Basic Product Management Jargons - I

 Hello readers👋 Today we will learn about the basic jargons used in Product Management. As a PM you must know them thoroughly and I hope you will start using them after the end of this blog in your daily communications.

1. North Star Metric - The NSM is the core value that your product delivers to your customers. By optimizing this metric, you can address long-term business success. Examples - For a SaaS product it is the DAU(Daily Active Users), For an E-commerce industry it can be the GMV (Gross Merchandise Value), For OTT platforms it can be the time spent by the subscriber, and many more.
   
   
2. Churn Rate - It is the percentage of users who stop using your product after a certain period of time. There can be monthly/annual churn rates. Keeping this rate low is essential to keep the active customer base high. 
   Churn Rate = (Number of Customers Lost During a Period / Number of Customers at the Start of the Period) * 100
   
   
3. Agile - It is a project management or a product development methodology which focuses on flexibility, collaboration and customer centric development. In this, the tasks are divided into smaller parts known as 'iterations' or 'sprints' which has a time period of 1-4 weeks. The goal is to develop incremental product improvements that can be tested and refined on feedbacks.
   For detailed explanation check this blog - Link
   
   
4. DAU/MAU - These are Daily Active Users/Monthly Active Users which tells us how many users engage with our product or service in a day/month. It is an essential metric to track as it tells how addictive our product is for the consumers. An early stage startup would want to scale their product fast so would aim at gaining more user percentage but big companies are generally satisfied with a single digit percentage growth in a month/year when calculated in the reports.
   
   
5. Painted Door Test - Also known as a fake door test, it is used to check the feasibility/acceptability of a feature by a user in a product which has not been fully developed. For example - a button or link is created for a new feature and when the user clicks on it you get a "coming soon"/"under development" page. 
   This helps to check how likely the feature matches with the user's expectations and checking with the pricing strategies. A drawback with this is that customer's trust can be lowered when they check the feature they are interested in but eventually land on the under development page.
   
   
6. Customer Lifetime Value - It is the total value that a company can generate from a customer over the course of their relationship. CLV helps the companies to make informed decisions about the acquisition cost (CAC), retention, marketing strategies to check overall profitability generated from the customer. For example if a customer's lifetime is 6 months then the company will look at the revenue generated from the customer in 6 months and if the CLV is low it indicates that the company does not want to spent much on marketing as they will not get the money back after acquisition.
   
   
7. Differentiation - Product differentiation tells how your product is different from the available products in the market. This business strategy aims to create a competitive advantage by creating unique selling propositions (USPs) that sets the product apart from its competitors. The factors can include pricing, functionality, user experience, user interface, etc.
   For example - ipod, when launched, was different from other existing products due to its user experience (navigation menu to surf through different music) and its storage capacity. 
   
   
8. Monetization - It basically tells how your product is going to make money or the process of turning a product into a source of revenue. It can be through usage, subscription or one-time fee. There are different models of monetization which we will study later in detail. An important aspect in monetization is research on the customers and market to develop the best strategy to generate revenue.
   
   
9. Net Promotor Score - NPS is a metric which tells you how likely a customer/user of your product is going to recommend it to someone else. A specific prompt is stated and the user has to give their feedback on the basis of their experience with the product. You might have seen this question -
   How likely are you going to recommend us to a friend? Rating between 1-10
   This is what calculates the NPS of your product. The range between -100 to 100 is detected among a group of customers and a score between 0-30 is regarded as good, 30-70 is great and 70-100 is exceptional. 
   
   
10. Scope Creep - Sometimes in product management the scope of the project i.e. the project deliverables or requirements gets expanded by the stakeholders or the team itself, it leads to cost overruns, delays and ultimately the product fails to attain the desired key objective. This is called a scope creep which can be checked by getting and sticking to clear product requirements, stakeholder management, frequent review meetings, scope definition in agile and a prioritization framework to eradicate unnecessary stuff. 
    
    

That's all for today's reading. There are more amazing jargons in product management so if you want to learn/use them in your daily vocab, stay tuned cause another blog is coming next Tuesday ;)