Product Management Metrics and KPIs Explained

Product Management Metrics and KPIs Explained

In product management, KPIs and metrics are used to identify risk and measure success.

KPIs, or key performance indicators, are the most useful tools in a project manager’s toolkit. They help with product development, identifying team progress, and ensuring that teams stay on track to achieve wider business goals.

Before setting KPIs, teams may have multiple questions such as:

• What are KPIs and metrics?
• How to choose the right KPIs and metrics
• Which metrics and KPIs are the most important?
• How many KPIs should be selected?

In this section, we will identify the product management metrics and KPIs that can guide your team to product management success.

What are KPIs and metrics?

Key performance indicators show whether the business is achieving its predetermined goals and objectives. KPIs are used to quantify the success and failure of product goals.

KPIs measure the performance of the business or product in line with elements such as revenue, cost, usage, customer satisfaction rate, and more.

Product teams set goals and then identify specific, measurable KPIs that help ascertain progress. They can brainstorm and set up five to six KPIs to document and monitor regularly.

What are metrics?

A metric is a specific number or data-centric criteria that teams use to track the success of a product or business activity. Product teams use metrics to detect risks, set goals, and make effective decisions. KPIs track the measurable business outcomes, while metrics track workflows and processes. While every KPI is a metric, all metrics are not KPIs.

Here’s a product metrics and KPIs example:

• Metrics: Active product users is a metric that represents the number of regular customers that use the product. It can indicate growth, revenue, and other important insights.
• KPI: An achievement of a 25% increase in users year over year is an example of a KPI. Let’s say that a major business objective was to increase revenue by a certain amount within a financial year. A 25% increase in users indicates that more paid users have adopted or joined the platform, signaling that the organization is closer to achieving this objective.

Key metrics for product management

There are many important metrics in product management. Let’s explore the most commonly used product metrics that guide product development, design, testing, launch, and growth. Use these key product management metrics and KPIs to measure product and process performance.

Net promoter score (NPS)

NPS quantifies customer satisfaction with the product. Imagine your customers answering this question: Would you recommend this product/service to a friend/peer?

Promoters are existing clients who can promote the product through positive reviews or word-of-mouth recommendations. Leverage these positive experiences using interviews and case studies.

Consider the time it takes to adopt a product or feature that's just been introduced. The NPS also includes the percentage of users adopting the new feature and how often they engage with it.

Retention rate

Retention rate is a key metric that tracks the percentage of active users compared to the total users for a specific period.

It's commonly used by SaaS companies or organizations with a subscription-based model. To maintain a reasonable retention rate, companies need to consistently meet customer expectations and deliver immense value.

Churn rate

The churn rate is the percentage of customers that leave a company or unsubscribe from a platform within a specific period. Every product-focused company (SaaS companies, in particular) is intent on increasing the retention rate while reducing the customer churn rate.

This is a simple metric, but one that's difficult to track. Different companies have varying methodologies to define the time periods and customers.

Customer satisfaction rate

Every company wants its customer satisfaction rates to be the highest. High customer satisfaction rates imply that a company is able to deliver on what customers want across the buying journey.

From attracting customers to delivering the product to post-sales service, customer satisfaction rates rely on users being happy with the entire process.

Quantifying customer needs and preferences can act as a benchmark when identifying customer satisfaction scores. A detailed analysis of customers' inputs and feedback can help determine what users want and need from a company's product or service.

KPI examples for product management

Setting KPIs need not be overwhelming. In this section, we highlight different KPI examples for product management to inspire you to create your own.

Business performance KPIs

Business performance KPIs are related to the business and not directly to the product. They help teams spot new business trends and customer preferences before they reach your company.

Here are some KPIs that are multi-disciplinary and can be located across the company and its departments:

• Gain two places on the Gartner's Quadrant
• Increase Net Promoter Score (NPS) by 20%
• Improve customer count for a feature by 45% by February 2022

Product usage KPIs

Product usage KPIs support teams as they try to understand how customers or prospects connect with the product. They guide product decisions, manage feature development, and help you navigate the product roadmap.

Documenting, tracking, and analyzing these KPIs help identify how to improve product performance. Some product usage KPIs include:

• Increase the number of product users by 35% by December 2022
• Reduce time to onboard new users by 28% by next quarter
• Gain 2200 new users for the ‘reports’ feature in the next six months

Product development KPIs

Product development KPIs identify the speed of development while enhancing process improvements. You can create engagement in the team by monitoring and tracking these results. It’s also possible to discover development gaps immediately and resolve them before they become bigger. Here are a few examples:

• Uphold 99% on-time deliveries in 2022
• Preserve resource utilization above 90% for the entire quarter
• Maintain 40 units per month velocity in 2022

Product quality KPIs

Deliver outstanding customer experiences by establishing product quality KPIs. Avoid any negative events by ensuring these instances are promptly addressed within the shortest possible time.

Lay down quality control processes for customer satisfaction to minimize negative experiences. Here are some product quality KPIs to inspire your team:

• Maintain less than 200 monthly support tickets for 2021
• Decrease number of support ticket escalations to ten per month for 2022
• Reduce defect rate for product development to less than 2% by the end of 2022

How to structure product KPIs

Focus on creating five to six KPIs to establish a data-driven foundation for product management. Structure the KPIs around specific outcomes for business performance, product development, product quality, and product usage.

Here is a four-step process for structuring product KPIs:

Outline the measurement

Express the goal in clear terms to measure performance more effectively. Consider using these measurements:

• Activity: Includes a specific figure, such as the number of leads in the pipeline or percentage of new customers
• Outcome: Includes the progress for a specific outcome or result, such as the increase in revenue over last year or percentage rise in product users
• Project: Depicts project progress, such as the percentage of completed product development testing
• Target: Can be a deadline, such as achieving a particular revenue amount by a specified timeline

Describe the outcome 

Establish a specific number the team needs to achieve in a defined timeline. Make sure that the numbers match. For example, if the measurement is a percentage, the goal/outcome should also be a percentage.

Clarify the KPI data source 

Advocate for simplicity in every action to keep the stakeholders on the same page. Clearly articulate the data sources for the KPIs and explain how the progress will be measured.

Define tracking measure and frequency

Go with a monthly or quarterly time frame for your KPIs. Inform the team to increase transparency and accountability.

Product management KPI dashboard

Easily manage your product management metrics and KPIs with Wrike’s custom dashboards. Quit spending hours creating complicated spreadsheets that need to be constantly reviewed and updated.

Instead, create simple and real-time reports on demand using Wrike’s effective product management software. It allows teams to set goals, visualize product progress, and ensure that teams focus on the KPIs that matter.