Product Management

A Deep Dive into Key Performance Indicators (KPIs) for Product Management

December 6, 2023

12 mins read

A Deep Dive into Key Performance Indicators (KPIs) for Product Management

What product management KPIs should you give the top priority? How to track them? More importantly, what to do when the results aren’t encouraging?

If you’re a product manager asking these questions, this guide is for you. It will tell you why you must incorporate key performance indicators into your product strategy, how to navigate successfully in the ocean of KPIs, and what to do when you feel your ship is drowning. We’ve rounded up the tips from business leaders on improving your KPIs for successful product management.

Set a five-minute timer and enjoy the dive.

What is a Product Management KPI?

In product management (PM), key performance indicators, often called KPIs, are quantifiable metrics used to track progress and measure achievements when managing products.

Setting the product manager’s KPIs is vital for overall business growth. Like a map or compass, they serve as navigation tools to reach the shore of customer success successfully. By determining the proper metrics, you can draw a comprehensive picture of product management performance, assess your current results, and shift to a data-driven approach to make wiser decisions.

For example, here’s a KPI chart of Toptal.

Source: Toptal.com

It visualizes the full revenue potential, usage by application type, and cloud usage by week (with the count of logins, operating expenses, gross profit, and revenue).

Types of KPIs in Product Management

Check the following metrics every product manager should know:

  • Financial KPIs: monthly recurring revenue, customer lifetime value, customer acquisition cost, etc.
  • Product development KPIs: feature adoption rate, defect density, team velocity, etc.
  • Product quality KPIs: support tickets, MVP and MLP testing, etc.
  • User/customer experience KPIs: bounce rate, customer satisfaction score, customer effort score, etc.
  • Customer success KPIs: retention rate, net promoter score, etc.
  • Team communication and collaboration KPIs: team velocity, employee effectiveness ratio, employee engagement index, etc.
  • Cross-functional KPIs: risk aversion, lead generation, conversion rates (free trial, website, or email conversions)

Of course, there are more of them.

But let’s focus on the most crucial ones you can’t miss out on if you want to manage a product like a pro.

6 KPIs for Product Management You Should Track (And How to Improve Them)

If the above list contains the must-know KPIs, the below one is a must-track set of product management metrics.

Key Performance Indicator #1. Monthly or Daily Active Users (MAU or DAU)

DAU and MAU pinpoint user engagement levels and the stickiness of products during a specific period. DAU means active users per day; MAU – active users per month. Companies often pick MAU as the North Star metric for product success, for example, Facebook. And the brand nails it.

Statista ranked it Number One among the most popular social apps by MAU in October 2023:

  • Facebook – 3.03 billion
  • YouTube – 2.49 billion
  • WhatsApp – 2 billion
  • Instagram – 2 billion
  • WeChat – 1.32 billion
  • TikTok – 1.21 billion

How to calculate

For measuring MAU and DAU, you should find the sum of unique users who interacted with your product within one month and 24 hours, respectively.

You can turn to Similarweb App Analysis, RankMyApp, or IronSource’s Aura.

How to get more active users

What if we told you it’s possible to boost your app’s audience by 700% within a month?

Jesse Hanson, Content Manager at Online Solitaire & World of Card Games, explains how to achieve that:

“To grow DAU and MAU, brands should bring interactivity and animations into play. Animated content leaves a lasting impression because it tells a story and appeals to emotions. Besides, an animation interacts and engages with the audience more effectively than text.”

That’s true. An animation drives more leads and 70% more sales than static text.

Let’s take Duolingo. The brand gamified the in-app experience so much that Gen Z has become obsessed with the Duo owl, its green, animated mascot.

Key Performance Indicator #2. Monthly Recurring Revenue (MRR)

MRR is a measurable goal for the financial performance of a product, ingrained into PM analytics. It is particularly vital for SaaS product management.

How to evaluate

MRR = Average monthly revenue per account x Number of paying customers per month

To define your MRR, you must multiply the quantity of paying accounts by the monthly fee per user.

For example:

You have 200 users, each paying $10 per monthly software subscription. Then, your Monthly Recurring Revenue is $2,000.

How to generate more revenue

The first idea coming to your mind is probably to raise the price.

But don’t rush to do that.

“Increasing prices may seem an attractive tactic to lift the MRR. However, it is a dead-end if the product quality remains unchanged without improvements,” notes Jim Pendergast, Senior Vice President at altLINE Sobanco.

“A smarter solution that brings money to SaaS is the customization of pricing options and diversification of features in subscription plans. This way, SaaS companies can target different customer segments and ensure their offerings perfectly correspond to their customers’ pay ability. For that, it’s better to create at least 3-4 paid subscription options,” he recommends.

If you aim at product-led growth for your SaaS business, segment your audience by – 

  • Income
  • Business size
  • Number of seats per account
  • Preferred features
  • Integration with other tech tools, etc.

Relying on these and other factors for customer segmentation, TimeDoctor created three paid subscriptions.

Source: Timedoctor.com

TimeDoctor’s competitor, Hubstaff, is one step ahead. It offers certain paid features as optional add-ons on top of subscription plans.

Source: Hubstaff.com

Key Performance Indicator #3. Customer Effort Score (CES)

Monitored by 60% of service organizations, CES is a user feedback type worth capturing and an excellent product performance yardstick worth tracking. It estimates whether using your product is trouble-free for a customer.

How to calculate

It’s one of the easiest product manager KPIs to track. Identifying CES is as simple as asking customers one question starting with “How easy was it for you to …?”

You can also rephrase it and incorporate emojis like here.

Source: ProductMindset

Then, you get a response on a 1-to-7 rating scale, where one is tough, and seven is painless.

CES = Sum of collected scores ÷ Number of responses

For example:

Suppose you get 20 responses totaling 114. So, you divide 114 by 20, and voila – your CES is 5.7. The average CES score is 5.5.

But there’s a more straightforward method to do that. Use feedback collection tools to send CES surveys and receive instant results:

  • Zonka Feedback
  • Delighted
  • NiceReply
  • Qualtrics
  • Naxai, etc.

How to minimize customer effort

Michael Power, CMO at DTF Transfers, shares how his company reduced the customer effort score:

“At DTF Transfers, we provide explainer videos on the homepage to instruct customers on how to use our products. Besides, we have a pool of educational videos, product demos, and step-by-step guides on the website to make using direct-to-film transfers a breeze for our customers.”

Source: DTFTransfers

If you’re a product manager of a mobile or web application, you should enable an intuitive user journey and guide users, decreasing user effort.

SurveySparrow, for instance, implemented a help desk built with Zendesk to deliver a smoother user experience and assistance round the clock.

Source: SurveySparrow

Key Performance Indicator #4. Customer Satisfaction Score (CSAT)

Along with CES, mentioned earlier, CSAT is another great metric for a consistent product feedback loop. It measures how pleased customers are with your app, website, or other products.

How to estimate

Like the customer effort score, the CSAT relies on a single question: “How satisfied are you with …?” on a rating scale of 1-10, 1-7, or 1-5.

Source: ControlHippo

CSAT = (Sum of satisfied customers ÷ Total number of responses) x 100

Let’s say you have used a 1-5 scale. Now, you define the number of customers who gave 4s and 5s, divide it by the number of all respondents, and then multiply it by 100.

For example:

Seven out of ten customers are satisfied or very satisfied with your product. Then: (7 ÷ 10) x 100 = 70

A good CSAT score typically ranges between 75 and 85, depending on the industry.

Again, customer feedback platforms may become handy for creating surveys and gathering CSAT scores.

How to boost CSAT

Follow this piece of advice from Jim Rainey, VP of Growth at CoPilot Search, an AI tool for car shopping:

“In today’s digital era, people are hungry for information, motivation, entertainment, and inspiration. So, here goes the winning principle to increase the customer satisfaction score: EMEIEducate, Motivate, Entertain, and Inspire.”

Check how CoPilot does that.

Educate

Relevant information for car buyers and owners with pros & cons of particular vehicle models, how-to guides, and answers to FAQs

 

Source: CoPilotSearch

Motivate

Reviews from CoPilot users that spur people to try the tool

 

Source: Instagram

Entertain

Entertaining giveaways with prizes

 

Source: Instagram

Inspire

Inspirational social media posts with exciting activities and lists for car seekers and drivers

Key Performance Indicator #5. Customer Retention Rate (CRR)

How many customers have you retained over the past two months? And what about over a year?

If you don’t know it yet, this KPI for product management success will show you the result.

How to calculate

Apply the formula:

CRR = ((E - N) ÷ S) x 100.

Where:

E is the amount of customers at the end of the set timeframe.

N is the number of customers acquired during that period.

S is the customer count at the start of the period.

Source: CustomerThermometer

The average CRR in retail is 63%. In SaaS, a good customer retention score is 35%.

How to retain more customers

Here’s a fact to cling to:

82% of customers connected to the company emotionally always buy from it whenever they need something, compared to 38% of those with low emotional engagement.

“Positive emotions are the most powerful triggers for building customer relationships and increasing retention,” says Will Ward, Co-Founder at Industry Arabic. “Being a universal language between the brand and the customer, it establishes through content that evokes surprise, interest, gratitude, pride, belongingness, amusement, joy, and other positive feelings.”

IndustryArabic, for instance, taps into the audience’s emotions by sharing hilarious Arabic translation failures.

Source: IndustryArabic

Consider how other brands connect with their customers emotionally:

  • Asana uses celebration creatures to help users feel proud of their productivity.
  • Venmo makes transactions fun with GIFs and emojis.
  • Motivosity has a loyalty program with rewards and the ThankMatters Card.
  • eCommerce stores such as Envy Shoes and Wayfair send engaging and entertaining emails with spin-to-win wheels.
  • Gitnux kindles the website user’s interest with the leadership personality test.
  • AppSumo and Gusto surprise and “wow” subscribers with their email subject lines: “Don’t worry be app-y” from AppSumo and “Heyyy, are you seeing another payroll provider?” from Gusto.

Key Performance Indicator #6. Team Velocity (TV)

Although mentioned last on the list, it remains one of the most significant KPIs for product leaders of Agile product development teams working in sprints.

TV is the amount of work done within a particular interval of time.

How to assess

Team velocity is calculated by adding all story points accumulated per sprint.

Source: ScrumInc

The more story points you have →,the higher your team velocity is → the better your team performs → the faster solutions it delivers.

How to increase your team’s effectiveness

Two of the most fundamental PM principles are empowering your team to solve problems more efficiently and focusing on the outcomes.

That’s when you might need to streamline team velocity with roadmapping. A flexible and customizable product roadmap at Zeda.io can help you visualize and communicate your steps with an overview of team performance and product development.

It integrates seamlessly with Slack, Teams, Intercom, Jira, Salesforce, and other workflows and tools.

A Product Manager at Nimble, Gokul Prabhu, says Zeda.io made their team more organized and increased work efficiency dramatically. Read the case study for more details.

Manage Products More Effectively with KPIs on the Horizon

It’s time to dive out of the article and strengthen your product management with KPIs as guiding beacons.

Draw a comprehensive KPI framework in PM, monitor the right metrics, and continuously improve to make your vessel (your product) stay stable on the waves of digital turbulence and sail safely.

Get a bird’s eye view of the situation with Zeda.io. It’s a superb tool for teams, powering the future of product management.

Give it a try here.

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Product Management

A Deep Dive into Key Performance Indicators (KPIs) for Product Management

December 6, 2023
12 mins read
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IN THIS ARTICLE:
  1. What are product discovery techniques?
  2. 8 key product discovery techniques link
  3. Conclusion
IN THIS ARTICLE:
  1. What are product discovery techniques?
  2. 8 key product discovery techniques link
  3. Conclusion

What product management KPIs should you give the top priority? How to track them? More importantly, what to do when the results aren’t encouraging?

If you’re a product manager asking these questions, this guide is for you. It will tell you why you must incorporate key performance indicators into your product strategy, how to navigate successfully in the ocean of KPIs, and what to do when you feel your ship is drowning. We’ve rounded up the tips from business leaders on improving your KPIs for successful product management.

Set a five-minute timer and enjoy the dive.

What is a Product Management KPI?

In product management (PM), key performance indicators, often called KPIs, are quantifiable metrics used to track progress and measure achievements when managing products.

Setting the product manager’s KPIs is vital for overall business growth. Like a map or compass, they serve as navigation tools to reach the shore of customer success successfully. By determining the proper metrics, you can draw a comprehensive picture of product management performance, assess your current results, and shift to a data-driven approach to make wiser decisions.

For example, here’s a KPI chart of Toptal.

Source: Toptal.com

It visualizes the full revenue potential, usage by application type, and cloud usage by week (with the count of logins, operating expenses, gross profit, and revenue).

Types of KPIs in Product Management

Check the following metrics every product manager should know:

  • Financial KPIs: monthly recurring revenue, customer lifetime value, customer acquisition cost, etc.
  • Product development KPIs: feature adoption rate, defect density, team velocity, etc.
  • Product quality KPIs: support tickets, MVP and MLP testing, etc.
  • User/customer experience KPIs: bounce rate, customer satisfaction score, customer effort score, etc.
  • Customer success KPIs: retention rate, net promoter score, etc.
  • Team communication and collaboration KPIs: team velocity, employee effectiveness ratio, employee engagement index, etc.
  • Cross-functional KPIs: risk aversion, lead generation, conversion rates (free trial, website, or email conversions)

Of course, there are more of them.

But let’s focus on the most crucial ones you can’t miss out on if you want to manage a product like a pro.

6 KPIs for Product Management You Should Track (And How to Improve Them)

If the above list contains the must-know KPIs, the below one is a must-track set of product management metrics.

Key Performance Indicator #1. Monthly or Daily Active Users (MAU or DAU)

DAU and MAU pinpoint user engagement levels and the stickiness of products during a specific period. DAU means active users per day; MAU – active users per month. Companies often pick MAU as the North Star metric for product success, for example, Facebook. And the brand nails it.

Statista ranked it Number One among the most popular social apps by MAU in October 2023:

  • Facebook – 3.03 billion
  • YouTube – 2.49 billion
  • WhatsApp – 2 billion
  • Instagram – 2 billion
  • WeChat – 1.32 billion
  • TikTok – 1.21 billion

How to calculate

For measuring MAU and DAU, you should find the sum of unique users who interacted with your product within one month and 24 hours, respectively.

You can turn to Similarweb App Analysis, RankMyApp, or IronSource’s Aura.

How to get more active users

What if we told you it’s possible to boost your app’s audience by 700% within a month?

Jesse Hanson, Content Manager at Online Solitaire & World of Card Games, explains how to achieve that:

“To grow DAU and MAU, brands should bring interactivity and animations into play. Animated content leaves a lasting impression because it tells a story and appeals to emotions. Besides, an animation interacts and engages with the audience more effectively than text.”

That’s true. An animation drives more leads and 70% more sales than static text.

Let’s take Duolingo. The brand gamified the in-app experience so much that Gen Z has become obsessed with the Duo owl, its green, animated mascot.

Key Performance Indicator #2. Monthly Recurring Revenue (MRR)

MRR is a measurable goal for the financial performance of a product, ingrained into PM analytics. It is particularly vital for SaaS product management.

How to evaluate

MRR = Average monthly revenue per account x Number of paying customers per month

To define your MRR, you must multiply the quantity of paying accounts by the monthly fee per user.

For example:

You have 200 users, each paying $10 per monthly software subscription. Then, your Monthly Recurring Revenue is $2,000.

How to generate more revenue

The first idea coming to your mind is probably to raise the price.

But don’t rush to do that.

“Increasing prices may seem an attractive tactic to lift the MRR. However, it is a dead-end if the product quality remains unchanged without improvements,” notes Jim Pendergast, Senior Vice President at altLINE Sobanco.

“A smarter solution that brings money to SaaS is the customization of pricing options and diversification of features in subscription plans. This way, SaaS companies can target different customer segments and ensure their offerings perfectly correspond to their customers’ pay ability. For that, it’s better to create at least 3-4 paid subscription options,” he recommends.

If you aim at product-led growth for your SaaS business, segment your audience by – 

  • Income
  • Business size
  • Number of seats per account
  • Preferred features
  • Integration with other tech tools, etc.

Relying on these and other factors for customer segmentation, TimeDoctor created three paid subscriptions.

Source: Timedoctor.com

TimeDoctor’s competitor, Hubstaff, is one step ahead. It offers certain paid features as optional add-ons on top of subscription plans.

Source: Hubstaff.com

Key Performance Indicator #3. Customer Effort Score (CES)

Monitored by 60% of service organizations, CES is a user feedback type worth capturing and an excellent product performance yardstick worth tracking. It estimates whether using your product is trouble-free for a customer.

How to calculate

It’s one of the easiest product manager KPIs to track. Identifying CES is as simple as asking customers one question starting with “How easy was it for you to …?”

You can also rephrase it and incorporate emojis like here.

Source: ProductMindset

Then, you get a response on a 1-to-7 rating scale, where one is tough, and seven is painless.

CES = Sum of collected scores ÷ Number of responses

For example:

Suppose you get 20 responses totaling 114. So, you divide 114 by 20, and voila – your CES is 5.7. The average CES score is 5.5.

But there’s a more straightforward method to do that. Use feedback collection tools to send CES surveys and receive instant results:

  • Zonka Feedback
  • Delighted
  • NiceReply
  • Qualtrics
  • Naxai, etc.

How to minimize customer effort

Michael Power, CMO at DTF Transfers, shares how his company reduced the customer effort score:

“At DTF Transfers, we provide explainer videos on the homepage to instruct customers on how to use our products. Besides, we have a pool of educational videos, product demos, and step-by-step guides on the website to make using direct-to-film transfers a breeze for our customers.”

Source: DTFTransfers

If you’re a product manager of a mobile or web application, you should enable an intuitive user journey and guide users, decreasing user effort.

SurveySparrow, for instance, implemented a help desk built with Zendesk to deliver a smoother user experience and assistance round the clock.

Source: SurveySparrow

Key Performance Indicator #4. Customer Satisfaction Score (CSAT)

Along with CES, mentioned earlier, CSAT is another great metric for a consistent product feedback loop. It measures how pleased customers are with your app, website, or other products.

How to estimate

Like the customer effort score, the CSAT relies on a single question: “How satisfied are you with …?” on a rating scale of 1-10, 1-7, or 1-5.

Source: ControlHippo

CSAT = (Sum of satisfied customers ÷ Total number of responses) x 100

Let’s say you have used a 1-5 scale. Now, you define the number of customers who gave 4s and 5s, divide it by the number of all respondents, and then multiply it by 100.

For example:

Seven out of ten customers are satisfied or very satisfied with your product. Then: (7 ÷ 10) x 100 = 70

A good CSAT score typically ranges between 75 and 85, depending on the industry.

Again, customer feedback platforms may become handy for creating surveys and gathering CSAT scores.

How to boost CSAT

Follow this piece of advice from Jim Rainey, VP of Growth at CoPilot Search, an AI tool for car shopping:

“In today’s digital era, people are hungry for information, motivation, entertainment, and inspiration. So, here goes the winning principle to increase the customer satisfaction score: EMEIEducate, Motivate, Entertain, and Inspire.”

Check how CoPilot does that.

Educate

Relevant information for car buyers and owners with pros & cons of particular vehicle models, how-to guides, and answers to FAQs

 

Source: CoPilotSearch

Motivate

Reviews from CoPilot users that spur people to try the tool

 

Source: Instagram

Entertain

Entertaining giveaways with prizes

 

Source: Instagram

Inspire

Inspirational social media posts with exciting activities and lists for car seekers and drivers

Key Performance Indicator #5. Customer Retention Rate (CRR)

How many customers have you retained over the past two months? And what about over a year?

If you don’t know it yet, this KPI for product management success will show you the result.

How to calculate

Apply the formula:

CRR = ((E - N) ÷ S) x 100.

Where:

E is the amount of customers at the end of the set timeframe.

N is the number of customers acquired during that period.

S is the customer count at the start of the period.

Source: CustomerThermometer

The average CRR in retail is 63%. In SaaS, a good customer retention score is 35%.

How to retain more customers

Here’s a fact to cling to:

82% of customers connected to the company emotionally always buy from it whenever they need something, compared to 38% of those with low emotional engagement.

“Positive emotions are the most powerful triggers for building customer relationships and increasing retention,” says Will Ward, Co-Founder at Industry Arabic. “Being a universal language between the brand and the customer, it establishes through content that evokes surprise, interest, gratitude, pride, belongingness, amusement, joy, and other positive feelings.”

IndustryArabic, for instance, taps into the audience’s emotions by sharing hilarious Arabic translation failures.

Source: IndustryArabic

Consider how other brands connect with their customers emotionally:

  • Asana uses celebration creatures to help users feel proud of their productivity.
  • Venmo makes transactions fun with GIFs and emojis.
  • Motivosity has a loyalty program with rewards and the ThankMatters Card.
  • eCommerce stores such as Envy Shoes and Wayfair send engaging and entertaining emails with spin-to-win wheels.
  • Gitnux kindles the website user’s interest with the leadership personality test.
  • AppSumo and Gusto surprise and “wow” subscribers with their email subject lines: “Don’t worry be app-y” from AppSumo and “Heyyy, are you seeing another payroll provider?” from Gusto.

Key Performance Indicator #6. Team Velocity (TV)

Although mentioned last on the list, it remains one of the most significant KPIs for product leaders of Agile product development teams working in sprints.

TV is the amount of work done within a particular interval of time.

How to assess

Team velocity is calculated by adding all story points accumulated per sprint.

Source: ScrumInc

The more story points you have →,the higher your team velocity is → the better your team performs → the faster solutions it delivers.

How to increase your team’s effectiveness

Two of the most fundamental PM principles are empowering your team to solve problems more efficiently and focusing on the outcomes.

That’s when you might need to streamline team velocity with roadmapping. A flexible and customizable product roadmap at Zeda.io can help you visualize and communicate your steps with an overview of team performance and product development.

It integrates seamlessly with Slack, Teams, Intercom, Jira, Salesforce, and other workflows and tools.

A Product Manager at Nimble, Gokul Prabhu, says Zeda.io made their team more organized and increased work efficiency dramatically. Read the case study for more details.

Manage Products More Effectively with KPIs on the Horizon

It’s time to dive out of the article and strengthen your product management with KPIs as guiding beacons.

Draw a comprehensive KPI framework in PM, monitor the right metrics, and continuously improve to make your vessel (your product) stay stable on the waves of digital turbulence and sail safely.

Get a bird’s eye view of the situation with Zeda.io. It’s a superb tool for teams, powering the future of product management.

Give it a try here.

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