Of all the items on a new car sticker, which ones should matter most to the car’s product manager?
Product managers, how do you know if you’re doing a good job? Your manager tells you so? A customer leaves a glowing product review? Your coworker likes the new feature you launched? Nope. You’ll know if you’re doing a good job if your product is successful.
But what does success means? It depends on your product, but no matter what, if you don’t have a way to measure success, you’ll never know, and neither will your stakeholders – internal or external. Here are some tips on choosing Key Performance Indicators to measure the success of your product.
Tip 1: Start With the Money
I’ve written about this before: the ultimate measure of success should be a business outcome, so you should have at least one KPI that has a dollar sign in front of it. Profitability is ideal, but revenue or cost savings for your company are also good. If you need a shorter feedback loop on a KPI like revenue (because your sales cycle is really long), use a proxy KPI (for example, maybe you know that your sales team closes 80% of deals after 2 meetings with the decision maker – great, use that instead of revenue).
Tip 2: The Customer KPI
At least one KPI (not revenue) should be one that you share with customers and that measures the outcomes they’re trying to achieve through your product. It might be time or cost savings, or weight loss if you’re building a health app. Don’t be shy to get creative with this one – maybe you derive a new formula that combines cost savings, time savings and weight loss if all 3 are key outcomes your customers are seeking. Having this customer KPI focuses the team on delivering value regularly, and helps you avoid awkward “I don’t know what I’m paying for” conversations when you ask customers to extend their term with you.
Tip 3: Don’t Pick Too Many KPIs
At most, I’d suggest 2 or 3. Why? Because if you’re prioritizing changes (or tests) to improve your KPIs, it’s hard to juggle too many. Don’t forget about the “K” in KPI. In an ideal world, you might even assign a KPI to each of your product owners and development squads, so that they know whether their work is resulting in meaningful business value.
Tip 4: Measure Often
KPIs don’t matter if you can’t measure them easily, especially if you’re releasing frequently as a part of an Agile process. Make sure you can measure your KPIs within a few minutes, and that the data needed to measure them is updated often – at least daily. If you need to prioritize time to instrument your product to make measurement easier, do it. Otherwise you’re either flying blind, or there’s too much of a delay in your feedback loop. Also, don’t forget to publish your KPIs regularly for internal stakeholders, so that they can also see how your product is doing.