Become a Product Management Pro: Learn the Most Popular Terminology
General Product Management Concepts & Terminology
- MVP - Minimal Viable Product. A very basic version of a product to prove market viability.
- POC - Proof of Concept. Usually a prototype or bare-boned model used to demonstrate an idea.
- ROI - Return on Investment. Often a metric that measures profitability of investment, measured as a percentage.
- Product - any platform or service created to solve a problem
- Ecommerce Companies - companies that specialize in selling products online
- SaaS Companies - literally “Software as a Service” - companies that specialize in a particular service, often to sell to other companies.
- Hit - any action taken by a user visiting your product.
- Visit (synonymous with “session”) - A 30-minute period where a user is active on your product.
- Visitor (synonymous with “user”)- A unique user on a website. Usually due to privacy concerns this cookie expires after 30 days.
- CTA - Call to Action, can be any button encouraging a user to do something (Add to Cart, Learn More, etc)
- CVR - “Conversion Rate,” can be applied to more metrics than order. (Action / Total Site Visitors)
- OKR - Objectives & Key Results. Often used to measure success of a product team.
Ecommerce Product Management Concepts & Terminology
- PDP - Product Description Page
- PLP - Product Listing Page, synonymous with “Collection Page”
- ATC - Add to Cart, the rate at which users add items to cart on the website/application (Cart additions / Total site visitors)
- OCR - Order conversion rate, the rate at which users place orders on the website/application (Orders / Total site visitors)
- AOV - Average order value. This number is calculated by adding all the revenue from orders (sometimes removing outliers) and dividing it by total number of orders. The mean value of an order.
- RPV - Revenue per visit (or sometimes visitor). Total revenue generated by the product divided by total number of visits (or visitors).
- LTV - Lifetime Value. Calculated on a function of AOV * OCR * repeat orders.
Software Product Management Concepts & Terminology
- SaaS - maps directly to "Software as a Service"
- RFI - Request for Information, when a user requests a demo of your product.
- ARR - Annual Recurring Revenue, value of a single user over a year length. Example: Netflix at $20 a month would yield a $240 ARR
- MRR - Monthly Recurring Revenue, which is the value of your users over a month (tricky!). Let’s pretend Netflix only had 100 users, their MRR would be $20 * 100 = $2,000.
- Churn Rate - loss of customers, calculated over total customers. In the 100-user Netflix example, if they lost 5 users, their churn rate would be 5% (5/100).
- CLV - Customer Lifetime Value, more squishy but similar to LTV in ecommerce.
In conclusion, familiarizing yourself with popular product management terminology is a critical step in becoming a successful product manager or joining a product pod. Understanding key concepts such as MVP, POC, and ROI will help you communicate effectively with stakeholders and make informed decisions about your product. By mastering these and other important terms, you'll demonstrate your expertise and stay ahead of the curve in the ever-evolving world of product management. Whether you're a seasoned pro or just starting out, investing the time to learn and understand these key concepts will pay off in the long run.