We’re big fans of the TV series The Boys, which portrays what it would be like to be a superhero in the real world.
One of our favorite characters is Starlight, who starts out as a normal young woman who happens to have superpowers but then becomes a real “supe” with a costume. In her early days, she had no super-peers to compare herself against. She trained hard, but she could only measure her progress against her own past performance.
The way we see it, creating a successful SaaS product feels a bit like being Starlight. You’ve got a special set of powers that enable you—and your users—to do amazing things. But in the early days of the company, you’re mostly concerned with your own performance metrics—have you improved based on what you delivered last quarter or last year? This is important information, but no product exists in a vacuum, especially in the crowded field of SaaS.
When Starlight joins the superhero group “The Seven”, she suddenly has to compare herself against other supes who can also do amazing things. Now she has real data on how she stacks up. This is the same challenge that product managers face when they start comparing their product’s capabilities to those of their competitors. They are forced to expand their focus from simply improving their own performance, to improving their performance relative to the other options in the market.
This process of external comparison is called product benchmarking, and when it’s done right, it opens up a new universe of possibilities for product optimization and revenue growth.
Product benchmarking measures how your product performs against industry standards, based on the size and sector of your company for specific KPIs.
Typically, the standards are calculated by analyzing hundreds or even thousands of other companies to create percentiles. Each benchmark measures a specific metric or key performance indicator (KPIs) that indicates how engaging and successful your product experience is.
Product benchmarking is important because it gives you valuable insights about your product experience. You can discover where your product is succeeding, and where it is falling short, relative to the sector. It gives you visibility into the latest trends, strategies, and ideas in the market. And it gives you hard data you can use to make decisions and prioritize efforts as you work to improve your product.
Finding the product metrics that matter
Effective product benchmarking tracks metrics that indicate whether or not your users are finding value. The top metrics range from measures of pure usage to more sentiment-driven measures. But no matter how new or established your product is, these metrics will tell the story of how you stack up against the competition.
Activation. In general, activation means the “aha” moment when a user truly experiences the value that your product can bring. Activation doesn’t automatically mean they will become a power user, but it is the first crucial step. This metric is different for every product, depending on your product’s features. Finding the right metric usually requires some digging into customer feedback.
Feature adoption. Feature adoption is sort of the next step after activation. This metric tracks how many key features your users are adopting. The more key features adopted, the more likely the users are to renew and expand, and the less likely they are to churn. Because you are measuring multiple inputs (the features), it is important to how long it takes to adopt a feature, and the typical order in which they are adopted.
Stickiness. Stickiness is the sweet spot for measuring product engagement, based on how often users return to the product. The time period may vary based on the type of product, but typically is measured in terms of Daily Active Users (DAUs), Weekly Active Users (WAUs), or Monthly Active Users (MAUs). The more returning users you have, the more certain you can be that you are delivering value, though stickiness doesn’t necessarily give you insights into why.
User retention. User retention measures whether first-time users are returning to the product within a designated time period, for example, how many first-time users are still using the product three months later. Low user retention is usually a sign that you need to improve onboarding or push users toward activation.
Net Promoter Score (NPS). NPS is a sentiment metric, derived from surveys, that tells you how your users feel about the product and whether they would recommend it to others. For B2B SaaS companies, you will want to measure account-level NPS, which indicates how the purchaser rates the product, rather than the individual users at the company.
Product engagement score (PES). The PES measures how popular your product is with your users based on the combination of adoption, stickiness, and growth metrics. PES provides a more well-rounded, but still rigorous, way of understanding the product experience. PES is a reliable way of visualizing user engagement over time.
Using product benchmarking for adoption and expansion
Once you have determined how your product is performing against industry benchmarks, you can identify the right moves to make to improve your product experience or to take advantage of your strengths. Remember that product benchmarking provides nuance and context that you don’t get from internal benchmarks. The best product experience strategy will vary based on the reason why your product is succeeding or lagging against competitors.
Features. It sounds basic, but sometimes the differences between competing products comes down to the quality of the features. If a feature’s quality is not up to industry standards, you need to determine whether it is possible to improve, or if you need to pivot away from that feature. If your feature is superior, you can explore pricing or market share–building strategies to take advantage of the edge you already have.
Engagements. If your product performs well or poorly against benchmarks, but your features are up to the standards, the cause may be your user engagements. If your features are great, but activation is low, it may be because your training, onboarding, and in-product engagements are lacking. On the other hand, high quality engagement and customer success capabilities may be helping you punch above your weight in terms of product experience.
Sentiment. How customers feel about your product and your company can also be seemingly divergent from the nuts and bolts of the product. This could be because of the quality of your marketing, sales, or customer success efforts, or just your brand equity as a whole. Setting expectations up front and providing a consistent product experience throughout the customer journey can go a long way to generating positive sentiment among your customers, independent of the product’s features.
Power up your product benchmarking with Gainsight PX
As an industry leader in product experience, Gainsight is at the forefront of thought leadership in understanding industry standards, trends, and best practices. Benchmarking with Gainsight will give you deep insight into how your product stacks up against the competition. And our powerful platform gives you the tools to act on those insights, including actionable user data, effective engagements, and relevant user feedback—all available without writing a single line of code.
Learn more, schedule a demo today!