But here's the thing, in order for a project manager to achieve these amazing results, they have to have a firm handle on how to measure product management performance. In other words, they need to know the key product management metrics and KPIs available to them.
Keep reading to learn what KPIs are, how they differ from OKRs, and the 12 most important KPIs for product managers. Let's dive in!
What's a KPI?
According to ProductPlan, a KPI, which stands for Key Performance Indicator, is "a quantitative metric that organizations use to track progress toward business goals. In plain English, it’s a way to measure the things that matter most."
Just about every department within a company can (and should!) use KPIs to track performance and progress toward goals. Product teams are no different.
The Difference Between KPIs and OKRs
Before we dive into the 12 most important KPIs for product managers, we need to take a moment to address the difference between KPIs and OKRs.
OKR in an acronym for Objectives and Key Results. This metric is often confused with KPI and, to be honest, the two are similar. The main difference lies in the goals and/or initiatives the two metrics are asked to track.
KPIs measure the progress made towards predefined goals. OKRs, on the other hand, are used when new goals or strategies are first put into place — i.e. when a new objective is set.
While this distinction may seem trivial, it's important to understand.
The 12 Most Important KPIs For Product Managers
KPIs are used to track specific goals, which means that the KPIs that product managers use may be different than the ones used by leaders in marketing, sales, customer service, etc. Here are the key product management metrics and KPIs that you need to be aware of:
Business Performance KPIs
Business performance KPIs are often overlooked — they shouldn't be. While these metrics aren't always directly related to product management, they're essential to your company as a whole and can be used to spot important business trends.
1. Customer Count
This KPI can be used to measure your company's total number of customers, the number of customers acquired within a certain time period, the number of people using a specific feature of your product, and even the number of upsells made between date ranges.
Customer count is an important metric when evaluating growth. Many SaaS brands, in particular, use this KPI to track operating capacity.
A general example of the customer count KPI in action might be: Boost the number of customers utilizing XYZ product feature by 07/01/21.
2. Net Promoter Score
Net Promoter Score, often shortened to NPS, has become an increasingly popular metric in recent years. It's used by a variety of departments, including marketing and customer support, to track customer satisfaction levels with specific products and/or services.
If you're not familiar with NPS, it's found by asking customers a simple question: On a scale of 0 to 10, how likely is it that you'd recommend our product/service to a friend or colleague?
Customers are then classified based on their responses. Detractors are customers who give scores between 0 and 6. Passives are customers who give scores between 7 and 8. And Promoters are customers who give scores of 9+.
To find your company's NPS, subtract your detractors from your promoters, then divide the result by the number of people who took your survey and multiply the figure by 100.
Here's an example:
Let's say that 100 people took your NPS survey. 76 of them classified as promoters, 14 as passives, and 10 as detractors. You would then remove the 14 passives from the equation and subtract the 10 detractors from the 76 promoters to get 66. Next, divide 66 by 100 (the number of people who took your survey) and multiply the result by 100. In this hypothetical scenario, your company's NPS would be 66.
Note: NPS scores should be taken by product managers with a grain of salt and only used in conjunction with hard data.
3. Market Position
This KPI will enable you to see how your product compares to the competition. To find your product's market position, use third-party resources like Ovum, Forrester Research, IDC or Gartner. The Gartner Magic Quadrant is a good example.
When you understand how your product is received by your industry, you can make strategic decisions to improve or maintain it's standing.
You might, for instance, use this KPI by saying something along the lines of, "I want to improve our products market position by two spaces in the Gartner Magic Quadrant by 01/01/2022.
Product Usage KPIs
When you understand how customers use your product, you can make strategic decisions regarding functionality, new features, additional products, etc. Here are the main product usage KPIs you'll want to track:
4. Monthly Users
How many people use your product on a monthly basis? If your product can't be measured this way, i.e. you don't sell a SaaS solution, you can try measuring the total number of units sold in the last 30 days instead.
Monthly user counts will help you identify adoption trends, encourage growth, and ensure your product plan accounts for scalability. You do NOT want to secure more users only to find that your team and/or product environment can't support the surge in customers.
5. Number of Sessions Per User
Most product managers would love for customers to engage with their products on a regular basis. In general, high levels of engagement indicate a product is well-received and useful to its target audience — AKA exactly what product managers strive for.
To measure this, you'll want to use the number of sessions per user KPI, which essentially tracks the average amount of engagement your products generate.
6. Users Per Feature
How many people use the individual product features your team creates? When you can answer this question, you'll be able to better strategize new features and updates.
For example, if you find that very few people use the new feature you just launched, you may conclude that it's not useful to your customers, or that it's too difficult to use. Either way, you'll know that the feature needs to be updated or scrapped, which is useful information when planning the future of a specific product.
This KPI is especially helpful for software developers as feature usage can easily be tracked with in-app triggers and acted on accordingly.
7. Time to X
The time to X KPI measures how long it takes customers to perform specific actions with or inside your product. It's a useful metric when attempting to understand how customers engage and interact with specific product processes and features.
In general, the quicker your customers can perform tasks, the better. Slow time to X metrics often indicate friction, which can lower satisfaction scores and increase support costs.
Product Development KPIs
How fast can your team crank out new products, product updates, and the like? By tracking the following KPIs, you can optimize your development processes and ensure your team works productivity and cost effectively.
8. Delivery On Time
This KPI is used to track your team's ability to hit deadlines. It's especially important for engineering teams and can help them improve their product development and testing estimates. Accuracy in this regard will increase business and customer confidence.
You want to be a product manager with integrity, right? Tracking delivery times will enable you to build more efficient processes for your team and even pinpoint development complications as they happen. Then you can keep key stakeholders informed at all times and company-wide plans can be adjusted before it's too late.
9. Resource Availability
To maximize the quantity and quality of your team's output, you need to track resource availability. Doing so will allow you to better decide who works on what, the tools they have at their disposal, and how long they have to complete specific tasks.
Product team members are often called upon by other departments due to their subject matter expertise. Resource planning will help ensure your team has the time they need to actually do their jobs effectively and hit deadlines.
10. Team Velocity
Team velocity measures the amount of work your product team can accomplish within a specific time frame. For example, you could use this KPI to estimate the number of man hours required to complete an important software development project.
According to Toptal, "Team velocity is calculated by counting the number of units of work completed in a certain interval, (many companies plan two-week sprints)."
When you understand the pace at which your team can realistically work, you can give upper management more accurate time estimates and create more reliable roadmaps. You'll also be able to track team activities to make sure you stay on track with your time goals.
Product Quality KPIs
Completing projects quickly is important. But only if the products you create are well-made and useful to your company's target customers. With this in mind, make sure to track these two product quality KPIs at all times:
11. Support Tickets + Escalations
How many support tickets (customer calls, emails, tweets, etc.) does your company receive on a weekly or monthly basis? Support tickets don't necessarily indicate serious concerns in terms of quality. But they are definitely worth noting — especially if they begin to escalate. A quick and easy way to improve the support ticket process is to use a free screen recorder like CloudApp to help close tickets up to 3x faster.
Why? Because an escalation in support tickets could indicate low product quality, which you'll want to address as soon as possible.
Finally, we have testing, a KPI that can cover automation coverage reports, as well as unit, system, and feature tests. Do your products do what they're supposed to?
You'll definitely want to keep an eye on failed tests, which could signify product quality issues. They'll also help you determine where to allocate your team's time and energy. Better focus will lead to better products — guaranteed.
Don't Rely Too Heavily on Product Manager KPIs
Product manager KPIs can be incredibly useful. But they can also be dangerous if you and your team alter your behaviors to meet them at all costs. Instead, take a big-picture approach to product management and use KPIs as tools, not the end all be all.
This approach will allow you to freely change direction when company-wide goals change and give you the flexibility you need to do your job at the highest level.
Boost Your Product Management Efforts
Effective product management will help your company increase profits and better satisfy its unique customer base. To boost your PM skills, keep in mind the most important KPIs for product managers that we mentioned in this article:
- Customer Count
- Net Promoter Score (NPS)
- Market Position
- Monthly Users
- Number of Sessions Per User
- Users Per Feature
- Time to X
- Delivery On Time
- Resource Availability
- Team Velocity
- Support Tickets + Escalations
Now it's your turn! Get back to work and start tracking these KPIs for your company. You won't regret it, we promise. Good luck!