Product Management 101: Product Benchmarks
When it comes to key metrics like feature adoption, stickiness, and NPS, how do you know if your product is over- or under-performing? One option is to compare your current performance to your past performance. Another is to compare your metrics to those of peer products of similar market size and industry. Both of these are forms of product benchmarks.
What are product performance benchmarks?
Product performance benchmarks (also referred to as product benchmarks) are the reference points used for comparing your product to others. As in other spheres of comparison, percentiles are often used to describe how well (or how poorly) your product is performing in particular KPIs relative to products of similar size and vertical.
If you’re looking to compare your product’s performance, here are the most up-to-date product benchmarks. This is a form of external benchmarking—rather than internal benchmarking, which is when a company compares performance to its own past performance.
Why are product performance benchmarks important?
In order for product measurement to be useful, there needs to be meaning behind the numbers. By comparing performance to industry standards, a company can better understand relative performance, including where they have a competitive advantage as well as any areas for improvement. For example, the team at Oranj used Pendo’s product benchmarks to see how they stacked up against their peers for app retention, realized that they had room to improve, and set out to increase retention rates.
It’s also beneficial for companies to benchmark their performance against themselves, which, as mentioned above, is called internal benchmarking. This can be particularly useful for Net Promoter Score (NPS), since tracking NPS over time can help you understand how product updates and improvements impact customer satisfaction.
How should I use product performance benchmarks?
Ultimately, product performance benchmarks exist so that companies can identify ways to make their products better. Benchmarking is a key part of the continuous improvement cycle, which includes measurement, comparing results to competition, and identifying opportunities for improvement. Before a company can reap the benefits of product benchmarks, the product organization needs to ensure it’s effectively capturing product data and measuring the right things.
Which metrics matter for product performance benchmarks?
Product performance benchmarks can be used for a variety of different metrics, but five of the most common are:
- Stickiness: an engagement metric that measures how many users return to the product on a regular basis
- Feature adoption: a measurement of usage for a product’s particular features
- App retention: the number of users who continue using a product during a given period of time
- Product engagement score: an average of stickiness, feature adoption, and app retention that provides a more holistic view of product engagement
- Account-level NPS: a measurement of how likely customers are to recommend a product or service at the account level (rather than the individual user level)
“Product Retention: How Your Go-to-Market Approach Impacts Churn” by Sam Richard
The way you attract users to your product has a massive impact on their likelihood to churn. Were buyers able to use the product before buying? According to the data, freemium and free trial models retain users almost 2x better than those that require a demo process before a customer can access the product.
“2020 SaaS Product Benchmarks Report” from OpenView Venture Partners
The team at OpenView Venture Partners recently surveyed 150 SaaS companies to better understand how product performance varies across industries. Get the in-depth report to learn how go-to-market approach, activation metrics, and more critical factors affect key product metrics.
“Measuring Your Product Performance With Benchmarks” by Blake Bartlett
Successful PMs constantly measure their product’s performance and compare it to that of past quarters. But can they compare that performance with that of peer products, particularly those that employ a product-led approach to growth? That’s where industry benchmarks come in.
“Why Product Benchmarks (Should) Matter to Investors and Boards” by Laura Baverman
Too often, what’s missing from investor decks and presentations are the metrics that prove users are engaged, happy, and willing to keep spending money with that business. However, this is starting to change, and KPIs like NPS, product engagement, and stickiness are starting to make their way into exec and board meetings.