Key Outcome Metrics

Outcome metrics are those that measure the real impact and value generated by the product or team's work, aligning directly with business objectives.

Unlike Output metrics, which measure internal efficiency, Outcome metrics assess whether success is being achieved in terms of customer satisfaction, profitability and strategic goals.

For most organizations (except nonprofits), these are the most important metrics, as they indicate whether the product is fulfilling its fundamental purpose in the marketplace and contributing to the company's viability.

Business Metrics (Profit, Revenue, Cost of Acquisition, Customer Lifetime Value)

These financial metrics are fundamental to assess the economic health of the product:

• Profit: is the final metric for most businesses. It is calculated as total revenue minus total costs (fixed and variable).
• Revenue: The money generated by the sale of the product or service.
• User Acquisition Cost (UAC): Represents how much money is spent on average to acquire a new user (including marketing, sales, advertising, etc.).
• Lifetime Value (LTV - User Lifetime Value): It is a prediction of the net profit attributed to the entire future relationship with a customer. It can be calculated by multiplying the average purchase amount by the average purchase frequency and the average duration of the relationship with the customer. For a business to be profitable, LTV must be significantly higher than CAC.

Conversion Rate and Vanity Metrics (Traffic, Active Users)

Conversion Rate: The percentage of users who perform a desired action (e.g., purchase, subscribe, download).

It is a crucial metric because it links user activity to a tangible business result.

CAC can also be calculated by dividing marketing spend by the number of conversions.

Vanity Metrics: Metrics such as total traffic or number of daily active users (DAU) can be misleading if analyzed in isolation.

An increase in traffic without an increase (or even with a decrease) in conversion rate may indicate that you are attracting low-quality traffic that does not generate value.

It is vital to always analyze these metrics in conjunction with conversion rates and other performance metrics to get a true picture of performance.

Net Promoter Score (NPS) for Satisfaction and Loyalty

The Net Promoter Score (NPS) is a widely used index to measure customer satisfaction and loyalty to a product or brand.

It is based on a single question, "How likely are you to recommend [product/brand] to a friend or colleague?". Answers are given on a scale of 0 to 10. Customers are categorized into:

• Promoters (9-10): loyal and enthusiastic customers who will actively recommend the product.
• Passive (7-8): Satisfied but indifferent customers, vulnerable to competition.