13 Product Management KPIs and Metrics

As a product manager, you will have to know your product health, if there are any issues concerning your product, how does your team work on it and a lot more. You have a lot of data to assess so that you can improve your product and make it more desirable. You can use certain metrics that measure the product’s performance. Finding the right metrics to measure is pivotal to having a successful product strategy in place. Well, you know what I am talking about right? Yes, the Product Management KPIs.

Measuring the KPIs will help you understand if you are on the right track when it comes to reaching your business goals and seeing if your product strategy is working.

What is product management KPI?

Product Management KPIs are used by the product management teams, marketers, founders, etc, to see how business goals are being reached. The metrics that you choose should be based on your business goals- getting more leads, increasing website performance, getting inputs for new features, and so on. Instead of trying to measure everything, just focus on things that matter the most to achieve your immediate business goals.

How to choose the right product management KPIs?

#1 Based on business goals:

Without knowing what your business goals are, you cannot set your product management KPIs. If you are not sure what could be the KPIs that you could take into consideration, then here’s what you can do. Write down the features and benefits of the product for someone who is a customer. These are the product management KPIs that you can use. Ensure that your goals are measurable so that you can benchmark it for the next time you evaluate them.

#2 Some metrics are vanity:

Not all metrics are important, some of them are just for vanity as it doesn’t add any true value. For eg, the number of people who are using the app at a particular time is a product management KPI that is just for vanity. There is not much you can do with this piece of data. Instead of measuring the number of people using the app currently, you could instead measure the number of subscribers every hour. Just because you have the resources handy, do not measure everything. Some of the metrics are best left untouched.

#3 Consider the company’s stage:

If you are a relatively new company, then you should care about metrics that validate the business model with KPIs being customer reviews, awareness of the brand, stickiness, etc. Established businesses can think about customer retention, increasing CLV, the number of customers acquired, cost per acquisition, and so on.

#4 Lagging and Leading performance indicators:

Lagging indicators measures events that have already happened- number of sales last month, number of new customers, customers served last month, etc. They are good for measuring results while leading indicators measures inputs, progress and the chances of achieving an output in the future. For eg, conversion rates, sales volume, etc, are some of the leading product management KPIs. Knowing your leading indicators puts you in a position where you can predict the success of your organization.

#5 Spot trends:

When you have a variety of data at different time points at your disposal, you can leverage it to understand trends and predict the future. Check out revenue growth, customers accrued, and other important parameters over a time period, it will help you understand the scenario. For example, if you see that there is a sharp decline in the number of renewals, it is an indication that there is no proper customer retention program in place. If there is a decline in revenue or increase in costs without any major event happening, then you need to investigate it.

#6 Look at indicators that measures product, process and people:

Most businesses are guilty of tracking only financial indicators like revenue, profit, account value, and so on. Or something on the lines of customer satisfaction, referral rates, etc. While these are important metrics that you should care about, we would suggest that you take a little offbeat route and concentrate on metrics which will tell you about your product and the changes that it might require. Indicators that talk about the motivation and morale of your team are also important.

Product Management KPIs and Metrics

Here are 13 of the best product management KPIs that you need to know:

1. Monthly Recurring Revenue (MRR):

This measures a product’s total revenue in one month. If you want to calculate this, you need to consider the MRR at the beginning of the month, add the revenue that you got from new customers and minus it with the number of customers you lost. MRR is easy to measure for subscription-based businesses like SaaS where there are no extra sales happening after someone becomes a recurring customer.

2. Average Revenue Per User (ARPU):

With ARPU, you will be able to count the revenue generated per month or annually for each user. When you are not sure how to price a new product or when you want to increase the price of an existing product, knowing your ARPU helps you make the decision smoothly. ARPU can be calculated for a new user and an existing user. ARPU for a new user refers to metrics that are based on accounts after the subscription plan or product price was changed, while for an existing user, it involves numbers before the price change.

ARPU= Monthly recurring revenue/ Total number of accounts.

You can use ARPU as a performance indicator if you want to know how you fare against your competitors, consider various acquisition channels, or you are looking to see how you can segment your customers so that you can increase the price. MRR and ARPU are great to monitor the overall health of a company, especially for SaaS businesses.

3. Number of customers acquired:

It is not a number that is just for your sales and marketing team. In fact, the number of customers acquired is an indicator of the success of your product. If the number you forecast and the final acquisition number has a huge difference, then there has either been an over-estimation of your capabilities or the product hasn’t been that widely accepted yet.

This is where you find out areas where you can improve the product. Find out more why your product failed and take immediate steps to rework on the product so that there is more acceptance to it. Some of the KPIs to track that are related with acquisition are: New % of users, number of new users, % increase in user base.

4. Customer Acquisition Cost:

Every business needs to scale, and responsibly at that. You cannot fancy acquiring customers at $10 a pop while the cost of your product is just $1. That is economic suicide. Acquiring customers is a big cost associated with each business. Customer Acquisition Cost is the estimated cost of getting one customer for your business. If you are thinking of running a business in the long run, then understanding the need to measure CAC is crucial.

CAC includes the money you spent on marketing, the sales team’s work, overheads, advertising, software used, etc. Only when you can calculate the total amount invested for each client would you be able to gauge how much you need to spend in the future for acquiring a new customer.

CAC= Total money spent over a period of time/ Total number of customers generated over a period of time.

5. Customer Lifetime Value:

Customer Lifetime Value allows you to calculate how much money a customer will generate in their entire lifetime. It basically gives you an idea of how much profit you can expect from a customer before they stop spending their money with you. Why is this important? Because it helps you measure how much you can spend on acquiring a customer. If the CLV of a customer is $1000, then spending $20 to acquire one is extremely lucrative. Just knowing these numbers helps you make smart business decisions, especially for marketing and product pricing.

CLV= Average Revenue Per User * Average Customer Lifetime

Use this metric to select the best customer acquisition channels and retention strategies. It will also help you to understand if your product pricing is flawed or do you need to market it differently so that you can get a different set of customers who will be ready to pay more.

6. Retention Rate:

It is the percentage of customers who continue doing business with you after a certain time period. Using this KPI in product management, you can measure how long you will be able to retain your customers and if there is a decline in the number of customers leaving, you need to find out if there are measures taken regularly to retain customers. Without a retention strategy in place, it is normal for businesses to only spend time on acquiring new customers while completely ignoring the existing ones.

Retention Rate= (Customers at the end of a time period)- (New customers/Customers at the start of the time period)*100

Another method that you can use to reduce the retention rate is to talk to your previous customers and ask them why they decided to leave you. Always remember that getting new customers is much more difficult than keeping your existing customers happy. Your old customers tend to spend more on you versus new customers.

7. Churn Rate:

Retention rate and Churn rate are the opposite of each other. While retention rate measures the percentage of customers who chose to stay with you, churn rate measures the percentage of customers you have lost. In fact, there are two types of churn rate- 1. Customer churn and 2. Revenue Churn.

Customer churn talks about the number of users who have cancelled their subscription or stopped working with you. Revenue churn indicates the amount of revenue that the business has lost because of customer churn.

Customer Churn Rate= Customers Lost/ Total customers.

While we would advise you to concentrate on revenue churn than customer churn, the latter is also important because it can tell you a lot about customer satisfaction.

8. Net Promoter Score (NPS):

This is one of the most important metrics to measure customer satisfaction and loyalty. It asks the customers a simple question.

“How likely are you to recommend our business to your friends or family, on a scale of 0 to 10?”

Customers who give a rating between 0 and 6 are considered detractors, and they are most likely to churn. Customers who give a rating of 7 or 8 are most likely to jump ship when they see a better product, but stay with you for now since the product meets their minimum expectations, but they are not extremely excited about it. The ones who will stay true to you are customers who give you a rating of 9 or 10. They are called promoters or advocates and they will be the one singing paeans about your brand.

NPS= % of Promoters — % of Detractors

You can’t exactly pinpoint what is a good NPS score. There is no right NPS number. It varies depending upon the industry. An electronics company might have a relatively higher NPS value than a company in the telecommunications industry. There are companies that have NPS value in the negative too. If you have a negative NPS score, it means that you have more customers who hate your brand and are more likely to move to a competitor soon.

Ensure that everyone in the organization knows about NPS and your score. Motivate them enough to make them take steps which will help improve the NPS score. When everyone in the organization knows about NPS, the employees will be keen on providing more value, improve the morale of everyone in the office, will be more proactive and keen on providing a solution to detractors.

9. Customer Satisfaction Score (CSAT):

CSAT is a metric that measures the satisfaction of a specific product or service. In this type of survey, customers are asked to provide their satisfaction levels with a specific product/service on a Likert scale. The scale could be from 1–3, 1–5 or 1–10. The scores are summed and it is divided by the number of respondents to measure this metric. While NPS measures the overall satisfaction, CSAT measures the satisfaction level of just one feature or service.

Use CSAT at regular intervals so that you can always get to know from the customer how they like using a particular feature. Ensure that you work on their complaints based on the feedback so that you will give them enough reasons to renew the product.

10. Organic vs Paid traffic:

Understanding where you get your traffic from can be an eye-opener as well. When you measure paid traffic, you will be able to know which are the channels that give you the most traction. If you have a number of channels where you put up content so that you can get organic traffic, you will also be able to understand which works the best and which one doesn’t. Your marketing team will have a field time analyzing this metric.

11. Bounce Rate:

It is a metric that measures the percentage of users who visit only one page and leave the website or just stay for a very few seconds. It gives you an opportunity to optimize the product so that the visitor will check out more pages in the website and go deeper into the funnel. Using this metric, you will be able to increase the average user’s attention on the website. The product manager should work on reducing the bounce rate.

12. Number of active users:

With good marketing efforts, you will be able to acquire a lot of new customers, but are you keeping them engaged? Your users being engaged on the site means that your product is meeting their expectations. If you see that the engagement rate is low, then you need to find out from the user why there is no active participation. Send surveys to your customers as to where you are lacking and how you can improve their experience so that they will use more of your product. When creating surveys to find out your NPS, CSAT or CES score from your customers, employ the services of online survey tools like SurveySparrow for an intuitive survey.

13. Customer Conversion Rate:

This is the rate at which you turn your prospects into customers. Just by increasing your customer conversion rate slowly, you will be able to increase your revenue by a huge margin. It is measured by taking the number of customers that you have added in a certain month divided by the number of leads added during that month. Conversion rates are essential for all the marketing campaigns, this is the most basic of them.


Most of the product managers concentrate only on product features while completely ignoring many other metrics that need as much care, if not more. If you want to create a great product, not only are the features important, you should also be sure about what your customers want. Realizing that your customers wanted something else in the beta stage is not a favourable position to be in. The more you focus on your product, the higher will be your success rates.

Keep in mind that the product is not only about the benefits that it gives, but it is also about keeping the customers satisfied. To sum it up, the most important KPI in product management is the customer.

Using the above product management KPIs, you can be on top of the business’ performance, product quality, customer satisfaction, customer usage, and so on. This is the foundation of a well-oiled business machine. If you are just starting out, we would suggest you to map out the most important metrics based on your goals and monitor them like a hawk. Keep improving the metrics every time you measure it.

Guest Blogger at SurveySparrow

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Originally published at https://surveysparrow.com on February 10, 2020.




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