Product KPIs every product team should track (2024)

Product teams face challenges in determining which Key Performance Indicators (KPIs) to track. Understanding the right metrics ensures effective product development.

Many teams struggle to identify KPIs relevant to their goals. Without clear indicators, progress assessment becomes ambiguous. This confusion often leads to wasted resources and misdirected efforts.

Empathizing with these struggles, it's crucial to streamline KPI selection. This article outlines essential product KPIs that every team should monitor. By focusing on actionable metrics, teams can align efforts with overarching objectives.

Through a structured approach, teams can optimize product performance and drive meaningful outcomes. Let's delve into the core KPIs for streamlined product management.

What are product KPIs?

Product KPIs (Key Performance Indicators) are metrics used to gauge the success and performance of a product. They measure specific aspects such as user engagement, retention, and revenue generation.

Examples include monthly active users, conversion rate, and customer satisfaction score. Product teams rely on KPIs to assess whether their efforts align with business objectives and user needs.

By tracking KPIs, teams can identify areas for improvement and make informed decisions to enhance the product.

KPIs provide actionable insights into how well a product is meeting its goals and where adjustments may be necessary. They serve as benchmarks for evaluating progress and driving future strategies.

Now that we've covered the basics of product KPIs, let's explore why they are crucial for your product's success.

Why is keeping track of product KPIs important?

Tracking product KPIs provides valuable insights into your product's performance. Learn why it's essential for product teams to monitor these metrics closely and how it impacts decision-making and strategy formulation:

1) Data-driven decision making

Keeping track of product Key Performance Indicators (KPIs) is crucial because it helps teams make decisions based on data. By analyzing KPIs regularly, teams can see what's working and what's not.

This allows them to adjust strategies quickly and effectively. Without tracking KPIs, decisions may be based on assumptions rather than concrete evidence, leading to ineffective strategies and wasted resources.

2) Aligning with business objectives

Tracking product KPIs ensures that the team's efforts are aligned with the broader business objectives. By monitoring KPIs, teams can ensure that their work contributes directly to the company's goals and priorities.

This alignment is essential for maximizing the impact of the product and ensuring that resources are used efficiently. Without tracking KPIs, teams may lose sight of the bigger picture and prioritize tasks that don't align with the company's objectives.

3) Measuring progress and identifying areas for improvement

Tracking KPIs allows teams to measure progress towards their goals and identify areas where improvement is needed. By comparing current performance to past data, teams can see if they are moving in the right direction and identify trends or patterns that may require attention.

This enables teams to take proactive measures to address issues and make continuous improvements to the product. Without tracking KPIs, teams may struggle to assess their progress accurately and may miss opportunities for improvement.

4) Improving product quality and user experience

Monitoring product KPIs is essential for improving product quality and enhancing the user experience. By tracking metrics related to user engagement, satisfaction, and retention, teams can identify areas where the product may be falling short and take steps to address them.

This could involve fixing bugs, implementing new features, or making changes to the user interface based on user feedback. Without tracking KPIs, teams may not be aware of problems with the product until they escalate, leading to dissatisfied users and potential churn.

5) Adapting to changing market dynamics

Today's fast-paced business environment requires product teams to be able to adapt quickly to changing market dynamics. By tracking KPIs related to market trends, competition, and customer behavior, teams can stay ahead of the curve and make timely adjustments to their strategies.

This could involve launching new features to capitalize on emerging trends or pivoting the product direction in response to shifting customer needs. Without tracking KPIs, teams may miss important signals from the market and struggle to remain competitive.

Now that we understand the importance of tracking product KPIs, let's identify the key metrics every product team should consider.

Product KPIs to track and measure

Discover the core product KPIs that product teams should prioritize. These metrics offer actionable data to assess product health, user engagement, and overall performance:

‍

1) Growth efficiency

Metric	What	Why	How
CAC (Customer Acquisition Cost)	CAC is the cost incurred to acquire a new customer for your product or service. It encompasses expenses related to marketing, advertising, and sales efforts.	It is a vital metric as it directly impacts profitability. Lower CAC implies cost-effective customer acquisition, contributing to healthier profit margins.	Divide the total cost of acquiring customers by the number of new customers acquired during a specific time frame. For instance, if you spent $10,000 on marketing and gained 1,000 customers, your CAC is $10.
LTV (Customer Lifetime Value)	LTV predicts the total revenue a customer is expected to generate throughout their entire relationship with your product. It helps in determining the long-term value of each customer.	Understanding LTV aids in making informed decisions about customer acquisition costs and guides strategies for customer retention and upselling.	Calculate the average purchase value, multiply it by the average purchase frequency, and then multiply that by the average customer lifespan. For example, if the average purchase is $50, the frequency is 2 times a month, and the lifespan is 12 months, the LTV is $1,200.
Payback Period	Payback period represents the time it takes for the revenue generated from a customer to cover the cost of acquiring that customer.	A shorter payback period indicates a faster return on investment, ensuring financial sustainability and liquidity.	Divide the CAC by the gross margin-adjusted revenue per customer per month. If your CAC is $500 and the monthly gross margin per customer is $100, the payback period is 5 months.
Return on Ad Spend	Return on Ad Spend (ROAS) measures the revenue generated for every dollar spent on advertising.	It evaluates the effectiveness of your advertising campaigns and guides budget allocation towards the most fruitful channels.	Divide the revenue generated from ads by the total ad spend. For example, if your ads generate $5,000 in revenue and the ad spend is $1,000, the ROAS is 5.
New Signups to Activation Milestone Percentage	This metric gauges the percentage of new signups that successfully reach a predefined activation milestone, such as setting up a profile or completing a tutorial.	It indicates the efficiency of onboarding processes and the likelihood of retaining new users.	Divide the number of users who reach the activation milestone by the total number of new signups, then multiply by 100. If 500 users reach the milestone out of 1,000 signups, the percentage is 50%.

2) Customer growth

Metric	What	Why	How
Traffic on Site	Traffic on site measures the number of visitors accessing your product's website within a specific period.	Increased website traffic is a precursor to potential customer growth and reflects the effectiveness of marketing efforts.	Utilize web analytics tools to track the number of unique visitors. For instance, if your website receives 10,000 visitors in a month, that is the monthly traffic.
Free User Signups	Free user signups represent the number of users who register for your product without making a purchase.	It serves as a pool for potential future paying customers and reflects the attractiveness of your product.	Count the number of users who sign up for a free account. If 1,000 users register for your product without making a purchase, that is the number of free user signups.
Conversion Percentage From Free to Paid	This metric calculates the percentage of free users who convert to paid customers, indicating the effectiveness of your product's value proposition.	It directly influences revenue generation and provides insights into the product's ability to convert free users into paying customers.	Divide the number of users who upgrade to a paid plan by the total number of free users, then multiply by 100. If 100 free users upgrade, and you had 1,000 free users, the conversion percentage is 10%.
User Retention	User retention measures the percentage of customers who continue using your product over a specific period.	High retention rates indicate customer satisfaction and loyalty, reducing the need for constant customer acquisition.	Calculate the number of customers at the end of a period and divide it by the number of customers at the beginning, then multiply by 100. If you start with 1,000 customers and end with 800, the retention rate is 80%.
Logo Retention	Logo retention measures the percentage of businesses or organizations that continue using your product over time.	For B2B products, retaining logos is critical for sustaining revenue and establishing long-term partnerships.	Similar to user retention, calculate the number of logos at the end of a period and divide it by the number at the beginning, then multiply by 100.

3) Consumption growth

Metric	What	Why	How
Traffic to Site	Traffic to the site measures the number of visitors accessing your product's website.	More traffic indicates increased visibility and potential for user acquisition.	Use web analytics tools to track the number of unique visitors. For instance, if your website receives 10,000 visitors in a month, that is the monthly traffic.
Key Actions Taken	Key actions taken represent specific user activities within your product, such as messages sent, nights booked, or collaborative boards created.	It gauges user engagement and the value users derive from your product.	Identify and track the key actions users take within your product. For instance, if users send an average of 100 messages per day, that is a key action.
Average Revenue Per User (ARPU)	ARPU calculates the average revenue generated per user, providing insights into the overall revenue potential of your user base.	It aids in understanding the financial health of your product and guides pricing strategies.	Divide the total revenue by the number of active users. If your product generates $50,000 in revenue with 1,000 active users, the ARPU is $50.

4) Engagement growth

Metric	What	Why	How
New Signups to Activation Milestone Percentage	This metric gauges the percentage of new signups reaching a predefined activation milestone.	Efficient onboarding contributes to sustained user engagement and satisfaction.	Divide the number of users reaching the milestone by the total new signups, then multiply by 100.
Key Actions Taken	This metric focuses on specific user activities within your product.	It indicates user engagement and the value users derive from your product.	Identify and track the key actions users take within your product.

5) User experience

Metric	What	Why	How
Net promoter score (NPS)	NPS measures customer loyalty and satisfaction by asking, "How likely are you to recommend our product to a friend or colleague?".	Higher response rates provide more accurate insights into user satisfaction and potential areas for improvement.	Calculate NPS by subtracting the percentage of detractors (unhappy customers) from the percentage of promoters (happy customers). For example, if 70% of respondents are promoters and 20% are detractors, the NPS would be 50 (70% - 20%).
New Signups to Activation Milestone Percentage	This metric gauges the percentage of new signups reaching a predefined activation milestone.	Efficient onboarding contributes to sustained user engagement and satisfaction.	Divide the number of users reaching the milestone by the total new signups, then multiply by 100.

6) Revenue growth

Metric	What	Why	How
Average Revenue Per User (ARPU)	ARPU calculates the average revenue generated per user.	It aids in understanding the financial health of your product and guides pricing strategies.	Divide the total revenue by the number of active users.
Expansion within an Organization	Expansion within an organization measures the growth of product usage within existing customer organizations.	For B2B products, this metric indicates the potential for upselling and expanding product usage within a customer's organization.	Track the number of users or departments within an organization using your product over time.
New Dollar Retention	New Dollar Retention calculates the revenue retained from new customers over a specified period.	It assesses the ability to sustain revenue from newly acquired customers, complementing the customer retention metric.	Calculate the total revenue generated from new customers over a period and divide it by the total revenue potential from those customers. If new customers generate $10,000 in a month with a potential of $15,000, the new dollar retention is 67%.

With an understanding of the crucial product KPIs, let's explore how to select the right ones for your product strategy.

How to choose the right KPI for your product strategy

Choosing the right KPIs is essential for aligning your product strategy with business objectives. Learn the criteria for selecting effective KPIs and how to ensure they reflect your product's goals accurately:

1) Start with user and business goals:

User Goals:

Identify the problem your product solves for users. For instance, a task management app aims to increase productivity by helping users organize their tasks efficiently.
Define the value your product delivers. For example, a messaging platform enhances communication by providing seamless messaging and collaboration features.

Business goals:

Determine your business objectives, such as revenue growth, user retention, or market expansion.
Align KPIs with these goals. For instance, if the business aims to increase revenue, KPIs related to customer acquisition or upselling can be prioritized.

2) Consider product objectives:

Examine your product roadmap to understand specific product goals. For example, if your goal is to launch a new feature like video calling in a messaging app, relevant KPIs could include user engagement with the feature and customer feedback on its usability.
Choose KPIs that track progress towards these objectives. This ensures that your KPIs directly reflect the success of your product initiatives.

3) Use a balanced approach:

a) Quantitative vs. Qualitative:

Incorporate both quantitative and qualitative KPIs for a comprehensive assessment of your product's performance.
Quantitative KPIs include metrics like daily active users and conversion rates, providing numerical insights into user behavior.
Qualitative KPIs involve gathering user feedback, sentiment analysis, and conducting surveys to understand user perceptions and preferences.

b) Leading vs. Lagging:

Monitor both leading and lagging indicators to evaluate both future prospects and past performance.
Leading indicators, such as user engagement metrics and trial signups, offer insights into potential trends and future performance.
Lagging indicators, such as churn rate and revenue, reflect historical performance and help in assessing the effectiveness of past strategies.

4) Avoid generic KPIs:

Resist relying on generic metrics like downloads or signups if they do not align with your specific goals.
Choose KPIs that directly measure the value your product delivers to users and align with your business objectives. For example, instead of focusing solely on downloads, prioritize KPIs related to user retention or customer satisfaction.

5) Keep it actionable:

Ensure that your KPIs are SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.
Select KPIs that enable you to make data-driven decisions and take actionable steps to improve your product strategy.
For instance, if your goal is to improve user engagement, a SMART KPI could be increasing the average session duration by 10% within the next quarter.

Now that we know how to select the right KPIs, let's move on to understanding how to track them effectively.

How to track product KPIs?

Tracking product KPIs efficiently is key to gaining actionable insights. Explore best practices for monitoring and analyzing your product metrics to drive informed decision-making:

Step 1: Define clear measurement methods

Start by clearly defining the KPIs that matter most to your product's success.
Ensure that each KPI is specific, measurable, achievable, relevant, and time-bound (SMART).
Identify the key metrics that directly align with your product goals and objectives.
Use tools like Google Analytics, Mixpanel, or custom dashboards to track relevant data points accurately.
Collaborate with stakeholders to establish consensus on which metrics are most important to track.

Step 2: Establish a reporting system

Develop a structured reporting system that outlines when and how KPI data will be collected and reported.
Determine the frequency and format of reports based on the needs of your team and stakeholders.
Create visually appealing dashboards or reports that present KPI data in a clear and digestible format.
Ensure that reports are accessible to all relevant team members and stakeholders.
Establish protocols for addressing any anomalies or discrepancies in the data.

Step 3: Set a tracking frequency

Determine how often you need to track and monitor your product KPIs based on your product's lifecycle stage and goals.
Consider tracking KPIs daily, weekly, monthly, or quarterly, depending on their relevance and impact on decision-making.
Adjust the tracking frequency as needed to accommodate changes in product priorities or market conditions.
Regular tracking helps detect trends and patterns early, allowing for timely intervention and adjustments.

Step 4: Assign ownership and responsibility

Clearly define roles and responsibilities for tracking and managing product KPIs within your team.
Assign ownership of specific KPIs to individuals or teams who are accountable for monitoring and improving them.
Foster a culture of ownership and accountability by encouraging team members to take ownership of their assigned KPIs.
Provide adequate support and resources to empower team members to fulfill their responsibilities effectively.

Step 5: Regularly review and analyze

Schedule regular review meetings or checkpoints to analyze KPI data and performance trends.
Encourage open discussions and brainstorming sessions to identify potential opportunities or areas for improvement.
Use data visualization techniques to identify patterns, correlations, and insights hidden within the KPI data.
Continuously evaluate the effectiveness of your product strategies and initiatives based on the insights derived from KPI analysis.
Adjust priorities and allocate resources based on the performance of key metrics.

Step 6: Adapt and iterate

Be prepared to adapt your tracking methods and KPIs based on changing business objectives or market dynamics.
Solicit feedback from stakeholders and team members to identify areas where tracking efforts can be improved.
Experiment with new tools, techniques, or methodologies to enhance the accuracy and relevance of your KPI tracking.
Stay agile and flexible in your approach to KPI tracking to respond effectively to evolving business needs and competitive pressures.

Step 7: Communicate results

Communicate KPI results and insights effectively to key stakeholders, including senior management, product owners, and cross-functional teams.
Tailor your communication approach to suit the preferences and needs of different audiences.
Highlight successes, challenges, and areas for improvement in your KPI reports and presentations.
Use storytelling techniques to make the data more relatable and compelling.
Foster a culture of transparency and accountability by openly discussing KPI results and their implications for the product strategy.

With insights into tracking product KPIs, let's explore the best tools available for measurement and analysis.

Best tools to track and measure product KPIs

Discover top tools and platforms designed to streamline the tracking and measurement of product KPIs. These tools offer features for data visualization, analytics, and reporting, empowering product teams to make data-driven decisions:

1) Blitzllama

Blitzllama offers in-product surveys, a crucial tool for tracking and measuring product KPIs. These surveys are seamlessly integrated into the product interface, enabling real-time feedback collection. Users can provide insights without disrupting their experience. With Blitzllama, product teams gain valuable data on user satisfaction, feature preferences, and pain points. This facilitates informed decision-making and enhances product iteration cycles. In-product surveys empower teams to prioritize roadmap initiatives based on user feedback, ultimately driving product success.

2) Amplitude

Amplitude stands out as a comprehensive analytics platform tailored for product teams. It allows for robust tracking and measurement of key performance indicators (KPIs) throughout the user journey. With its intuitive interface, product teams can analyze user behavior, retention rates, and conversion funnels effectively. Amplitude's advanced features enable segmentation of user cohorts, providing actionable insights into user engagement patterns. By leveraging Amplitude, product teams can optimize features, enhance user experience, and drive sustainable growth strategies.

3) Userpilot

Userpilot offers a powerful suite of tools designed to track and measure product KPIs while focusing on user onboarding and engagement. Its interactive user guidance features enable product teams to create personalized user experiences. Through tooltips, walkthroughs, and in-app messaging, Userpilot facilitates user adoption and retention. Product teams can track user interactions in real-time, identify usability issues, and optimize the onboarding process. With Userpilot, product teams can achieve higher activation rates and long-term user satisfaction.

4) Google Analytics

Google Analytics remains a staple tool for tracking and measuring product KPIs across various digital platforms. Its robust tracking capabilities provide insights into website traffic, user demographics, and conversion metrics. Product teams can set up custom event tracking to monitor specific user interactions within the product. Google Analytics' comprehensive reporting features offer in-depth analysis of user behavior and acquisition channels. By leveraging its data-driven insights, product teams can refine marketing strategies, improve user experience, and drive product growth.

5) Tableau

Tableau offers powerful data visualization capabilities, making it an invaluable tool for tracking and measuring product KPIs. Product teams can create interactive dashboards and reports that present KPI metrics in a visually compelling manner. With Tableau's intuitive drag-and-drop interface, teams can explore data trends, identify correlations, and uncover actionable insights. Its robust analytics engine enables product teams to make data-driven decisions with confidence. By visualizing product performance metrics, Tableau facilitates cross-functional collaboration and fosters a culture of data-driven innovation.

Conclusion

In conclusion, tracking essential Key Performance Indicators (KPIs) is paramount for every product team. These metrics provide clear insights into product performance, user engagement, and overall success.

By focusing on KPIs such as user retention, conversion rates, and customer satisfaction, teams can make informed decisions and drive continuous improvement. Regularly monitoring these indicators enables teams to identify trends, address challenges, and capitalize on opportunities swiftly.

Moreover, KPIs foster accountability and alignment across the organization, ensuring that efforts remain aligned with overarching goals. In essence, prioritizing the tracking of relevant KPIs empowers product teams to optimize their strategies, enhance user experiences, and achieve sustainable growth.