Do I know which metrics are most important?

This is an excellent question, but there's no single standard answer. Because every company's business model and development stage are different. It's like evaluating a car: for a sports car, we look at 0-100 km/h acceleration; for a truck, we look at load capacity and fuel consumption. The standards are completely different.

However, don't worry. While there's no "standard answer," there is a "general approach." As engineers, we value logic and data, so from an engineer's perspective, I'll help you sort out which metrics are usually the most important.

You can categorize metrics into three main types: User Behavior, Business Health, and Technical Stability.

1. User Behavior Metrics: Is your product being used and liked?

This is fundamental; if no one uses the product, everything else is zero.

• North Star Metric: This is the most important concept. Simply put, it's the single metric that represents the core value your product delivers to users. Everyone should strive to grow this metric.

  • For WeChat, it might be the number of messages sent daily.
  • For Taobao, it might be the Gross Merchandise Volume (GMV) daily.
  • For an online document tool, it might be the number of weekly active users creating/editing documents.
  • What you need to do: First, work with your team to figure out what your "North Star Metric" is.

• User Activity (DAU/WAU/MAU): Daily/Weekly/Monthly Active Users. This reflects the size of your product's user base. However, just looking at this number can be misleading; for example, an event might bring in many people who then don't return the next day. So, it should be viewed in conjunction with retention rate.

• User Retention Rate: This is a core metric for measuring product vitality. Will new users return after day 1, day 7, or day 30?

  • You can imagine it as a leaky bucket: user acquisition is pouring water in, and retention is patching the holes. If the retention rate is extremely low, it indicates a fundamental product issue where users leave after one use. In such cases, spending more money on acquisition is a waste.

• Activation Rate: The proportion of users who complete a "key action." This "key action" signifies that they have truly experienced the product's core value.

  • For a project management tool, a user registering isn't activation; creating their first project/task is.
  • For a social app, a user registering isn't activation; adding at least 3 friends is.
  • This metric tells you whether users have "gotten started" or "onboarded."

2. Business Health Metrics: Can your company survive and make money?

Having users isn't enough; the company needs to survive.

• Customer Acquisition Cost (CAC): How much money (marketing, sales salaries, etc.) did you spend to acquire a new customer? The lower, the better.

• Life Time Value (LTV): How much money will a customer contribute to you from the time they start using your product until they leave?

  • Key Formula: LTV > CAC. This is the golden rule for whether a business model is viable. Simply put, the money you earn from a customer must be more than what you spend on them. If LTV is less than CAC, you're losing money on every transaction, and the company is not far from collapse.

• Monthly Recurring Revenue (MRR): For subscription-based service companies (SaaS, etc.), this is crucial. It represents the stable income the company can expect each month, reflecting the health and predictability of the business.

3. Technical Stability Metrics: As engineers, have we held our ground?

The first two points are about "how well the business is doing," and this one is about "can we handle it?" This is the most direct reflection of our value as IT engineers.

• Website/App Response Time: If a page takes more than 3 seconds to load, users might just close it. We must ensure one thing: speed! This directly impacts user experience and retention rate.

• Service Availability (Uptime): Does the website frequently go down? This refers to the "99.9%" or "99.99%" availability we often talk about. Don't underestimate the decimal point; 99.9% means over 8 hours of service unavailability per year, which is a disaster for large companies.

• Error Rate: How often do users encounter 500 server errors or 404 page-not-found errors during operations? This directly reflects code quality and system stability. No one likes using a product full of bugs.

To summarize, what should you do?

1. First, grasp your "North Star Metric": This is the most important, as it guides everyone's direction.
2. Focus on user retention: In the early stages, retention rate is more important than user growth. It validates whether your product truly provides value.
3. Keep an eye on the core formula LTV > CAC: Ensure your business is profitable.
4. Maintain technical baselines: As engineers, ensuring the system is "fast, stable, and accurate" is our greatest contribution to the company.

Don't try to monitor all metrics from the start; you'll drown in a sea of data. Begin with the most important ones, and gradually refine your metric system as your company develops. Remember, metrics are not for show; they are for identifying problems and guiding action.