The benefits of Data-driven decision making have been long known. In 2012 a study from the MIT Center for Digital Business found that organizations driven most by data-based decision making had 4% higher productivity rates and 6% higher profits. Thus arises the need to develop and cultivate data-driven product management which values product decisions that can be backed up with data.
Today its more easier than ever to extract product data, whether its from web analytics tools, API analytics tools, bug tracking tools or customer service tools. Each of these tools themselves have APIs and data from these tools can be extracted and correlated to identify trends. With all of this data available at our fingertips it becomes easy for us to make informed and better product decisions.
One of the many but most important question that product managers need to think about and answer with this data is where is the money? There are two part to this question – What about the product makes customers open up their wallets and what makes them walk away. In other words, what is working and what is not.
Measuring whats working can begin with identifying the most used features in the product. Once we know what customers use most of the time, a percentage of product development can be spent on nurturing those features – making the user experience better and fixing bugs. This helps in keeping current customers happy and attracting new ones who may find these features beneficial as well. On the other hand, measuring what isn’t working isn’t as simple as identifying the features that customers are not using, although eliminating the most unused features can help simplify the product and improve user experience. A better approach is conducting a Funnel analysis to identify where the roadblocks are and what isn’t working. If we identify where we are losing customers, we can begin to address their concerns and capture lost opportunities.