Key Performance Indicators (KPIs) are central to measuring the success and progress of your product’s strategy. Your product KPIs should therefore align with your overall business goals and objectives, including OKRs, revenue, customer acquisition, and retention rates, user engagement, conversion rates, customer satisfaction, market share, or usage analytics. Selecting the right KPIs ensures that the relevant and meaningful aspects of your product’s performance can be quantitatively assessed.
When deciding upon which KPIs will be tracked, it can also be helpful to establish a ‘North Star’ metric. This metric should be a key business, or user metric, that serves as a focal point for growth and can be placed front and center with your team and leadership to represent progress frequently.
While KPIs can vary depending on the product type and available data, below is a list of example KPIs commonly used for software products, with many also applicable to other product types or services.
User Acquisition & Activation:
- Number of people exposed to the product through marketing channels like ads or organic search.
- Number of new user sign-ups or registrations.
- Conversion rate from website visits to sign-ups.
- Conversion rate from free trials to paid customers.
Active Users and User Engagement:
- Monthly Active Users (MAU), or Daily Active Users (DAU)
- Time spent per session, or average session duration.
- Retention rate (percentage of users who continue using the product over time).
Customer Satisfaction and User Experience:
- Net Promoter Score (NPS), or Customer Satisfaction Score (CSAT).
- User feedback ratings and reviews.
- Usability metrics, such as task completion rate or error rates.
Revenue and Monetization:
- Total revenue or revenue growth rate.
- Average Revenue Per User (ARPU).
- Customer acquisition cost, lifetime value, payback period, gross margin.
- Conversion rate from free to paid users, or trial to paid users.
Conversion and Funnel Metrics:
- Conversion rate from sign-up to activation.
- Conversion rate from trial users to paying customers.
- Conversion rate from lead to sale.
- Percentage of users lost at each funnel stage.
- Sales cycle length.
Product Performance and Stability:
- Application/server uptime or system availability.
- Site response time and API latency.
- Mean Time Between Failures (MTBF), or Mean Time to Failure (MTTF).
- Mean Time to Repair (MTTR), or Mean Time to Resolution (MTTR).
User Retention and Churn:
- Churn rate (percentage of customers lost over a specific period).
- Customer Lifetime Value (CLTV).
- Repeat purchase rate or subscription renewal rate.
Marketing Metrics:
- Traffic sources.
- Referral traffic.
- eMail open/click rates.
- Social media followers/engagement.
Support and Issue Resolution:
- Average response time to customer support requests.
- First Response Time (FRT) or First Contact Resolution (FCR).
- Customer satisfaction with support interactions.
Feature Adoption and Usage:
- The adoption rate of new features or product updates.
- Frequency of feature usage by active users.
- User paths and feature flow analysis.
Competitive Metrics:
- Market share or user base compared to competitors.
- Customer acquisition or churn rate compared to competitors.
- Performance metrics benchmarked against industry standards.
Conclusion
Measuring and tracking the right product KPIs is crucial for understanding product performance, identifying opportunities for improvement, and demonstrating progress to key stakeholders. By aligning KPIs to overarching business goals, product strategy, and target outcomes, Product Managers can focus on the metrics that matter most.
While the specific KPIs will vary across products, some best practices apply – choose a limited set of meaningful metrics, review them regularly, and be prepared to adjust as needed. With the right product KPIs providing data-driven insights, Product Teams are equipped to optimize the user experience, accelerate growth, boost retention, and ultimately drive product success.