As a product manager, you must be aware of your product’s health, any difficulties it might be facing, how your team is working on resolving them, and so on. There’s a lot of data that can be analyzed to improve your product and make it more appealing. Finding the correct metrics to measure is critical to implementing a successful product strategy.
You know what I’m talking about, don’t you?
I’m referring to the Product Management KPIs. A key performance indicator, or KPI, is a quantitative value used to assess how effective an individual or organization is in meeting a goal. Measuring KPIs can help you determine the right road, in terms of meeting your company objectives, and if your product strategy is effective or not.
What are Product Management KPIs?
Product management KPIs are the kind of statistics that indicate the success of a team. Product management, sales and marketing teams, and other business professionals use these KPIs to set targets, track progress, and troubleshoot problems. KPIs are extremely useful for product managers and other team leaders since they guide them in prioritizing activities and allocating responsibilities. These criteria are critical for a company’s ability to create and manage high-quality products.
KPIs may be classified into many categories. Product managers must investigate whether product management KPIs should be communicated as part of developing credibility, increasing involvement, celebrating achievement, or spotting trends and difficulties.
KPIs for Product Engagement:
Product engagement assesses how users interact with a product at the most granular level, allowing product managers to better identify what may be lacking from the product experience. However, it is more than simply a matter of measuring. Product engagement includes measures that are used to make constant product adjustments that provide a better experience for your consumers and in turn boost retention and growth.
To fulfill the demands of consumers, product managers creating these products must be aware of how their customers interact: which features do they utilize the most; how many individuals continued to use the product after the initial onboarding process; and if consumers utilize the app daily.
So, Let’s take a look at the product engagement metrics:
|In-App Time||Monitors the amount of time a user spends in your app over time.||This statistic aids in the discovery of use time patterns, which serve as a measure for how valuable users find your product.||If the product is designed to be used on a daily basis, take the sum of the entire active time users spend on the product each day to calculate time in-app. Next, look at how the daily time spent in the app has changed over time to discover how various user groups’ product engagement has changed. Identify various use trends and go further to determine what’s causing them.|
|Group Retention||Determines if a certain set of users or customers continues to use or pay for the product over time.||Retention allows you to determine whether or not people continue to appreciate your product over the course of time. It also helps in understanding how retention differs, depending on when certain users or clients were recruited. This KPI could also be used to examine the long-term effect of product or service modifications on retention rates.||If the product tracks monthly active users, the calculation is based on how retention fluctuates, depending on which month the user was acquired. For example, if the product gained 1000 customers and then dropped to 700 the next month, the retention rate is 70%. This can assist product managers in determining why there is a 30% loss and they can delve further into the problem.|
|Daily and Monthly Active Users||They track active users throughout a certain time period.||These metrics give a high-level perspective of how your user base evolves over time, as well as user engagement in the product.||DAU = Number of users who open the product per day.|
MAU = Number of users who open the product within a 30-day time frame.
|Stickiness||This metric measures how often consumers interact with the product.||Stickiness aids in determining whether or not people return to the product and it is also an indication of the company’s growth rate.||If the product is used on daily basis: |
DAU / MAU = Stickiness Ratio
KPIs for Customer Acquisition
Customer acquisition for SaaS takes a much more sensitive approach. Customers must understand how the product can benefit them before they sign up, and putting this value across could be a time-consuming process. Finding fresh prospects for development and client acquisition in the competitive SaaS business may be quite difficult. To help solve this, we’ve compiled a list of KPIs to monitor throughout the client acquisition process.
|Retention Rate||The proportion of users or customers that remain active or continue to pay from one period to the next.||This is an important metric since it is costlier to gain new consumers than it is to maintain current ones. The retention rate can be used to anticipate a customer’s lifetime value and to analyze the effect of changes on retention. Examine retention rates across various user and customer groups to understand how they fluctuate over time or how they differ across different types of users.||((CE-CN)/CS)*100|
CS – Number of Customers at the end of the period
CN – Number of new customers during the period
CS – Number of customers when the measured period began
|Churn Rate||The reversal of the retention rate is the proportion of users or customers who cease to be active or pay from one month to the next.||A churned customer is a lost customer, and PMs want to do all they can to avoid them. It begins with determining how many clients the product is losing, often known as the total churn rate.||Number of customers who left / total number of customers x 100|
|Trial to Paid Conversion||Measuring the number of consumers who have switched from a free trial to a paid subscription.||Analyzing this rate can help you understand how adjustments to a product’s trial experience affect the yield of paying consumers. It might be useful to compare the rate across various user groups.||Number of Paying customers / Number of trial users = % customers converted|
Customer Acquisition Cost
|The total cost of gaining a client, including marketing, sales, and onboarding assistance.||Acquiring customers’ costs assists a company in determining the entire worth of a client to the product. It also helps in calculating the overall ROI of a purchase.||Customer Acquisition Cost = Total marketing campaign cost / Total customers acquired|
KPIs for Customer Satisfaction:
Developing KPIs for customer satisfaction can aid in identifying patterns in the success and development of the product. Customers who are dissatisfied are less likely to return and may spread unfavorable word of mouth. It is thus critical to choose the appropriate customer satisfaction measures for your product. It all boils down to what you want to know and how you intend to act on the information revealed. Let’s look at some common customer satisfaction measures.
|Customer Satisfaction Score||CSAT is a measure of consumer gratification determined from a brief survey.||CSAT can be utilized as an overall health measure of the user base’s contentment. By tailoring questions to a particular area of the experience, businesses can gain additional insight into which parts of the experience need to be addressed. CSAT answers can also assist in identifying which customers are dissatisfied and so need further attention from the team, as well as which customers are really satisfied and can serve as champions for the firm or product.||# positive responses / # total responses X 100 = CSAT %|
|NPS||NPS is useful in determining customer loyalty.||NPS is beneficial for gaining a comprehensive insight into users’ and customers’ overall happiness with the product as well as how it evolves over time.||NPS entails gathering replies to a basic inquiry such as “how likely are you to suggest our product to a friend or colleague?” and then sorting replies into three categories, establishing critics, neutral responses, and boosters.|
Other KPIs to look out for:
- Team velocity – This is a measure of how much work your product team has completed in a sprint. It is generally measured for each sprint and is computed by the number of points in the finished stories. This offers an indication of how effective the team is over time.
- Release time – This KPI determines whether or not there are any delays in the releases supplied. It may be measured as the amount of time that has elapsed between a planned release date and the actual date or as a percentage of delayed releases.
- Monthly Recurring Revenue – One of the most important aspects of a SaaS product is predictable, recurring income. MRR is a key indicator for tracking how subscription income changes over time which helps in revenue forecasting and understanding how effectively the product is expanding. The formula is MRR = (Monthly average revenue per user) * (Total number of users)
- Lifetime Value – Lifetime value is an important SaaS metric that indicates how much income a typical client will generate using the system. It’s critical to determine the viability of a SaaS product, and it’s the core of subscription-based business models. A high lifetime value is a measure of product fit and brand loyalty and it provides a clear picture of how well the product connects with consumers.
Product managers must comprehend the entire scope of KPIs and how they will affect much of what they and their coworkers perform on a daily basis. Metrics, on the other hand, are only useful when they measure things that matter. Product managers play a vital role in ensuring that this is the case.