2 November, 2023
Value metrics are measures used to quantify the value a product or service delivers to its users or customers.
“Value” may be subjective—but it has very real implications for businesses. If customers perceive a product as valuable, they will likely buy it, use it, and recommend it. If not, you’ll likely struggle to make sales.
Value metrics are your best bet for keeping tabs on the perceived value of your product.
In this UXCam guide, we’ll explore value metrics from different angles—what they are, how to measure them, and why you should be tracking them. We aim to give you all the tools you need to optimize your product for deeper customer engagement.
Let’s get started!
Value metrics measure the value exchange between your product and customers.
Still confused? We don’t blame you.
To put this concept more simply, value metrics are a tool that lets you price your product based on the benefits users get from using it. A great example of this comes from Appcues—a popular product adoption tool:
“Monthly active users tracked” is a value metric for Appcues. The more users engage with the product’s onboarding tools, the more value customers get from it. That means they can safely charge more for more active users.
However, without understanding the qualitative aspects of user experience—what features and elements of the product make it valuable—it’s hard to get accurate data. That’s why, when measuring value metrics, you need to zoom out and look at the entire customer journey.
That’s where UXCam comes in.
We offer mobile product teams the data-driven insights they need to create user-centered products and features. By analyzing real user behavior, teams can easily step into their customers' shoes and gain a more profound understanding of their journey.
Functional value metrics measure how much or how often customers use a product or service. If your app sends automated reminders when a task is due, one functional value metric might be “reminders sent per user.”
Other common examples include:
Average session length
Feature usage rate
Outcome-based value metrics measure the outcome of an interaction with your product. For example, if customers use your mobile app to save money each month automatically, one possible outcome-based value metric is “amount saved.”
Other outcome-based value metrics include:
Number of conversions
Feature adoption rate
Number of product ratings
Monthly Recurring Revenue (MRR) is a financial indicator representing the anticipated monthly income a company receives from its customers in exchange for its products or services. MRR measures the company’s normalized monthly revenue. It’s a crucial cost measure in the operational analysis of a company
Customer churn refers to the proportion of customers who have discontinued using your company's product or service within a specified period. To determine the churn rate, divide the number of customers you lost during that time by the number of customers you had at the beginning.
The renewal rate is a metric that indicates the number of customers who actively opt for contract renewal. On the other hand, the retention rate represents customers who have chosen not to cancel their subscription, whether it be an automatic or intentional decision to renew their contract.
Revenue churn refers to the proportion of subscription revenue that a company fails to retain during a specific time frame. It also reflects the company's ability to maintain the value of existing customer contracts. Together with customer churn, which measures the retention of customers, these two metrics offer insights into the overall strength of a company's customer base.
Expansion Monthly Recurring Revenue (Expansion MRR) refers to the increase in monthly recurring revenue from existing customers between the current month and the previous month. It specifically excludes any new revenue generated from new customers or new sources. A high expansion MRR rate essentially suggests a revenue boost through effective customer retention.
Unit cost represents the average expense incurred by a business to produce one unit of a product or provide one unit of service. It includes both fixed and variable costs, like labor, materials, overhead, and production expenses. Monitoring cost per unit helps ensure competitiveness and sustainable financial health.
Understanding your customers is the first step in identifying the right value metrics for your business. There are multiple approaches for collecting this information, including surveys, interviews, and user testing. The goal is to gain insights into what your customers value most about your product or service.
The use case of your product plays a significant role in determining the value metrics. It’s essential to understand how different customer segments use your product.
For instance, a video platform like Wistia might consider the number of videos uploaded as a value metric, while a communication application like Slack might consider the number of messages sent.
Your value metrics should align with your long-term business goals. This means that the metrics you choose should help you track progress towards achieving these goals. For example, if one of your goals is to increase customer satisfaction, you might pick customer satisfaction score (CSA) as one of your value metrics.
Tracking product usage patterns of different customer segments can provide valuable insights for determining your value metrics.
You should focus on:
Which features they use and which they don’t.
Usage frequency, time, and intensity – how often and how long they use it.
Goals and objectives they achieve and the ones that they don’t.
These are the dimensions along which you could plot your product value.
UXCam's segments feature enables cohort analysis and behavior comparison between users. It also provides insights into the user journey, like the screens they visited before and after a certain screen. This helps to understand how different user segments navigate and interact with your app (and derive value from it).
Housing.com used UXCam’s segmentation and session replay features to discover why users weren’t adopting their mobile app. They found that a specific user segment wanted to be able to search for housing in multiple cities at once—this was the value they were looking for.
Adding this feature led to a 20% increase in product adoption.
Gathering relevant data from your customers is crucial for determining your value metrics. This can be done through various methods like surveys, interviews, user testing, and data analytics. The data collected should be relevant to the value metrics you are trying to determine.
Experimenting with different metrics can help you find the ones that best represent your product's value to your customers. This involves testing different metrics, analyzing the results, and refining the metrics based on these analyses.
Analyzing your competitors can provide valuable insights into what value metrics might work for you. This involves understanding what products your competitors offer, their sales tactics and results, their pricing, and any perks they offer.
It’s important to regularly review and refine your value metrics based on new insights and changes in your business environment. This involves monitoring your metrics, analyzing the results, and making necessary adjustments to ensure that they continue to represent the value your product provides to your customers accurately.
Choosing the right value metrics involves understanding your customers, aligning with business objectives, and being flexible. It should be tailored to your product's unique use case and align with long-term goals. Experiment with different metrics and keep refining your approach.
But remember—a holistic picture of value cannot be achieved through a single metric. The key is finding the right metrics combination to give you an accurate picture of customer value.
UXCam is an all-in-one mobile analytics tool that helps mobile product teams develop that holistic picture. Features like session replay, event analytics, heatmaps, and more can provide valuable insights into user behavior. Try UXCam today for free today.
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