Critical Metrics for Monitoring Netflix’s Success

Introduction

Performance metrics are crucial for any product manager to understand and measure success. When interviewing for a product management position, you might be asked to determine key metrics for a product. Here, we will address: If you had to create a dashboard for Netflix with only three metrics, what would they be?

Detailed Guide on Framework Application

For metric-related questions, the AARRR (Acquisition, Activation, Retention, Referral, Revenue) framework is a solid choice to categorize and prioritize metrics. Although we’re selecting only three, it’s essential to cover critical aspects of the business. Here’s the application:

1. Acquisition: Select a metric that represents user growth or market reach, such as monthly new subscribers.
2. Engagement/Activation: Choose a user engagement metric, like average viewing hours per subscriber, to gauge product utilization.
3. Retention or Revenue: Consider a critical metric like churn rate or average revenue per user (ARPU) to understand user retention or monetization success.

In a hypothetical scenario, the PM might choose these three metrics:

• Monthly New Subscribers to reflect market growth;
• Average Viewing Hours per Subscriber to capture engagement;
• Churn Rate to understand user retention and the service’s value to its customers.

When justifying these choices, refer to industry benchmarks, such as average churn rates for streaming services or average revenue growth rates. This exhibits your awareness of market norms and expectations.

Communicate your thinking with clarity and substantiate the choice of metrics with how they align to company goals like expansion, user satisfaction, and revenue growth. Be open to discuss alternatives or additional metrics if prompted.

Conclusion

Choosing the right metrics requires a deep understanding of the product and its goals. The AARRR framework helps streamline this process by focusing on the fundamentals of business performance. Practicing the application of such frameworks in various scenarios enriches your analytical skills and prepares you for challenging interview questions.