Nov 25th, 2022

Product Management Metrics and KPIs


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When it comes to product management, we tend to hear a lot more about things like road mapping, requirements gathering, and wireframing because the mechanics of the job are easier to explain. And yet, when you start getting into metrics and KPIs (Key Performance Indicators), the principles become a lot more abstract. So let’s make metrics and KPIs feel a little less conceptual for you. Metrics can often go unrealized without a more explicit focus on achieving key performance indicators (KPIs) and associated outcomes.

Metrics and KPIs are tools that will help an organization translate strategy to action while measuring progress. This article aims to complement these sources with a deeper look into what questions product managers should consider for each KPI and metric as well as give an under-the-hood look at how a particular company uses some of these metrics and how they’re aggregated.

What are Metrics For Product Management?

You may have heard about 'metrics for product management' before, but you've never really stopped thinking about what they are. A metric is simply something that helps you measure some aspect of your product.

It can be a very simple indicator, like whether you have a certain number of customers, or it can be a more complex metric that measures things like the number of people who are using your service and how they're using it.  Product managers use metrics to measure the overall health of their product and its features. Since everything can be measured, each metric is essentially a way of framing something in the world.

Using a variety of metrics, a product manager can track how their product is doing and whether or not it's meeting user needs. Product metrics are essentially data points, such as conversion rate and churn rate, that a business tracks, analyzes, and reports on to determine the effectiveness of its product. Great companies start with a compelling product vision and user-centric strategy.

As the product strategy becomes a reality via the product development process and subsequent market release, tracking and analyzing key metrics is critical. The most prominent product metrics tie directly to the product strategy through KPIs, i.e., key performance indicators. These metrics can be tracked in real-time and should link back to the goals defined in the strategy.

What are KPIs For Product Management?

Essentially, it’s easy to get lost in the sea of data and analytics available to business leaders. KPIs help point out which are the most important metrics. KPIs are commonly used by organizations to evaluate their success in reaching targets. They identify the critical success factors that are most important to an organization's goals. KPI measurement raises awareness of what is required to help business leaders make informed decisions. As a product manager, it can be difficult to track the success of your products.

Because your product is so complex, with multiple moving parts, it’s not easy to know what’s working and what’s not. KPIs for product management are key to tracking the true impact of your product across various dimensions and departments. They are used by companies and teams to determine whether they’re meeting established targets and making progress toward goals. These measurements create transparency and accountability, so everyone in an organization knows what is expected of them at any given moment.

KPIs are used to measure the contribution of each individual aspect of your product across the stages of its lifecycle. These aspects include

  • Marketing
  • User Acquisition
  • Onboarding
  • Retention
  • Engagement
  • Monetization

Key performance indicators (KPIs) enable organizations to track and monitor the success of their business. They differ from other metrics because they help gauge the company’s overall performance based on specific organizational goals.

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Factors to Consider Before Choosing a KPI

Every workforce needs goals to monitor progress, create engagement and keep moving forward. While there are many different types of metrics a business can use to measure progress, those metrics must be relevant to the overall business goals. Relevant KPIs ensure that individuals understand how their work matters in the big picture. Choosing good key performance indicators is critical for businesses.

The right KPIs for your organization will depend on the kind of business you operate. They should tie into your specific objectives and be easy to calculate. Choosing an appropriate KPI has five main stages:

  • Considering the type of indicator
  • Defining the time frame related to your KPI
  • Setting your target measure
  • Choosing the perspective
  • Selecting a source of data.

Once you have this information, tracking specific KPIs that measure progress toward these objectives will be easier. In consonance, when you have selected your KPIs according to your needs, you should review them regularly and aim to improve continuously. The design of KPIs also needs to stay true to the values and culture of your organization.

You can’t copy what you read about another company because KPIs are for communicating where the entire company is likely to head. They need to motivate people at all levels and align activities so everyone is pulling in the same direction.

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Types of KPIs for Product Management

Each product has unique KPIs that can help reveal the business's overall performance. Product management tools and strategies are often used to track and organize KPIs, making it easier for businesses to create meaningful reports and gather actionable insights based on their performance data. The KPIs a product manager uses depend on the type of product a company produces alongside its structure and processes. Each KPI must be aligned with organizational goals and strategies to ensure actionable insights can be gathered from the data reported.

Monthly Recurring Revenue (MRR)

  • 1One of the most appealing aspects of using subscription-based pricing models is that it offers a stable monthly revenue stream.
  • 2These monthly subscriptions are known as Monthly Recurring Revenue or MRR.
  • 3It is a critical metric for SaaS businesses and other subscription-based model companies, as it shows management how much income the company will bring in each month.
  • 4This information is useful for making informed business decisions about your portfolio or product pricing, and it's also essential for calculating your overall churn rate.
  • 5It helps to predict the business’s future financial performance so you can make smart decisions quickly.

Average Revenue Per User (ARPU)

  • 1When you average out the different subscriptions and segments, you can get a good picture of the value of your business.
  • 2ARPU determines customer value so you know where to strategically invest.
  • 3This can show investors profitability levels, direct investment decisions, and ensure the financial stability of the business.
  • 4ARPU is best used when companies are less concerned about short-term revenue.
  • 5Therefore, if your company is in a growth phase and looking for long-term sustainability and profitability, it’s probably something you want to keep an eye on.

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Customer Lifetime Value (CLTV)

  • 1The quality of a particular customer's association with your business is a crucial parameter that is frequently overlooked when companies are trying to determine the economic benefit they receive from a customer transaction.
  • 2Customer lifetime value can be used to measure the success of a business or marketing campaign.
  • 3Customer lifetime value is essentially an indication of the total profit that can be obtained by selling to a given customer throughout their relationship with you.
  • 4Therefore, it should not be seen as merely a measurement tool for online businesses and e-commerce companies alone - rather, it can be used by all kinds of businesses to determine their future plans.

Customer Acquisition Cost (CAC)

  • 1Customer acquisition cost, or CAC, is the amount of money a business spends to acquire a new customer.
  • 2Businesses calculate this number by dividing total sales and marketing costs by the number of customers acquired over a given period of time.
  • 3The importance of customer acquisition costs (CAC) is that they are a prime indicator of marketing effectiveness.
  • 4The more customers that your campaigns can pull in, the lower your overall costs will be.
  • 5This means that you will have more money at each point along your sales funnel to spend on new marketing strategies or future products and services.

Website & mobile Traffic

  • 1Web traffic can be defined as the number of customers visiting your website, who look at your content, at what you are selling, and maybe make a purchase.
  • 2Traffic is one of the most important metrics for a website and for online marketing in general.
  • 3That's because traffic tells you and your clients how many people saw your website, and how many people bought a product or service from it.
  • 4Conventional wisdom holds that it's better to have organic traffic that comes for free rather than paid traffic, but if you're investing in marketing campaigns, a combination of both can get you even more customers.

Customer Retention Rate (CRR)

  • 1The customer retention rate is one of the most critical metrics of a company. It directly impacts the company's revenue, gross margin, etc.
  • 2Retention is one of the most important factors in measuring a business performance because it demonstrates that customers value your products and services enough to pay for them again and again.
  • 3This metric can be used to gauge product strength and overall performance as the majority of new companies go out of business within their first 5 years.
  • 4Successful businesses tend to have strong CRRs as this indicates they've developed products and services that people want to continue buying.

Net Promoter Score (NPS)

  • 1The net promoter score involves the number of customers who are likely to recommend a product (promoters) and those who don't like it (detractors).
  • 2Companies use this metric to quantify their growth.
  • 3The NPS can be an excellent tool for measuring the quality of a product, which is why it is important for teams involved in product development to check whether users were satisfied with the experience.
  • 4 A large number of detractors can indicate that the team should start working on improvements or upgrades.
  • 5NPS is not an average of customer experiences, but rather a measure of customer loyalty to a company or product.

Customer Satisfaction Score (CSAT)

  • 1The CSAT is one set of key metrics that every company wants to track.
  • 2It measures the quality of your product and customer support.
  • 3The customer satisfaction feature provides this kind of survey where the sole purpose is to evaluate if customers are satisfied or not.
  • 4You can find out if it's time for some quick wins or if it's time for a total redesign.
  • 5Doing regular CSAT surveys allows you to make improvements on an ongoing basis, rather than waiting until complaints are out of hand.

Return On Ad Spend (ROAS)

  • 1Ads are an important part of online marketing, and it’s important that you’re measuring the return on ad spent to help you make educated decisions about future campaigns.
  • 2As everyone knows, advertising is a double-edged sword: saturated with ineffective or unsuitable advertising, your audience will suffer from ad fatigue and disinterest and tune out.
  • 3Unworthy expenditures in the name of brand appeal can also drive away otherwise loyal buyers.
  • 4Instead of gambling on half-baked ideas and inefficient processes, a return on ad spend measurement gives you the tools to facilitate a more rational strategy.
  • 5ROAS is thus a performance metric that helps businesses determine how much revenue they're getting back on their marketing investments.

Quality score

  • 1Online marketers need to constantly adapt their web strategies, and one tool they can use is called a quality score.
  • 2This measurement can be used to rank how well your ad or landing page compares to other advertisers and is important for companies who use SEO.
  • 3The quality score is a metric that search engines use to measure the effectiveness of an advertisement.
  • 4It is based on several different factors that directly influence whether or not users will click on your ads.
  • 5You can improve your quality score by optimizing your keyword selection and increasing the relevance of your ads to those keywords.

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By keeping on monitoring your product KPIs and optimizing them, you can avoid making mistakes. You would also be able to provide a much more streamlined experience to your customers. Customer satisfaction is the most crucial metric that you need to keep an eye on if you wish to have a successful product.


Product management is a complex task as it not only involves defining the product but also ensuring that it reaches its target market and meets the expectations of customers. To do so, you need to start with the big picture and work your way down to micro details. While doing so, you need to monitor all the KPIs and ensure they are going in the right direction. There are no set formulas that will yield success overnight, but there are a few principles that you can use to reduce risks and increase returns.

Key Performance Indicators are a set of values that are used as an indicator to measure the success or failure of your product strategy. It would be very difficult to take care of all aspects of your product, including performance, security, and quality, without using KPIs. The main purpose of a KPI is to give you, the R, a way to measure success.


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