Best Practices

How to turn your data into insights and build better products

Published Jan 11, 2021

It was a much-anticipated idea being developed by one of the world’s most successful technology companies: an optical heads-up display worn like a pair of glasses, but with many of the capabilities of a smartphone. Engineers and product designers at Google worked on it for years, tinkering with prototypes and attaching them to glasses frames with wire and tape until they had a working product.

But when Google Glass was finally released to the public, it’s reception was underwhelming at best. The team had made a big assumption early in the development process that turned out to be incorrect: that people actually wanted what they were building and that it would solve a real problem.

Fitness technology Peloton experienced the opposite outcome when they released their popular smart cycle to the public: People loved it, and it quickly became a hot commodity. Now the company is working to get more bikes in more people’s homes faster than ever.

Peloton succeeded where Google Glass failed because they were able to identify a true problem, that people wanted to exercise and improve their health but didn’t always have time to get to the gym, and solved it with an in-home, on demand product. They started with “why,” instead of “what.”

In our latest webinar, Pendo’s Christine Itwaru, director of product ops, and Stephanie Tanzar, director of product management, discussed how the wealth of different metrics and data sources available to product teams today can help you identify the why behind what your building to find your own Peloton-style moment.

Connect the why with the work

The best way to make a business case for any product, feature, or improvement you’re considering building is to start with the end result in mind, then ask yourself three questions about it: who is the target audience, what sort of pain is it addressing and is it acute enough to be worth the time and effort, and what is the desired business outcome?

“At the end of the day, you need to make a case that’s going to solve these or answer these questions, and keep in mind that whatever you are building needs to provide some economic value,” Itwaru said.

You also need to adopt a strong product point of view and get close to your customers to find out how what you’re building connects to them. That will help you be sure the hypotheses and the direction you’ve settled on are correct. Early in Pendo’s history, for example, we made a decision to focus on building a product that could offer both deep product insights and the ability to act on them. Taking such a broad stance was unpopular at the time, but we felt that our customers really needed and were demanding a product that could do both. That decision has since paid off, Tanzar noted.

Frameworks like Jobs To Be Done and exercises like empathy mapping are excellent ways to put yourself in your customers’ shoes and get a real sense of their pain. Itwaru used to sit on the trading floor of the financial services company she worked for to understand what the traders were trying to accomplish, so she could build a product that worked for them.

Being empathetic, she said, is one of the best qualities a product manager can have. “PM’s are immensely empathetic, or at least they should be. They should very deeply feel the pain of their users to help inform their decisions and be able to translate all of that to their teams.”

You are what you measure

Once you’ve established your business case and goals, you need a way to track your progress towards achieving them. There’s no shortage of metrics out there for doing this, but some are better than others for certain situations.

Traditional KPIs like “number of features shipped” are beginning to be considered by many as obsolete, because it doesn’t provide any sense of whether users are actually finding value in those features. Product usage KPIs, like feature adoption, retention, and stickiness, are becoming more popular because they focus on the outcomes of feature development, and not just the output, Tanzar said.

These metrics can gauge whether and to what extent users are finding the features in your product, whether they’re finding them useful and solving problems with them, and if they’re returning to use them over and over again. That paints a much more complete picture of your product’s overall success.

Product and business metrics generally fall into two categories: lagging, like annual recurring revenue or win rate, or leading, like product usage, performance, and retention rate. Tanzar said it’s important to pay attention to both, because product teams can influence all of them.

Customer acquisition cost, she said, is a prime example: “If your customer acquisition cost is that high, think about what you can do in the product to make the experience that much better, to ensure that the selling motion is that much easier?” she said. Or, if your win rate is low, maybe it’s time to add a few “checkbox” features to become more competitive.

Leading indicators can help you prioritize what parts of your product are most important to your users and which you should focus on improving, so you can course-correct before issues start to impact the lagging indicators.

One metric, in particular, is extremely useful here: the product engagement score. It’s the combined average of feature adoption, stickiness, and growth, and it provides a fuller picture of the overall behavior and success of your product. “These three metrics together are really important to start to track and understand, is your product successful? Is it engaging? Is it healthy? Then, you can start to look at the individual components to make changes and start to see this score go up,” Tanzar said.

Good measurement doesn’t end with quantitative data. You’ve got to combine it with qualitative data to paint an even richer picture of your product’s success. Metrics like NPS, CSAT, and product market fit are all good sources of this sort of data.

Turn data into insights

Now that you’re tracking all of those fancy KPIs, it’s time to turn it all into the insights that will help you improve your product and grow your business. 

One of the best ways to draw out specific pains from different types of users is to segment them into subsets, Itwaru said. That way, you can tell how the pain differs for users in a different region or who have different roles and begin running experiments and solving for user needs at a more detailed level. “You can use this data to help target communications to your customers and understand where to put your efforts with your team to help grow retention and usage,” Itwaru said.

For instance, you can segment users of a free version of your app into those who convert to paid customers and those who don’t, examine their behaviors, then give a list of users who are very likely to convert to your sales team.

“The power of data is beyond words for truly product led companies,” Itwaru said. “We see this as the core of what they do, alongside spending time with their customers and really understanding. It helps to inspire ideas. It keeps teams excited.”

Want to learn more about becoming a product-led organization? Check out our co-founder and CEO’s new book, “The Product-Led Organization.”

To watch the full webinar with Stephanie and Christine, check out the recording here: