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hey guys welcome to another edition of the explainer series in today's video we'll take a look at how to solve metric based questions in PM interviews if you haven't checked out the previous videos as part of the explainer series do make sure to check them out put down in the comments below what kind of videos you'd want us to create and if you want to stay up to dat with all the cool content
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that we be bringing do make sure to subscribe to the channel and now back to the video metrics based questions generally come in two types first is the root cause analysis questions and the second is the goal setting based questions in today's video we'll be looking at goal setting based questions a typical question in this particular bucket is going to come in the form of
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how do you define the success metrics or goals for a particular product it could be a product or a feature or it could even be a company this could also be followed up with the root cause analysis question where you'd be asked to diagnose an unusual behavior or a drop in one of the metrics that you have just defined and diagnose what the root cause
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could be anytime this question is given there is a six-step framework that you can follow for this particular question the first step is to clarify the first thing you want to clarify is what exactly is the interviewer looking for because there is a big difference between what is a goal and what is a metric a goal is something that has a metric a Target and a time frame for
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example your goal could be that you want to increase monthly active users by 20% by the end of 2021 and in this the metric is monthly active users you have to clarify whether the interviewer wants you to focus more on goals or whether the interviewer wants you to focus more on metrics as such the next thing you
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want to clarify is what exactly does the company or product or feature does in one sentence you can just Define what it does or you can even clarify this with the interviewer the last thing you also want to clarify or talk about is the mission and vision of this company so that both you and the interviewer are actually on the same page in terms of your understanding of what the company
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does and what it's all about uh step number two is to think about what stage in the product life cycle is this company in at this particular Point based on this stage in the product life cycle the goal that the company will be trying to optimize for will be different for example if the company is just one or two years old then it's probably in
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its growth phase and as a result of which it wants to maybe optimize for adoption and acquisition over other metrics like revenue monetization and so on if the company is a little bit older than that then probably the metric or the phase that they want to optimize for is engagement and not much of adoption or acquisition you have to Define which
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particular phase the company is trying to optimize for at this particular point and focus more on this particular phase the next step is to think about what the product goal or the customer goal is for example in WhatsApp the customer goal is to be able to send messages to friends and family in a safe and encrypted
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manner now this is going to be very important when you start defining your notstar metric because at the end of the day a notstar has to marry your customer objective and what the company tries to achieve once you're done with all the clarifications and in setting the goals it's now time to go through each of the phases in the funnel and list down
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metrics for each phase here what you need to do is you need to understand the key actions that the user will be performing on your product and which ones You' want to encourage or discourage for example if you're Netflix and you're trying to optimize for acquisition or adoption then the key action that you probably want to encourage is more number of people
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downloading the app more number of people signing up to the subscription plan and even more number of people starting or completing their first TV show or movie on the app here in this step depending on the goal that you've chosen in Step number two you can decide which phases in the customer Journey you'd want to focus more on for example
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if you decided to go with acquisition as the goal then you can focus more on adoption acquisition and conversion and not much on revenue or monetization which come in the later parts of the fun two more points to remember here is that one it's always good to set metrics that actually have a time frame attached with
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them because in real life you really want to monitor how your metric is performing either quarter on quarter or month on month and the second point is that if you need to buckee your metrics or categorize them into different buckets based on customer groups you could do that as well the next step is to prioritize amongst the metrics that
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you've chosen your goal here is to have one notstar metric and four to five L1 supporting metrics when you prioritize remember that your notstar metric should be a broad indicator of success and not something that is complex or difficult to measure or even understand another tip here is to prioritize those metrics
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that you can actually take some action on on for example if you're WhatsApp and the goal you're trying to optimize for is engagement then one of the things you'd want to measure is how well your users are using the Richer forms of messaging like gifs stickers emojis Etc here one thing you probably want to
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measure is total number of emojis GIF stickers sent uh in a time period or a better metric in this case could be the total number of emojis J stickers sent per user in a particular time period adding the per user to the metric actually makes it a little bit more actionable and gives you much more information on what exactly is going on
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once you're done with the step the last step is to critique your own metrics and pick counter metrics if needed what you do here is you take a look at each of the metrics that youve prioritized and think of any ways in which these metrics could mislead you or any loopholes that these metrics could have let me take an example let's say you're tracking the
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number of people who actually sign up to your product from the number of people who actually download the particular product so the ratio you're tracking is number of signups by number of downloads let's say for the first month you have 100 people who are downloading your app and out of that only 30 people are actually signing up for your product and in month two you have just 50 people who
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are downloading your app and out of the 50 25 people are signing off for your product now if you measure this ratio you get 30% in the first month and you get 50% in the second month looking at the ratio alone it kind of tells us that you're actually on the right track but in fact when we dig a little bit deeper we know that it's not the case so this
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metric could actually mislead us into believing something that is actually not true in this case a good counter metric that you could add to this is total number of downloads and total number of signups in a particular time period so the above six-step process is how you approach any metric based questions as usual a reference sheet is attached
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below if you have any questions put them down in the comments below and we'll make sure you get them answered if you like the video do give a thumbs up and subscribe to the channel and until the next video bye-bye [Music]