric helps evaluate the return on investment (ROI) of marketing campaigns and make data-driven decisions to optimize customer acquisition strategies.
When acquisition is low, it’s important to work on marketing tactics and optimize it.
Tip: Experiment with new channels which you haven’t used so far. Maybe it’s time to set up new social media channels or use the newest paid marketing tools?
Activation
Activation shows that visitors understand the value of the product and is reflected in how quickly and effectively new users are fulfilling their needs with the product.
If the activation rate is low, it may indicate that the activation process is too complicated or that users are not receiving enough value from the product or service, or it’s hard to find the main value.
Tip: Check if the unique value of the product is highlighted, easy to find, and understandable.
Retention
Retention makes visitors stick around so the question is… do the users come back?
If the retention rate is low, it may indicate that users are not finding enough value in the product or service, or that there are barriers preventing them from returning.
Tip: Validate whether the value proposition is what the user needs by market research, user testing or test your business model: maybe pricing is what prevents users to come back?
Referral
Referral means that users like the product so much that they tell others about it and recommend it. However, while measuring this keep in mind that such metrics as NPS only take into account your customers, while a lot of non-customers can act as detractors and generate bad word-of-mouth publicity.
Tip: Think about how to encourage users to refer products to others by offering attractive advocacy or referral programs.
Revenue
Optimizing revenue requires a holistic look at all aspects of the business, from customer acquisition and retention to pricing strategy and operations.
Tip: Experiment with different pricing models and strategies, such as tiered pricing, subscription-based models, or dynamic pricing, to find the optimal price point that maximizes revenue
Conclusion
Once the product is launched on the market, pirate metrics can help a company continuously improve a product to ensure that it is and remains what clients want and expect. If you would like to learn more about this, rewatch Ula’s lightning talk below.
And join their upcoming event on 28.06.2023: Finding Product-Market Fit: Tools for maximizing your app’s market potential.
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