13 Essential Product Usage Metrics To Measure & Analyze

What do you do when customers aren’t engaging with your product as expected? Based on your research and the Product Design Process, you might have anticipated a certain level of activity post-launch. Still, after sifting through the data, you realize that the numbers tell a different story. While this scenario can be stressful, it’s not the end of the world. You can leverage product usage metrics to uncover what’s happening, identify any issues or roadblocks, and get your product back on track. This article will explore the essential product usage metrics to measure and analyze so you can gain valuable insights on improving your product and increasing customer satisfaction.

NUMI’s product design solution helps businesses like yours improve their products based on real customer data. Our software makes identifying and analyzing product usage metrics easy, so you can create a better customer experience and boost your product’s performance.

What is Product Usage Data?

Product usage data explores how customers use a product, feature, or service over time. Among behavior segmentation metrics, it focuses on when, for how long, and how customers use what you offer. Product usage data can also be segmented by account or consolidated at the enterprise level to highlight trends.

Automated product usage data comes from within your application, showing how customers interact with your product without bias. Collecting this data can:

• Supplement customer experience information
• Highlight product issues
• Reveal:some text
  • What’s working well
  • What can be improved
  • How to prioritize future enhancements 

To keep user retention high and brand loyalty growing. 

Why Product Usage Data Matters

Measuring product usage isn’t new, but its importance has grown with the rise of SaaS (Software as a Service) businesses. In these models, customer retention and engagement are paramount, making the Product Usage Rate a critical metric to monitor. 

Key components of Product Usage Rate include: 

• Active Users: The number of users actively engaging with the product.
• Frequency: How often the product is used within a specific timeframe.
• Duration: The length of time users spend with the product.

Understanding product usage can help businesses optimize their offerings, improve user experience, and enhance their marketing strategies to attract and retain customers in the context of SaaS and SEO.

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Why is Understanding Product Usage Important?

Product usage metrics track how customers interact with your product over time. They go beyond initial impressions and reveal the trends and patterns that emerge as real users navigate your product.

Product usage metrics can tell you how many users have engaged with a product feature, how often they use it, and whether their usage increases or decreases over time. These insights can help you identify which aspects of the product meet user needs and which aren't. By understanding product usage metrics, you can better understand your users' experiences, make informed decisions about improving the product, and ultimately create a more tailored experience that boosts customer retention. 

Why Product Usage Data Is Important

To understand why product usage data is important, it is helpful to think about what product managers and developers are left with when this data type is unavailable. Without product usage data, your team only has high-level anecdotes and survey responses to shape your product roadmaps or guide your product through the upcoming stages of the product lifecycle.

Therefore, product usage metrics are important because they are:

• Objective
• Quantifiable
• Often real-time reflections and records

How do customers view and use your product or service? As users continue to utilize your product, they generate more data that you, in turn, can use to:

• Refine features
• Identify trends
• Improve their experience

This cyclical momentum will also demonstrate to your users that you are attuned to their feedback, which should also support continued growth and less churn. This lifecycle, driven by product usage data, is key to establishing and maintaining product-led growth and increasing user retention.

13 Essential Product Usage Metrics to Measure & Analyze

1. Product Adoption Rate: Understanding Product Adoption Rate

Product adoption rate implies how many users utilize your product and become regular customers. It measures user activity and their demand for your products or services. You cannot increase the adoption rate by luring new shoppers. The central component in its calculation is the number of active users who already love and use your solution.

The more active users you have, the more revenue you will receive. The monthly recurring revenue directly leans on the customer's lifetime value. This segment is already willing to pay for your product or service but often just needs to improve the functionality or service. Bringing new features and enhancing the current consumers' experience is more time and budget-efficient. You don't have to launch a marketing campaign and lure newbies. Attempt to keep them involved, but only to lose after several sessions. You can try, but you will regret the experiment anyway.

How to Calculate Product Adoption Rate? 

The adoption rate counts the new active users and clients who signed up for your services within a distinguishing period.

Use this recipe to get the results: 

Product adoption rate = the number of new active users/ total number of users x 100%.

Suppose 330 people signed up to use your MVP within a month. Your stats show that only 46 of them have become involved. The product adoption rate will be 13.9%. 

2. Feature Usage Rate: Understanding Feature Usage Rate

Users often need help understanding the value and practical side of many product components, while C-levels invented these features, considering them life-changing. It's time to see whether you are on the same track as your consumers. Checking how they interact with every product functionality can help you adapt to their needs, enhance UX/UI, or offer pop-ups and instructions on how to use it. It's a great metric to track the success of fresh-deployed elements and advancements. 

How to Calculate Feature Usage? 

Feature usage has many faces and formulae. When introducing a new feature, it's important to grasp the idea of its adoption by the expected audience. You need to distinguish the percentage of total users who started using it. You want to gauge the number of new feature users over the total number of product consumers.

Do the following calculations to get the results: 

Feature usage = a number of new unique feature users/ total number of users.

If you want to check the average use per day, use the following: 

Average feature use = a total number of users per day/ total number of unique users per day. 

3. Number of Users: Understanding Number of Users

The number of daily active users (DAU) is essential to business success. When the DAU metric increases, your company is engaging more new customers. But before we continue, let's clarify the terms. You can only track the active users by defining it.

 Logging in is not enough. A customer must complete certain actions with your product. Counting repeating visits will also be a mistake. You can easily track this metric via any product usage analytics instrument. However, some of them only have monthly users. Just divide the number of unique sessions by 30 or 31 (depending on the month)

4. Total Time Spent: Understanding Total Time Spent

Companies dream of high customer engagement, which is the time people spend using their products. A high score can be a great result for a book-reading app or a social media platform. A long session can be disturbing if you offer quick cab ordering or banking solutions. It can indicate that the UX/UI requires some alterations. 

How to Calculate Total Time Spent 

You need to determine the interval you are interested in a day, week, or month. Add them to the recipe: Total time spent = total time of session durations/total number of sessions. 

5. Time to Value: Understanding Time to Value

Every user needs time to recognize the value of your business. TTV, or time to value, shows how long it takes for a newbie to appreciate your product's value. It can be measured now in time and clicks, screens, etc., and depends on many aspects, from the target customer segment to the business or monetization model.

The shorter the metric, the faster customers acknowledge their money and time spent were worth it. If your product brings joy and simplifies people's lives, they won't stop using it unless something better appears. As the satisfaction level grows, the churn rate falls.

Basic TTV categories comprise: 

• Time to Basic Value: This is the period when a newbie recognizes your business's minimum value. The user has not yet purchased or sticks to a basic subscription without being familiar with the maximum significance hidden in the premium version. 
• Time to Exceeded Value: It takes time for users to realize a deeper value they haven't seen or understood before. They often become loyal customers who need your services. For example, an app for learning a foreign language or sports will only show value to users after a while. 
• Immediate Time to Value: This is genuine love at first sight. The customer realizes the value of your business as soon as it appears in their lives.

Two clicks, and they are ready to pay for a lifetime subscription and share links with friends. There's no formula for love or affection. It is mainly connected to your definition of value. It’s a particular action a customer takes while interacting with your product. It can be an upgrade to a premium account, usage of new features, a share on social media, or even the first purchase. Once you determine your value in each classification, you can evaluate what it takes to achieve the desired action. 

6. Customer Stickiness: Understanding Customer Stickiness

A sticky product won’t let the customer go. It attracts users with its effectiveness, cost-efficiency, and convenience. Consumers include their expenses on sticky solutions in their monthly budget, making offering extra to loyal clients easier. Customer stickiness can reduce the churn rate and increase the customer lifetime value. 

How to Calculate Customer Stickiness? 

Use the daily and monthly active users to calculate this metric: 

Customer stickiness = DAU/ MAU x 100%

As a result, you'll get the percentage of devoted daily users. When analyzing this metric, consider the niche. 

7. Activation Rate: Understanding Activation Rate

Activation rate is a moment of insight. The customer finally realizes the bliss your product brings to their life and is ready to take the key action. An activation point can be switching from a free to a premium account or signing up for an annual subscription.

How many people care about your product and are willing to not just sign up with you and co-exist happily ever after? With insight, you can see how many users were ready to say "I do" and evaluate your onboarding process. A low metric hints that you should reconsider your communication with leads and reinvent the approach. 

How to Calculate Activation Rate 

The formula is simple: Activation rate = Users reached the activation point/ total users x 100%

8. Expansion Monthly Recurring Revenue Rate: Understanding Expansion Monthly Recurring Revenue Rate

It calculates all the extra revenue coming from existing consumers. As a product manager, you must coordinate with other team members and develop new ideas. It can include CTAs for old clients to renew subscriptions, up-and-cross-sells, and additional features. Ensure the extra is off the usage plan to avoid awkwardness.

Customer acquisition cost could be more helpful when attracting new consumers to yield more gains. Existing users already know your value, trust you, and can give a helping hand. 

How to Calculate Expansion MRR? 

The calculation may look tricky, but it’s easy to follow: 

Expansion MRR = (Expansion MRR on the first day of the month - Expansion MRR on the last day of the month)/ Expansion MRR on the first day of the month x 100%.

Product managers must pay more attention to product usage metrics, preventing their projects from crushing. This objective and reliable source of how users interact with your product helps:

• Improve customer retention
• Reduce costs
• Increase revenue
• Delight users

This data helps you make informed decisions, build strategies, and choose technologies to increase conversions and engagement. Don't underestimate them and work blindly. You are not a psychic, no matter how much you trust your intuition. 

9. Customer Engagement Score: Understanding Customer Engagement Score

The customer engagement score is relevant if you're tracking key user actions. It assigns a number that denotes your customers' level of engagement and free trial prospects. Your customers get a score based on how they use your product. Happier customers usually have higher scores. 

Here’s How You Calculate it

Customer engagement score (CES) = total event value #1 + total event value #2 + total event value #3 +

CES gives you an overall view of your product usage. You can identify friction points by tracking unengaged users with a low customer engagement score and cross-referencing it with other product usage analytics. You can then improve your product by acting on these friction points. Tracking highly engaged users and cross-referencing data with product usage analytics can help you identify areas for customer expansion. 

10. Free-to-Paid Conversions: Understanding Free-to-Paid Conversions

If you offer a free product option, measuring your free-to-paid conversion rate can help you identify how many users find enough value in your product to upgrade their membership to a paid plan. It can also help you better understand how many free users you need to onboard to continue growing your paid memberships.

Free-to-paid conversions can also provide insights into what features or upgrades your users find valuable enough to pay for. This can help you make smarter decisions about pricing and product offerings. 

11. Customer Retention Rate: Understanding Customer Retention Rate

For your product to grow, you need to retain customers. Your customer retention rate tells you the percentage of customers using your product. To find your customer retention rate, divide the number of existing users you have at the end of a period compared to the number of users you had at the start. Be sure not to count any new users added during this period in your count. 

12. Churn Rate: Understanding Churn Rate

Churn rate is the opposite of the customer retention rate. It tells you the number of users that have stopped using your product in a specific period. Unlike customer retention, you want to keep your churn rate as low as possible.

To find your churn rate, Divide the number of customers you lost in a specific period by the number of customers you started with during that same period. As with the customer retention rate, you don’t want to include any new users in your count. Furthermore, you can analyze retention to uncover why customers are churning. 

13. Product Onboarding Engagement Rate: Understanding Product Onboarding Engagement Rate

This metric measures the percentage of customers that engage with your product's onboarding process. There are several ways to approach this metric. The first is more common and involves measuring the number of customers who complete the basic sign-up process. The second is more complex and measures onboarding at every stage of the adoption lifecycle, from adoption to advocacy. Professionals who use the second approach often divide the onboarding process into three stages: 

• Primary Onboarding: The primary onboarding phase involves convincing customers to sign up for and use a product. 
• Secondary Onboarding: Secondary onboarding involves moving customers from the basic version of your product to higher levels that include extra features. 
• Tertiary Onboarding: The tertiary phase is the final onboarding stage, which focuses on taking users to the final stage of the adoption cycle and expanding to other customers.

There are many ways to measure onboarding engagement; each can give different insights. These are some ways to use product onboarding engagement metrics and the formulas for each: 

• To find the percentage of visitors that complete initial onboarding: (Number of users that complete onboarding ÷ Number of users that begin onboarding) x 100 
• To find out the average time required for onboarding: Total time spent onboarding for all customers ÷ Number of customers 
• To find out the percentage of customers that proceed from primary to tertiary onboarding: (Number of customers that complete tertiary onboarding ÷ Number of customers that complete primary onboarding) x 100

How to Collect Product Usage Data

Capture Feature Usage to Understand Engagement

Understanding how different customer segments engage with unique features can help product teams improve user experiences, drive retention, and boost customer loyalty. By tagging UI elements, teams can track how users interact with features across the user journey. Tools like Userpilot allow product managers to measure feature adoption, usage frequency, and engagement levels.

Analyze feature performance to calculate which features are underutilized or causing user friction. Enhance high-value features to bolster user engagement. These are the “killer” features that differentiate your product. Conduct usability tests to identify and address specific pain points that prevent users from realizing the full value of your product.

Set and Track In-App Goals

Defining and tracking in-app goals, such as completing key actions or milestones, helps gauge customer success. These goals reveal drop-off points, allowing teams to refine workflows and improve user progression through the product.

Monitor users’ progress toward these goals. Funnel analysis allows product teams to see how many users accomplish desired actions. This data helps refine journeys so teams can improve customer onboarding or ongoing usage experiences by addressing roadblocks identified in the data.

Use Heatmaps to Pinpoint Engagement Levels

Heatmaps visually represent how users interact with various elements of your product. They can help product teams spot issues, identify low-engagement areas, especially if core features are underutilized, and test hypotheses.

A/B testing lets product teams experiment with UI changes, such as repositioning features or adding tooltips, and evaluate their effectiveness. The goal is to enhance engagement levels so users can better realize the full value of your product. 

What Tools Are Available to Provide Product Usage Metrics?

Product usage data is unlike any other type of data your business may handle, such as financial or sales information. Not every data that can be potentially collected is worth analyzing to inform product usage metrics. That is where product experience platforms come in.

These platforms automate:

• Organizing
• Visualizing
• Initially interpreting your product usage data

Using built-in APIs and reporting tools. Armed with this information, product managers and other teams will have unique product insights needed to drive decisions, complete with the numbers to back them up.

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How To Use Product Usage Data In Your Business

Discover Trends to Inform Business Decisions

Visualizing product usage data through:

• Graphs
• Heatmaps
• Charts

Allows businesses to uncover trends and patterns. If a specific feature sees a consistent uptick in usage, this may indicate its growing importance to customers. 

Features with declining use could signal the need for optimization or retirement. Such insights guide product development, marketing campaigns, and customer segmentation efforts, helping businesses align with user demands. 

Enhance the Experience for Struggling Customers 

Customers facing difficulties with your product are at high risk of churn, especially in subscription-based industries like SaaS. Businesses can pinpoint bottlenecks or frequently abandoned processes by analyzing product usage data, allowing teams to address these pain points.

After implementing improvements, reaching out to users with personalized communications to highlight the changes can boost customer retention and satisfaction, showing that you value their feedback. 

Pinpoint Customer Characteristics 

Product usage data often includes information about user behavior, such as:

• Frequency of use
• Preferred features
• Operating systems
• Geographic location

This data can help businesses tailor their messaging, prioritize features that appeal to specific demographics, and create targeted marketing campaigns. Understanding customer characteristics also helps define personas that inform future product design and sales strategies. 

Convert More Trial Users 

Trial periods are critical for customer acquisition. If trial users encounter obstacles or don’t experience the product’s core value quickly, they’re more likely to abandon it. Usage data helps identify where trial users face challenges, allowing businesses to optimize the onboarding process, simplify complex features, or create targeted nudges that guide users toward the product’s most impactful functionalities. 

Upsell Free Subscriptions 

For products offering free and paid tiers, usage data reveals what free users value most about the product. By tracking which paid features free users attempt to access or express interest in, businesses can craft tailored messaging to showcase the benefits of upgrading. Highlighting these campaign features can convert free users into paying customers, boosting revenue. 

Gauge Feature Popularity 

Knowing which features are widely used and which are ignored is essential for resource allocation. Popular features merit additional investment, while underused ones may need reevaluation. This insight informs decisions about feature enhancements, deprecation, or replacements, ensuring the product remains relevant and user-focused. 

Improve Flow and Efficiency 

Product usage data provides insights into how users navigate workflows and complete tasks within your product. Identifying where users get stuck or drop off helps businesses streamline processes, reduce friction, and create a more intuitive user experience. Improved efficiency can lead to higher customer satisfaction and loyalty. 

Create Product Training Tools 

By analyzing where users struggle or frequently seek support, businesses can develop targeted training materials, such as:

• Tutorials
• FAQs
• Interactive guides

These resources empower new users to adopt the product more quickly and reduce the burden on customer support teams, creating a win-win situation. 

Gain Reliable Information 

Businesses rely on customer surveys and feedback to assess their service and customer satisfaction. According to statistics, about 50% of people lie in surveys. A well-crafted and targeted questionnaire might provide high-quality data. The results may upset you with their subjectivity.

Unlike tiring polls, product usage metrics showcase all the drawbacks. Analytical product usage data offers objective, relevant, up-to-date information on customer behavior, attitude, and interaction. With proper analysis and action, this trustworthy data upgrades your business. 

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