So you’ve just been brought onto a new team to manage a new project. You’re not quite sure what management metrics to use to track and monitor your progress towards the goals that leadership has set. You need some product management KPIs!
Don’t worry, given the many metrics within the management world, it’s easy to get lost on which metrics to use and for what purpose. We’re going to be going over the most important metrics for product managers to focus on and how to use them.
KPI and Product Management
KPI (Key Performance Indicator) is a management metric used to measure performance and results. These results will ultimately help define what success looks like for a company or a specific project.
Therefore, define your KPIs with outcome-based, quantifiable action items against objectives that you’ve set for yourself or for your project. They break down the steps of how you’re going to achieve your goals and see the results you want to see within a reasonable amount of time, usually by day, week, month, or quarterly checkpoints. They help track and monitor progress towards the goals that you have set. So before setting your product management KPIs, you will need to set some goals and objectives that you want to reach. You can’t plan without knowing where you’re going first. KPIs are just that: the planning segment of the process.
KPI are structured statements that contain the following parts:
- Measurement: a quantitative measurement of how much you want to accomplish or achieve.
- Target Date: when to complete a task. Specify a date or targeted date range for when this task will be completed.
- Data Source: what specific area of focus that the work will impact.
- Frequency: a quantitative measurement of how often to meet this metric.
How to Use KPIs as a Product Manager
Let’s take a look at a simple example of KPIs.
The Goal: To increase total revenue by 25% by the end of the fiscal year.
The Objectives: Gross monthly sale of $200,000 and increase foot traffic by 30%
Product management KPIs that you would want to focus on could be:
- Number of converted leads to sales
- Net sale per brand/model of shoe
- Foot traffic count
- Hours spent on sales follow-up.
Product management KPIs statements could be:
- Convert 20 leads to sales per day
- Upload 3 social media posts per day across Instagram and Twitter to drive reach and exposure on brand awareness
- Send 100 follow-up sales emails per day to increase consumer engagement and promotions.
With this in mind, conduct performance reviews at the end of each month or quarter. At that point you will have aggregated enough data points per KPI tracked to pinpoint areas that succeeded and areas that failed. Next, you could create a new set of KPIs to help improve those areas that failed. Rinse and repeat the process until you’ve met the yearly goals and objectives set.
How to Track KPIs
To track KPIs you could look into a KPI Dashboard tracking software. Tableau and Sisense are just a couple to name. This software helps you organize and visually present all KPIs you’ve created for specific projects, showing the percentage completed and time allocated.
Remember, KPIs will not be effective when they are isolated and used alone. Ideally, there should be a list of KPIs working hand in hand with other KPIs. This should help paint the bigger picture of how the project is progressing. Each individual KPI will correspond respectively to a specific area of a project and show the user area of gaps or how well the team is performing.
Now that you have an idea and basic understanding of what KPIs are, you’ll realize that they play an integral part of a corporation’s strategic plan. They help define what success looks like. Without key objectives and KPIs in place, there wouldn’t be any sense of direction or framework in driving the company to achieve its goals.
Qualitative and Quantitative & KPIs
People at any level of an organization can use KPIs. The CEO or leadership team can define KPIs once a definitive objective has been set. The rest of the organization can further break down the objective and create their own actionable KPIs. However, you must take care in write your KPIs will not be effective if they are written poorly.
A good KPI will give direction and provide a framework. A great KPI will be one that can be quantified and measured. The mistake that most people make with KPIs is making them qualitative. The key to keep in mind is to make sure you’re able to answer the question of how you’re going to achieve the outcome that you want to see.
So, If your objective is to increase your reading speed, and you set your KPI stating you’re going to read as many books as you can per month, that would be an example of a qualitative KPI. Whereas, if you were to say you’re going to read 1 book per week, 4 books per month, with an average of 3 chapters a day, you’ve just set three amazing KPIs. First, you’re addressing how you’re going to achieve the outcome that you want. And second, your KPIs are quantitative. Your progress can be measured and tracked. Ultimately, you want to be able to see progression in your work.
How to Choose the Best Product Management KPIs
The best way to approach choosing the best KPIs for your project would be to keep in mind the following components when defining your KPIs:
- Business Goals: To best choose your KPIs, you first have to know and understand your goals, or company’s goals and objectives. Again, you can’t plan unless you know where you’re going.
- Metrics: There can be many metrics to measure and track, but not all metrics are created equal. You want to find your key metrics. These metrics will provide the most value.
- Lagging and Leading Performance Indicators: Lagging indicators are usually old data points tracked from a previous performance review, ie: sales from last month. Understanding how to read your lagging indicators will help you create leading indicators that will help you predict the success of your organization.
- Spotting Trends: When you have aggregated your data points from your KPIs, you might start to notice certain trends that will help you predict the future. Keep an eye out for trends that appear and leverage them to your benefit in creating a plan for success.
13 Top Product Management Metrics
Choosing the top product management metrics really boils down to what your area of focus is. Again, it all starts with your goals and objectives. As stated before, there are tons of metrics that you can choose to measure. But which one will bring you the most value and help drive decisions that will make the most impact towards achieving your goals?
Below are just a few aspects of product that I feel are important to spend some time analyzing:
Marketing & Sales KPIs:
- Monthly New Leads: How many potential leads are you able to generate per month to drive to conversion?
- Conversation Rate Lead to Sale: How many potential leads are you able to convert over to sales?
- Cost Per Lead Generated: How much does it cost to generate a potential lead? IE: cost on advertisement.
- Cost Per Conversion: How much does it cost to convert the lead to a sale?
- Monthly Sales Growth: How much did sales increase on a monthly basis?
Product Development KPIs:
- Product Headcount: Headcount is the total number of resources needed for the duration of the product development lifecycle. This includes Engineers, Developers, Designers, Business Analysts, Project Managers, and Product Managers.
- New Product Released: How often is the company releasing new products? You’ll want to understand the product catalog and how often a product is being developed and released. This is one key aspect to the success of the business.
- Cost of Development: How much will it cost to develop the product?
- How Average Product ROI: How much is the product generating in sales for the business after the initial investment. The higher the ROI the better.
Product Performance KPIs:
- Product/Feature/Channel usage everyday: Are you able to track how often your product is being used per day?
- Active users: Total number of consumers/users using your product daily.
- Net Promoter Score: Metric for monitoring how well your product is doing by asking your consumer base survey question on the likelihood of them recommending your product to someone else. The higher the score the better.
- New Product Sales Per Month: How well is the product selling upon release to market? If you’re not generating any sales on release date, then there’s something wrong with the product.
At the end of the day, you need to choose what KPIs you track depending on your company and your goals. Are you new to Product Management and looking to make tracking metrics just one of your many areas of expertise? RSVP to our upcoming webinar events for insights, strategies, and tips to help you on your Product Manager journey.