Marta Ros Aligning Product and Business Metrics

Automatic Summary

Aligning Your Product and Business Metrics: A Complete Guide

Have you ever launched a product, only to find it failing to make a significant impact on your business? You are not alone. The question that arises then, is how to rectify this situation. The answer lies in aligning your product and business metrics. Let's delve into it with a real-life example.

Understanding the Players

Lets begin by defining the units to align. The business is concerned with the company's big picture - its mission, vision, and strategic objectives, including profitability, growth, market share, etc. It involves keeping the company running smoothly and includes aspects of company operations like marketing, sales, finance, human resources, and administration.

On the other hand, product focuses on the solutions the company provides to its customers. The product unit is inherently about designing and developing the company's offerings which can range from software applications and digital platforms to hardware devices.

Mind The Metrics

Business Metrics

Business metrics give a holistic view of the overall health of the company, focusing on profitability, how many customers we have, market share, among others.

Product Metrics

Product metrics provide granular insights on user interaction with the products. Metrics like user engagement, stickiness, retention, conversion rate, NPS, or CSAT are typical ones.

Aligning Product and Business Metrics

When product and business metrics fail to align, it hinders a company's success. To accomplish the alignment, you can follow a series of steps in a systematic approach.

1. Aligning on a Mission

Product mission should not differ too much from the business mission. Both units must be able to agree on a common mission.

2. Establish the North Star metric

The North Star metric is that one key performance indicator (KPI) that reflects the accomplishment of the organization's mission.

3. Define Clear Business Objectives And Their Metrics

It is crucial to identify those key business objectives and corresponding KPIs that will reflect on whether the business is on its right path towards revenue growth.

4. Identify Key Product Metrics

These metrics provide granular insights into how users interact with the product, how satisfied they are with it, and if they keep returning to it.

5. Aligning Product Metrics with Business Metrics

The last step is to link these product metrics with business metrics. This can be done successfully with the help of a KPI tree.

The Conclusion

Alignment of product and business metrics is not a theoretical concept, but a practical necessity for achieving success. This synergic approach ensures a sustainable growth via understanding how much your product contributes towards reaching the business goals of your company.

Video Transcription

I guess that we can start already. It's already the the time of the talk that you have joined already.So thank you very much for being here and selecting this talk among any others that they are out there in the event So let me let me start with a question for you, and I know that we cannot interact because we are online. So it's going to be difficult, but have you launched a product and didn't have any business impact. Indeed, this is the question that I have made myself, and it had happened to me more than once. So that's why I have spent a little bit of effort and some time on resolving this or trying to resolve it this. But let me go a step back because what I'm going to telling you today, it's going to be based on a real story, the one that, I have gone through all the journey that I have gone through in in for you.

So let me introduce super briefly myself. I am Marta. I'm product director at 4 jobs, which is part of Adevinta. And I'm going to give you a little bit of context of what is at Avinta and what is in for you to understand better the example then I'm going to walk you through. So I'm not going to deep dive a lot because I don't want to sell the companies just that for you to have the So at the Vintech is a leading online classified group that operates in 10 different countries with a huge portfolio, 25 digital marketplaces. I'm going to over simplify it. Right? We have 2 different type of marketplaces. What we call the generics, ones, the ones that sell where you can sell everything. And the specialist ones. Like, the dedicated ones either to, mobility or real estate or jobs in this case. So, now I'm going to talk about infill ups, right, infill ups is, job work. It has 25 years already, and it operates both in, Spain and in, Italy. Right?

Our main metric among all the ones that you can see on the slide is what we call Allegria. And allegria's is the joyfulness or the joyfulness that represents how many people find a job throughout our platforms. Right? And this is important to understand the overall, journey. But Today, we are going to be talking about aligning product metrics and business metrics. So it's about product business, business product. And these are 2 interconnected components of an organization. And both are key to drive success to the company. Right? But sometimes it is difficult for us to be a line product, with business, business with product because sometimes we don't talk exactly the same language. In my humble opinion, there's sometimes a little bit of misconception of what both of them mean.

And and there's indeed some people that think that they are exactly the same thing. Why? Because sometimes it is difficult to draw, like, a line in between both of them, because those 2 companies are key and specifically the product and more in tech companies plays like a key role on our business. And delivering the product on or one of our main goals in product is indeed impacting the business itself. No? So it is not only about building great products, beautiful products, or product that people use. It's also to drive this success to our business. So that's why I think it's crucial to align both metrics, the business, and the product metrics. And this crucial because it also going to allow us to understand if the effort that we are putting in developing the product itself is going to contribute to this broader organization, organizational goals.

Right? So in order to understand, the or in order to understand what is in common in between them in order to understand how to align. It is important for us to understand what are those differences, what are the the fair points of both sides. So let's just start with this. Let's start with the big picture, the the purpose of each of 1. So when we are thinking about business, the business is thinking about the the the whole thing, not the the big idea behind everything. And this means that they are going to be the one defining the mission, the vision, the goals. And to be more concrete is about defining the strategic objectives of the company. Right? Includes, profitability, growth, market share, all of that.

When we are talking about product, it is more about the stuff the company makes, not the one that what we are offering to our users and customers. It is the offering of a solution and the solution that the company provides to the customers. So indeed, the product are designed and developed to address specific market needs or opportunities that indeed the business people have identified before. Well, we are talking about the scopes, what are the limits, what each one does, the business side is in charge more on keeping the company running smoothly, right, that this include aspects of the whole company operations, and this includes product, but this is not the only thing that includes.

It also includes marketing, sales, finance, human resources, administration. And when we are going to talk about product, it is one part of the business, and it's about making and improving the actual things that company is saying. Right? So specifically, what we are doing is designing and developing the company offering. And that could be whatever. Right? When we are in a tech company, it's more about software applications or digital platforms or even hardware devices. So it could be anything like tangible or intangible solutions. And let's go to the metrics and how to identify them in terms of what is a business metric and a product metric. And metrics at the end of the day are the ones that are going to tell us if we are doing the right thing. Right?

So when we are talking about business metrics, business folks keep an eye on how much money we are making, or how many customers do we have or that's the people that is working in their company are having doing what they are doing. And this include metrics such as revenue or profit metrics or market share. Or you naming. Right? You have it in the slides. And it's these are very concrete. When we are talking about products, our think more about how many people are using the product or how happy they are with our product, or if they get coming back to our product, right, and this may include metrics such as user engagement or retention or conversion rate or NPS or CSAT, things like that.

Now Let's talk about the alignment of both parts, not the the the the both type of the metrics. And now I'm going to walk you through the journey that we have gone in in for you. Right? And it's a 5 step journey. Let's start with the first one, and it's about aligning on the mission. So we already said that the business faults are the ones that are defining the mission, the vision, the goals. Right? So product at the end of the day must be aligned with that. Indeed, I don't specifically believe that we need to have different missions in product and in in business.

So Let's give the example of info yet because this is the one that I'm going to walk you through. Right? Our vision is to provide candidates with relevant offers and become a trusted professional solutions for the recruiters. So the product at the end of the day must enable this vision of the company. But most importantly, what we need to do is make sure that we are accomplishing this mission. And for that, we need to align on one KPI that must be common, and that will be the north star metric. So We spent some time on aligning on this northeastern metric, and we went through 3 checkpoints. The first one is the one that I have mentioned.

Now first one, we need to be aligned on the vision. As I mentioned before, from my point of view, it be the the same one or very similar or do not defer so much. So just to recap, it's providing the candidates with relevant job offers and becoming these trusted, professional solutions. The second step is about measuring the customer value. Right? So we must be sure that we are delivering something that is truly understanding what is the value that we are providing throughout the platform. Right? And in order to identify this, we identify, like, 3, let's say, different games. Right? First one is the attention game. So how much time customers are willing to spend on your product. And this could be products more like social media. Right? Then we have the transaction game.

How many transactions that your customer make in your product? And these are pure marketplaces. But more like Amazon, my marketplace. And the other one that we took into consideration is the productivity game. So how efficiently or how affect if, yeah, someone is getting the work done throughout your platform since the work to be done in our platform on the candidate side is finding a job on the employer side is finding the right candidate. We decided that we were going to be a like, playing the productivity game. And we did have a divide or, sorry, divide, no, defined what is our critical event in this productivity game that is hiring successfully the the ideas that I mentioned before of this joyfulness. And the last step is that this normal style metric must be a leading indicator that you are going to bring revenues.

So this means that if you are improving the metric, it will positively impact your revenues. Right? So what we agreed is that our north star metric was going to be the success match. And what does this mean? Is a middle point in between the starting of the journey of both candidates and a companies finding either the the new person or the new job and the hiring successfully completed I'm not going to deep dive on the way that we have calculated, but this was important to be aligned.

And indeed, today. This is something that we are reviewing on a monthly basis with the whole company. The 3rd step is to find those clear, business objectives, and therefore, the key business metrics. So when I when I was explaining it before, what is a business metric is to give us this holistic view of the overall health of the company at the of the company. The first thing is that we need to define the goal. And in our case, and in for jobs, our make on is revenue growth. That was clear. And in order to understand if we're in the right path of the revenue growth, we have these different key business metrics. Markets are new users, visits, loved users, and so on and so forth. Right?

And then we need also to define because all these business metrics are not going to tell us if we are delivering the value to our users. And this is very important from a product perspective. Right? So we need to identify the key product metrics. The product metrics, as I mentioned before, are the ones that are focused the performance and effectiveness of the individual features that we are providing to our customers, the aspects of the products, you know, and these metrics are going to provide you this granular insight on how they are interacting with our product.

So did we have these, let's say, typical metrics, that definitely we need to look into, but they're not the only one the typical ones I'm referring to retention engagement, it's stickiness, but we need to identify those product metrics that are going to show us if we go to into the right path, the right path of impacting our north star metric.

Right? So let's give an example where we are talking about the candidates and connected with this success smarts for us. What is important is that we improve the employee ability of our candidate. This means that we need to understand the the percentage of the candidate that has this recommendation potential of that. It's going to be someone on the other side, an employer that is going to be interested in this candidate. And we have find also what are those factors that are going to be influencing this potential of being recommended, either having a last experience in form or the CB also went to form. Right? And the last one, once that we have the notice are the KPIs from the business side and the product side is aligning them.

How do we align them throughout KPA trees? And how do we build KBA trees? On the top of the tree, we place our north star metric. And we start with the first level of the KPIs that are going to be most likely the ones that are going to be impacting positively on this north star metric. This metrics could be either a business or product metrics. And this will give us visual understanding of the connection of these KPIs. Right? The beauty of the KPI tree is that it has different level Right? So that means that the ones that are in the first level are going to be more influence or they are going to be influencing more. On the northeast parametric and the ones that are, for example, in a third level will influence less.

So this will also allow us to prioritize the most impactful metrics and the most, most importantly, I would say the product metrics that are going to be more impactful. Right? And as I said, because it is connected to the our metric, which has a positive impact on revenue, then we are solving the the first problem that I was sharing with you. So in order to recap the the different steps, first one is on aligning on the mission. So product mission that cannot defer that much from the business mission. The alignment on the north star metric, something that is leading you or telling you if you are in the right path to achieve that mission, define those clear business objectives with their own KPIs, same on the product site, not only focus on the, let's say, typical one, the ones that we identify as product breakthroughs, but the specifics from your product And the last part is more about linking those product metrics with business metrics with your best slide that could be this KPI tree.

That is going to show you the relation and the distance of these metrics and give you the possibility to prioritize. So in conclusion, these alignments in between product and business metrics from my point of view is not only a theoretical concept, but a practical necessity for your company to drive into success by understanding how much you are contributing, you know, for reaching these business goals you are going to be ensuring that our metrics are in sync, and therefore, you are in a sustainable growth.

And This is it for today. Thank you very much, and I think that perhaps we can have a little bit of questions to be answered. Thank you. Okay. So I'm going to start reading the first one from, isa, how can you align this approach on an internally used product, such as financial performance insights product, a product that is used to help the business make more informed decisions. Rather than generating sales or profit. Thank you for the session. I don't know if I'm fully understanding the question, isha, but I'm assuming that you have an internal product that is giving you a little bit more information about the safe that you are making or the profit that you are making. For me, it could be a little bit, the same kind of getting to understand those, and I I'm I'm assuming that that product is showing you most likely the business metrics what you are missing in this picture probably is the product metrics. And, therefore, you need to sync them somehow And the KPA tree can give you a little bit more understanding on how they are interconnected.

So understanding on your own product that you are offering how your product is influencing that, profitability that you are bringing or the number of sales that you are bringing don't know if I'm answering your question 1. I'm going to, read what Maria Fernandez is asking. How do you establish your north star? So what we did is running a workshop, an internal workshop with different profiles in the company. So people from a data product deck business in order to be aligned altogether on what we were going to be establishing as our north star metric. So the workshop was going through those steps. So those steps that I have mentioned were very well defined. And we align on each one and make an agreement with all of us among all of us in order to achieve to the North Star Metric.

So once that we decided the north star metric and the definition of it, we are starting to deep dive on the north time metric on how to calculate it. And now we are still in the process of verifying also if this has an this is a leading indicator of the revenue. Right? We are still in the in the path of that. Eve Elise, you were saying, Martha, you spoke my language alignment between business product is essential and also a cross functional alignment between marketing, sales, and customer service. Totally agree with you. And, they are very involved in the conversation, and that's why also sharing the north star metric with all the company in the all hands, it helps a lot on the overall, alignments on this.

And that is an excellent presentation. Thank you very much. What is the best practice process of identifying your most granular product metrics. Do you only have quantitative or also quantitative metrics? It is a very good question. And, the way that we did it and the the exercise of the KPA tree was also helping us to think about product metrics in a different way. Right? So when we were the the when I joined Infos, that was a year and a half ago, they already have defined a product metric. That doesn't mean that those were the metrics were not well defined. My problem was that perhaps we were missing some of the of the product metrics that were going to give us a better and the standing if we are moving the north star major.

So the exercise of building the KPA tree help a lot. And the way that we did it, it was per squad. They defined their own KPI tree aligned with their own bonded context, and then we share it all together to have a common KPI tree. And the KPI tree is more also it's very concentrated on quantitative Even though outside the KPA tree, we also consider qualitative metrics. Good. And we think we are over the time. And thank you very much for sharing with me this moment. I'm happy to share my knowledge with you. Thank you. Bye.