Measuring the Success of a Product in a New Market
You’ve expanded your business and launched your product in new markets, but what’s next?
Now you need to set key performance indicators (KPIs) to measure your product’s success in each market and keep track of these regularly. The KPIs that you choose will depend on your type of product and its purpose.
In this article we will look at a wide range of KPIs for your consideration, we will explore what can cause inconsistent performance between markets and share what you can do to enable high performance across the board.
Reviewing pre-launch processes
As you’ve already launched your product you should have the following for each market:
- Clearly defined customers
- Reliable competitor insight
- Knowledge of market innovation opportunities
If you haven’t tailored your product and your approach for each market, inconsistent performance is inevitable.
In your home market you might be the number one product, yet in a different market you might be up against a major local competitor who has huge existing market share.
Equally, what you class as your main product feature for your home market, might not resonate the same elsewhere. Something you class as a small, supporting feature might in fact be the main draw in a new market and you should rethink your product’s focus accordingly.
You need to know how your customers behave and what they want in each market, in detail, and adapt your product accordingly, whilst having a thorough understanding of the competitive landscape.
If you haven’t been through a research and product localisation process to obtain this knowledge, look to do so before you do anything else.
Understanding product success metrics
You can measure the performance of your product in a variety of tried and tested ways. The metrics that you use will depend on what success looks like for your particular product.
What did you envisage success looking like when you launched your product in the new market?
Does it seem like it’s a good fit for the market? Is it getting a good level of traffic/engagement? Do customers like it and use it repeatedly? What is your customer retention rate like?
Let’s look at how you can get your answers by looking at some popular performance metrics for SaaS products…
Monthly Recurring Revenue
The obvious place to start is revenues. This will be the main factor if you’re operating an e-commerce business. How much recurring revenue are you driving every month?
Hold on, it’s not that simple for all SaaS products though. Especially if you have different paid plans with options for people to pay annually upfront and other users paying monthly. The number of users will also be evolving all the time.
So, you need to make some calculations.
For pre-paid or annual payments, you will need to divide the total revenue by the number of months the payments cover, then multiply this by the number of pre-paid customers.
For users paying monthly, multiply the monthly payment amount by the number of users.
Then add these figures together to get your monthly recurring revenue figure.
Lifetime value is how much profit a customer will bring in during their entire time as a customer.
You can calculate this by looking at the average revenue per user and your customers’ retention period.
Average revenue per user X retention period = lifetime value.
Not only can this metric help you analyse individual or groups of users, it can help you effectively manage marketing budgets. You will want to make sure that you judge your advertising costs against customer lifetime value to get a clear picture of its effectiveness, and your actual return on ad spend (ROAS).
Customer Acquisition Cost
So, we’ve now set out the main metrics to monitor revenue generation. But there are a lot of other aspects of your product’s performance that will impact future revenues that you will want to keep in check.
It’s important to understand how much it’s costing you to attract each new customer in the new market to make sure that they’re not costing you more than the profit they generate. That’s where calculating your customer acquisition cost comes in.
This can be tricky to accurately analyse, especially if you have a particularly long sales cycle. For example, in March you might spend £5,000 on an advertising campaign which then yields new customers throughout April, May and June. If you only looked at your customer acquisition cost for March, that would be misleading. Try and work this cost out over a longer period or do it more often to get more accurate data.
To calculate your customer acquisition cost, total up your sales and marketing costs for your chosen period and then divide this by the number of new customers you acquired during the same period.
Customer Retention Rate
Now we’re going to look at a few different metrics that can show you how happy your customers are with your product.
Let’s start with customer retention rate. This looks at how long users stay with you. At face value if you’re gaining a lot of new users every month you could easily view your product as a success, but if the same number of customers are falling away, you’re not growing.
A poor customer retention rate could be a sign that your product is not satisfying the needs of the market.
Net Promoter Score
Net promoter score is a metric that allows you to gauge how happy customers are with you. Generally, you do this by simply asking customers how they rate you from 0-10, or how likely they are to recommend your product to others.
You calculate your net promoter score (NPS) by using the following formula:
NPS = % of promoters – % of detractors.
Those who respond to you with a 9 or a 10 are your promoters. Those who give you a 6 or lower are your detractors. Those voting you a 7 or an 8 are classed as passive and you don’t include these in the calculation.
That’s not to say your passives aren’t important customers, they’re very close to becoming promoters if you can improve their experience.
Active User Percentage
For many SaaS products, this is a critical metric. It’s vital users actually use your product or you’re not going to keep them or generate much revenue from them.
You can calculate your active user percentage figures daily, weekly or monthly.
You can use this metric to understand if users have a need for your product as often as you’d expect them to. Is it fit for purpose and adding value?
Customer Satisfaction Score (CSAT)
CSAT is extremely valuable for evaluating product performance in new markets as it gathers customer feedback on specific features.
You can simply ask customers to rate certain features by importance. A lot of product owners make the mistake of presuming that the key features will be the same as in their home market, thus missing out on new opportunities for product innovation to make their product more suitable for new markets.
The Basic Facts
You will also want to keep an eye on certain basic performance figures depending on your product type. Generally:
- Number of sessions
- Session durations
- Bounce rate
How to Become a Successful Product Owner
As a product owner you want consistent high performance across all markets. Getting the foundations in place to do this is essential.
It starts with gaining a thorough understanding of your market – the potential customers and how they behave, your competitors, and new opportunities for innovation. This will shape your go-to-market strategy and how you tweak your product for each new market.
Then you need a solid framework in place to monitor and report on the performance in each market by selecting the right KPIs to analyse.
If you’ve researched effectively, you should have the following information to act on:
- Local market user behaviour insight
- Product localisation actions
- Market-driven product architecture
Creating high performing products in all markets
As an agency we’ve seen that developing products in a customer-centric way by involving your target customers throughout the product development process can lead to far greater success.
The quickest way to ensure inconsistent performance across markets as a product owner is by not understanding the differences between the needs of customers in different markets.
You need to research each market individually, thoroughly, and then develop your product accordingly. Post-launch you need to keep building your understanding of the market by monitoring performance and making changes as required on an ongoing basis. When you launch your product in a new market, your work is far from over.
At UX247 we provide UX research services that cover each stage of your product lifecycle. We can help you understand a new market, create a high-performing product for that market, and accelerate your growth. We’re a trusted partner with global capability and we’ve helped brands such as eBay, Shopify, Indeed, Samsung and many more develop internationally.