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Following a tightly-knit product strategy in a business with high velocity can be a nightmare – and can quickly turn into a chaotic mess of miscommunication and missed deadlines for updates of questionable importance. To conquer this organizational challenge, product managers need a framework for generating assumptions, testing, and validation so that the road ahead is (almost) always clear. How do you achieve this? You can certainly rely on a tarot deck to fill in the gaps in your product roadmap… Or you can build a robust strategy based on specific key performance indicators that align with the main goals of your business. In this article, we’ll take a look at twelve KPIs and analytics for product managers to monitor closely – grouped for your convenience into four buckets depending on their scope of measurement.
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In the realm of product management, Key Performance Indicators (KPIs) are indispensable tools that enable PMs to assess and monitor the performance of their digital products. KPIs are quantifiable product metrics that provide insights into various aspects of performance, user engagement, and business success.
The primary role of KPIs is to serve as benchmarks for evaluating the achievement of specific goals and objectives set for the product. By measuring and tracking KPIs over time, you can gain a comprehensive understanding of how well your product is performing (whether there aren’t any technical issues), identify areas for improvement and usability issues (spot friction points and assess their potential for optimization), and make data-driven product decisions to drive product-led growth. The good news is you don’t have to be a data scientist to do it!
However, not all KPIs are created equal. It requires a deep understanding of the product’s unique goals, objectives, and target audience. Each product has its own set of priorities and desired outcomes, and the chosen KPIs should align closely with these (stealing KPIs from a competitor won’t solve your problems, just an FYI).
When selecting KPIs, you should consider the following factors:
Your KPIs should directly relate to the product’s strategic objectives and key results. They should provide actionable insights that drive progress toward these goals and not stray into the void of possible experiments, optimizations and iterations.
KPIs should be measurable and quantifiable, allowing you to reliably track and analyze with specific metrics. It is essential to have access to data sources and analytics for product managers that can capture and provide the required metrics for any given time period.
KPIs should align with the specific context of the product and its target market. They should reflect the unique challenges, characteristics, and expectations of the product’s user base. One of the most important things a PM should know is how to be empathetic with said user base. An intimate understanding of both its needs and expectations for the exact user experience can make the difference between a successful product and a flop.
KPIs should provide insights that product managers can act upon. What good is it knowing something if you can’t use it to drive success? KPIs should shed light on areas that require attention or improvement, helping you to make informed decisions on how to make these improvements.
This data-driven approach will enable you to align your whole product team’s efforts with the product’s goals and objectives – and move you closer to achieving them.
Most analytics platforms will give you an enormous amount of data that you need to then sift through to find the gold. What if you could build a strategic monitoring routine that will help you swim in the sea of data with more confidence? With the following list, we’ve done just that – summarized the most important KPIs for you to monitor daily so that your eyes can stay focused on the prize. Building a dashboard to follow them is then easy, just use your favorite product analytics tool!
4. User Engagement: This KPI tracks product metrics such as daily active users, session duration, and frequency of product usage. It provides insights into the product’s stickiness, feature popularity, and overall user satisfaction.
5. Retention Rate: Retention rate measures the percentage of customers or users who continue using the product over a specific period. It helps evaluate product satisfaction, ongoing value delivery, and the effectiveness of retention strategies.
6. Average Session Duration: This KPI measures the average amount of time users spend actively engaging with the product during a session. It indicates the level of user engagement and the appeal of the product’s features.
7. Customer Satisfaction (CSAT) Score: CSAT Score collects feedback from customers to gauge their satisfaction level with the product. It helps identify areas of improvement, validate product-market fit, and ensure customer-centric product development.
8. Net Promoter Score (NPS): NPS measures customer loyalty and satisfaction by asking customers to rate their likelihood of recommending the product to others. It provides insights into customer advocacy and helps identify areas for improvement.
9. Bug Fix Rate: Bug Fix Rate measures the rate at which reported bugs are resolved and fixed within a given time period. It helps track and improve the product’s quality, stability, and overall user experience.
10. Revenue Growth Rate: This KPI tracks the rate at which the product’s revenue is growing over a specific period. It reflects the product’s market performance, customer adoption, and overall business trajectory.
11. Customer Acquisition Cost (CAC): CAC calculates the average cost required to acquire a new customer. It helps assess the efficiency of product marketing and sales efforts, ensuring that customer acquisition costs align with revenue generation potential.
12. Time to Market (TTM): TTM measures the time it takes to develop and release new product features or versions. It is crucial in assessing the product’s speed of innovation, agility, and ability to meet market demands promptly.
There are also other types of KPIs used by different teams – marketing analytics have their own set, for example.
We get it – implementing KPIs effectively in product management can be challenging, especially for beginners or when not all team members are on board. While KPIs hold immense value in measuring product performance, aligning them with product goals and integrating them into the product management analytics processes requires careful consideration and strategic planning. To make it even more complex, different stakeholders will require different sets of KPIs… So how do you make sense of this mess?
One of the primary challenges in implementing KPIs is ensuring their relevance and alignment with product goals. It is crucial to identify the key objectives and desired outcomes of the product and select KPIs that directly measure progress toward those goals. For example, if the goal is to increase user engagement, relevant KPIs could include metrics such as average session duration, number of daily active users, or feature adoption rates.
Integrating KPIs into the product management processes is another critical aspect. One effective strategy is to incorporate KPIs into regular product reviews and planning sessions. Reviewing and discussing KPIs with the product team can help you keep everyone aligned and focused on the prize. Additionally, integrating KPIs into the product roadmap and setting specific targets or milestones based on those KPIs can provide a clear direction for the team (and significantly reduce the stress of the unknown!). For instance, if the KPI is to increase customer satisfaction, the product roadmap can include specific initiatives and features aimed at addressing customer pain points and improving satisfaction levels (such as defining the pain points by watching session replays and addressing them by removing roadblocks such as lack of information or unclear navigation).
Last but not least, leveraging product analytics tools and data visualization techniques can help you not only effectively monitor but also communicate KPI progress. With advanced analytics for product managers platforms (like Heap and SesssionStack) you can track performance with granular segment insights, visualize data trends, and even watch how users interact with your product in real time. This allows for agile decision-making and enables you to make data-driven product adjustments to your strategies and tactics.
We already covered why regular monitoring is so important – in a fast-changing product landscape, you simply need to stay proactive in addressing any deviations from your goals and make data-informed decisions to optimize performance. Or your competitors will do it before you.
What do you need to effectively monitor your KPIs? The answer is simple – robust analytics tools (sorry, Google Analytics is simply not good enough). These tools will help you collect, organize, and visualize the data analytics associated with your KPIs, enabling you to gain a holistic view of your product’s inner workings. Setting up automated reporting and dashboards to have easy access to your KPI data can facilitate quick identification of any anomalies or trends so this should be high on your to-do list right after you create your strategy.
But having data analytics for product managers is not enough… Interpreting your KPI data requires a combination of analytical skills and domain expertise. Establishing benchmarks, comparing historical data, and performing trend analysis will allow you to derive meaningful insights, so cultivate these skills carefully. For example, incorporating data segmentation and funnel analysis techniques will help you understand the performance of different user groups and identify opportunities for targeted improvements to conversion rates.
If you need ideas to fuel your funnel analysis machine
We hope that you found what you were looking for in this article – not only a list of analytics for product managers but also valuable guidelines on how to use them to streamline your product management processes, informing your strategies and prioritization. Now, it’s time to get your hands dirty. May we suggest you take a free ride on the most comprehensive digital analytics tool available on the market? SessionStack combines a treasure trove of product, UX, customer success, product marketing, and sales data that can shoot your product straight into orbit. Take a 👀, it’s free and takes less than two minutes to launch!
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