Exercise 92 – What is the most important metric for Slack and why?

Post and review answers and feedback to answers in the comments section of this post.

See also:

How to answer a metrics question in a product manager job interview

List of metrics questions for product manager job interviews

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Slack is primarily a Saas company. Slack makes money by annual recurring revenue. Just to clarify, Slack is more than just a chat app. There are tons of applications you can integrate it with, for example, project management software with Trello. This could also be something to consider.

The goal of Slack is to empower teams and companies with productivity. As a user of Slack, you would be able to do all work-related things like chat, project management, analytics, etc with Slack.

The most important metric, in my opinion, is Churn. Retaining customers is extremely important for Slack, especially with all the upcoming competitions like HipChat and other companies like Google, Facebook trying to get into the business suite (B2B SaaS) industry. Churn allows the product team to learn from its customers the best (to understand why they left) – as opposed to asking satisfied current customers

You can create a funnel to see where the Churn occurred (for example, many users in a specific company could sign up for a Slack account, but not create any channels, and such, low usage due to issues leading to cancellations).

Digging deeper, you can look at a number of topics and threads being created, how engaged or active users were at certain points to pinpoint specific problems.

The problem with Slack as a user is a usage – if no one uses it, companies will not see the point of purchasing the subscription plan. Companies have to see the value from their employees and this means active chatrooms, threads, and some sort of result. Slack could definitely measure this individually and potentially quantify it by segmenting based on Slack-Successful companies VS non-Slack-successful companies.

And just to emphasize, monitoring customer satisfaction as a metric should be the next step. Go visit and speak to the customers to understand what issues they might be having.

Anyway, looking at churn rates on a monthly basis, and trying to reduce it with a set goal % should be an important aspect as a PM at Slack. This will lead to creating something sustainable – and afterward, we can focus on other things like CPA, ARPR, LTV, MRR, ARR.

I would end the note by saying enterprise Saas is tougher to analyze – a single metric should never be considered the most “important” because it all depends on context. For example, Slack could be focusing on retaining big enterprises as a business and could care less about churn from smaller companies. Churn rate % could help evaluate the current product and that should be important for a PM.

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Slack is a communication platform used in companies and common interest groups to exchange messages and files. One can communicate 1-on-1 or within a group. Depending on the usage i.e. # of messages or # of people in group, one can use free or paid version of slack.

For a product like this, there are several metric one would look at depending on the goal.
1. # of users to measure how many people enjoy using Slack
2. # of messages sent per user or time spent per session to measure user engagement with Slack
3. # of features a user uses to measure how much involved a user is with Slack
4. churn or time taken in any process flow before drop out to measure if slack is meeting user expectations
5. NPS to measure overall satisfaction

So to pick the most important metric, we would need to identify what would be the most important goal for slack. Since slack is a subscription based, no-ads and for-profit product, I would assume $ from subscription is the only source of revenue. For a company to run in a self-sustainable way, revenue or the amount of money it makes is an important metrict to look at.

Moreover, users would pay subscription fee only if they really like the product and use it frequently. So # of subscriptions which is the primary source of revenue is a good enough proxy for the success of product.

In summary, even though no one metric can measure the success of product fully and metrics change depending on the goal, if I have to pick only one metric, I would say # of subscriptions is the most important metric.