Jun 25, 2023

10 KPIs Product-led Leaders and Teams Need To Know

10 KPIs Product-led Leaders and Teams Need To Know

10 KPIs Product-led Leaders and Teams Need To Know

10 KPIs Product-led Leaders and Teams Need To Know

As an aspiring Product Leader, new to the industry, I was astounded by the amount of noise around Product KPIs. There is a paradox of choice which makes it challenging to choose the right metrics to focus on. I hope to provide some foundation and information on which you should have on your radar.

Ultimately the company's product, growth stage, and goals play an important role whether or not the chosen KPI is the right one. There are ten metrics that (I believe) every product leader should consider. For these performance indicators it does not really matter whether you are deeply involved in day-to-day operations or focusing on the big picture. Before jumping straight into it, I want to zoom out and give you some contextual distinctions between different types of product KPIs.

Business Outcome: Answers the question how your product impacts business and financial outcomes in the short and long-run. One of the most significant factors influenced by your product experience is retention and churn, which consequently impacts revenue numbers.

Product Usage: Answers the question how users / customers interact with your product. Where do they get stuck? Which feature is most commonly used? How loyal are your users and return to your product? Combining product usage data with qualitative insights like sentiment and feedback unlocks powerful insights.

Product Quality: Answers the question how well it fulfills its intended purpose. Factors like response time and down time directly impact user satisfaction and consequently the overall product credibility. Measuring these on a regular basis and setting internal benchmarks ensures continuous progress.

1. Net Revenue Retention (NRR)
NRR is a vital indicator of how well your product retains revenue from existing customers. A healthy NRR should be greater than 100%. To calculate NRR, use the following formula:

2. Adoption

Understanding user adoption is crucial to determine if users are actively using your product and its key features. Adoption can be expressed using metrics such as Monthly Active Users (MAU), Weekly Active Users (WAU), or Daily Active Users (DAU). To calculate adoption, use the following formula:

3. Stickiness

Stickiness measures how frequently users return to your product, reflecting its overall engagement. It can be calculated based on DAU/MAU and DAU/WAU ratios. The formula for stickiness is:

4. Growth

Growth indicates how effectively your product is acquiring and retaining new users compared to the number of users leaving. The formula for calculating growth is:

5. Product Engagement Score (PES)

PES provides an overall view of how users engage with your product, combining adoption, stickiness, and growth. To calculate PES, use the following formula:

6. Retention

Retaining users is essential for building enduring habits within your product. Measure user retention (using) and customer retention (paying) to understand your product's impact.

7. Time to Value

Time to Value refers to the time it takes for users to realize the value of your product. Identifying the "Aha moment" is crucial as it indicates when users understand the product's usefulness.

8. Net Promoter Score (NPS)

NPS is a measure of customer satisfaction and loyalty. It helps assess how likely users are to recommend your product to others. To calculate NPS:

9. Top Feature Requests

Understanding user needs and feature requests is essential for product improvement. Prioritize features based on their frequency of requests or their impact on customers with the highest ARR.

10. Product Performance

Ensure your product performs efficiently and without bugs. Monitor product response time and track the number of bugs reported versus the number of bugs fixed.

Tracking these essential KPIs will provide you with a comprehensive understanding of your product's performance, user engagement, and customer satisfaction. Leveraging these insights will enable you to make data-driven decisions and continuously improve your product, driving success and customer loyalty. Remember, the right KPIs will act as your compass on the journey to building a successful product.