Key performance indicators (KPIs) might help product managers communicate effectively with their stakeholders, whether they are customers or internal team members. Also, they might demonstrate a product manager’s impact on the performance of his or her product
Why am I not 100% sure about the relationship between KPIs and PM success? The reason is simple. We need to further qualify these statements. Although it sounds specific, “KPI” is really a vague term. So, what are the exact KPIs a PM should be tracking? In today’s world, there are at least 20-30 different KPIs a product manager could select to evaluate their performance. However, they’re not all applicable to every PM, organization, or situation.
In this article, I want to discuss not just KPIs, but a framework for selecting the right KPIs: the stakeholder framework. To determine the correct set of KPIs for your product team, you should focus on product’s four main stakeholder groups: management, customers, marketing and sales, and engineering and support.
Let’s go through each KPI category in turn, along with the tools you might use to gather and track these metrics.
Typically, companies focus their strategic goals around a few key vectors. Some examples include revenue, customer experience, market penetration, and increased profitability. A product manager should select his or her KPIs based on the vectors the company selects. As a result, they’ll be aligned with overall organizational goals. If the goal of the organization is to increase revenue, for example, a product manager should track growth in ACV (annual contract value) as a top-level KPI. Other KPIs that are closely associated with revenue, such as retention, churn, and growth in daily or monthly active users (DAU), should be chosen as well.
Relevant tools: Salesforce, Pendo
After setting a few KPIs based on company goals, a PM should then move on to customer metrics. In fact, customer KPIs should be high-priority, no matter what the company’s overall goals are. Why? Because the customer always comes first. And if a product manager loses sight of the customer and their needs, they are starting on the path to failure. Customers want a delightful experience and a product that can solve their main pain points. KPIs such as Net Promoter Score (NPS), CSAT (customer satisfaction), or CES (customer effort score) can help track whether a customer is happy with the product. Other customer KPIs a product manager should keep top-of-mind include customer lifetime value and churn rate.
Relevant tools: Pendo, Excel
Marketing and Sales KPIs
A product manager’s go-to-market strategy cannot function without support from the marketing and sales teams. Therefore, tying product KPIs to sales and marketing is key to analyzing the correlation between their success and that of the product. While sales and marketing teams track their own KPIs, a product manager should actively set KPIs related to these functions as well. Examples include CLV (customer lifetime value), conversions, and growth in daily and monthly active users. Tracking these metrics will help you build a more complete picture of your product’s go-to-market performance. Also, it will allow you to make strategic product decisions. For example, you can use this data to determine how to price the product, package it, etc.
Relevant tools: Pendo, Excel, Salesforce, NetSuite, Quick Books, Outreach
The main criteria for the successful shipment of a product are timely delivery, a bug-free product, and a well-designed user experience. In order to achieve these three goals, a product manager needs to track specific engineering-focused KPIs. These should include: number of issues, velocity, click-through rate, and Net Promoter Score (NPS). By keeping an eye on both number of issues and velocity, you can ensure that clean code gets delivered on time. Plus, you’ll be able to quickly identify and address any impediments should they arise. Click-through rate and NPS can help you figure out which widgets and the components of the product your users are clicking on, and whether they are satisfied with the experience.
Relevant tools: Confluence, JIRA, Pendo
To summarize, product managers should use the stakeholder framework to select KPIs that make sense not only for the product team but for the whole organization. Put together, the resulting set of metrics will help you analyze your product’s performance abd impact more holistically, and from the standpoint of different stakeholder groups.