Product Management Product Metrics and Analytics 1 — Questions and Answers
Question 1: What does 'DAU/MAU ratio' measure in product analytics?
- User engagement and stickiness of a product (Correct answer)
- Daily revenue divided by monthly revenue
- Active user acquisition cost
- Daily API calls per month
Correct answer: User engagement and stickiness of a product
The DAU/MAU ratio measures how often monthly active users return daily, indicating how sticky and engaging the product is.
Question 2: What is 'churn rate' in SaaS product management?
- The percentage of customers who cancel or stop using the product in a given period (Correct answer)
- The speed at which new features are released
- The rate of bug fixes per month
- Customer satisfaction score decline
Correct answer: The percentage of customers who cancel or stop using the product in a given period
Churn rate measures customer attrition — the share of users or revenue lost in a time period — and is a critical retention metric.
Question 3: What is 'North Star Metric' (NSM)?
- A single metric that best captures the core value a product delivers to users (Correct answer)
- The highest revenue figure ever achieved
- A metric set by the CEO each quarter
- The number of users at product launch
Correct answer: A single metric that best captures the core value a product delivers to users
The North Star Metric is the one key indicator that reflects the product's primary value delivery and aligns the entire team around a shared goal.
Question 4: What does 'conversion rate' measure in a product funnel?
- The percentage of users who complete a desired action out of those who started (Correct answer)
- The ratio of free to paid users
- Revenue per user segment
- Time to complete a purchase
Correct answer: The percentage of users who complete a desired action out of those who started
Conversion rate tracks how many users move from one stage of a funnel to the next, such as from trial to paid subscription.
Question 5: What is 'Customer Lifetime Value' (CLV or LTV)?
- The total revenue a business can expect from a single customer over their entire relationship (Correct answer)
- The cost to acquire one customer
- Annual recurring revenue from all customers
- Average order value for a single purchase
Correct answer: The total revenue a business can expect from a single customer over their entire relationship
CLV estimates the net profit attributable to a customer over the full duration of their relationship with the product or company.
Question 6: What is the significance of the 'LTV:CAC ratio' in product management?
- It shows whether the business model is sustainable by comparing revenue per customer to acquisition cost (Correct answer)
- It measures developer productivity
- It compares lifetime visits to cost of the app
- It tracks support ticket volume per customer
Correct answer: It shows whether the business model is sustainable by comparing revenue per customer to acquisition cost
An LTV:CAC ratio above 3:1 generally indicates a healthy business where the revenue from customers significantly outweighs the cost to acquire them.
Product Management Product Metrics and Analytics 1
What does 'DAU/MAU ratio' measure in product analytics?