Top 10 KPIs for Product Managers: Learn How to Track Them

You have finally launched your product in the market and even acquired customers. Now it’s time for you to prepare a monthly or quarterly report to discuss the success of your project with relevant stakeholders. You cannot just show them client testimonials. It is important to back up your success story with data. This is where KPIs help. They calculate customer satisfaction and loyalty levels and help predict revenue and profitability. Hence, the modern product manager and every project manager job description you come across also emphasizes calculating key metrics or KPIs. Let’s see the top KPIs for product managers and how relevant they are.

1. Customer Satisfaction and Engagement

As a product manager, the most important KPI for you to track how well the product is performing and generating revenue is customer satisfaction and engagement. This KPI signals how satisfied your customers are with the product, whether the product addresses customers’ pain points, and what value your product is offering them. The purpose of tracking customer satisfaction and engagement rate is to also identify improvement areas to enhance the product and gain customer loyalty. You can track customer satisfaction by checking daily or monthly active users or by conducting surveys. This KPI requires customer feedback analysis and survey design skills.

Weightage for success: It has high weightage because customer satisfaction impacts production adoption and overall revenue.

2. Time-to-Market

The roles and responsibilities of a project manager involve delivering quality products within reasonable timelines so that you get the early-mover advantage, which gives you a competitive edge in the market. Hence, time-to-market is also one of the more important KPIs for product managers, especially in the development stage. This KPI tells you how much time it takes to move your product from the ideation stage to launching it in the market. 

Time-to-market = Date of market launch – Date of project start

Faster time-to-market KPI requires project management, Agile methodologies, and risk management skills.

Weightage for success: This KPI has medium weightage because it aids businesses to get a competitive advantage. 

ALSO READ: What is the Role of Agile Product Management in Successful Digital Transformation?

3. Customer Conversion Rate

This is one of the most critical KPIs for product managers because customer conversions ultimately impact organizational growth. Customer conversion rate KPI explains the percentage of users/visitors who take the desired action, such as signing up for the app or purchasing an annual subscription to the software. The key skills required to analyze customer conversion rate KPI are A/B testing (to understand which product campaigns have better engagement), marketing strategy, and user journey mapping. 

Weightage for success: This KPI has high weightage because a higher customer conversion rate means higher revenue.

4. Customer Retention Rate

Another KPI that helps product managers analyze the success rate of a product is the customer retention rate. It indicates how long customers continue to use a product and whether the product is offering them value. A high customer retention rate is important for companies because it increases revenue, gives consistent cash flow, and contributes to the growth of an organization. 

Retention rate = (Customers at the end of the calculated period – New customers) / Customers at the start of the calculated period

The key skills you need to improve your customer retention rate are customer relationship management, problem-solving, critical analysis, market research, and loyalty program design. 

Weightage for success: Customer retention rate has high weightage because it impacts the long-term growth of an organization.

5. Customer Churn Rate

The customer churn rate or the attrition rate means the number of customers lost during a specific period. A higher customer churn rate means low customer satisfaction and low revenue. For example, a software gets 1,000 new sign-ups at the start of the month but towards the end of the month, the company has only 685 active users. The customer churn rate is 315/1000 × 100 = 31.5% (Customers lost/Total customers).

Product managers must have customer feedback analysis, customer journey mapping, and customer success management skills to minimize customer churn rate.

Weightage for success: It has high weightage because customer churn rate tells whether your customers are overall satisfied with the product or not. This KPI also impacts revenue. 

6. Net Promoter Score

If you want to assess whether your customers are truly satisfied with your product, Net Promoter Score (NPS) is one of the best KPIs for product managers. It indicates the willingness of your existing customers (on a scale of 1 to 10) to recommend the product to others. The customers who are willing to recommend the product are called promoters whereas people who dislike the product are called detractors. 

Net Promoter Score = Percentage of promoters – Percentage of detractors

Product managers must have skills in survey design, data collection and analysis, and customer feedback management to track NPS.

Weightage for success: NPS has medium KPI weightage because it helps companies acquire new customers through referrals.

7. Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR)

MRR and ARR are also the two most important KPIs for product managers, especially for subscription-based products. MRR tells how much monthly revenue a company will generate based on its monthly subscription plans. Similarly, ARR is calculated for customers who purchase annual subscriptions. A high ARR is a great mark that reflects a company’s long-term financial health. 

Product managers need financial analysis and revenue forecasting skills to track ARR and MRR.

Weightage for success: Both MRR and ARR have high weightage because they enable businesses to forecast revenue and plan their growth strategies accordingly. 

ALSO READ: What is Product Strategy and How Does it Determine a Company’s Success

8. Earned Growth Rate

This KPI is closely related to NPS. It tells you the percentage of new customers acquired through word-of-mouth marketing or by referrals from existing customers. A high earned growth rate indicates high customer loyalty and reduces the cost of acquiring new customers.

The key skills you need to track and improve earned growth rate are customer relationship management, data analysis, customer experience, and excellent communication. 

Weightage for success: This KPI has medium to high weightage because it helps in organic growth of a company. 

9. Customer Lifetime Value (CLV)

Roles and responsibilities of a project manager also involve boosting marketing strategies and campaigns to acquire high-paying customers. Once you have boarded a new customer, how do you calculate how much revenue the customer will generate for your business? The Customer Lifetime Value proves to be one of the most important KPIs for product managers in such cases. It tells how much a customer adds to the business revenue during the term they are engaged with the business. CLV is dependent on the frequency and amount of transactions made by a customer during their engagement with the company. You need financial modeling, data analysis, and customer segmentation skills to track CLV.

Weightage for success: This KPI also has high weightage because it helps businesses segment high-ticket customers and focus better on them. 

10. Customer Acquisition Cost (CAC) 

Another one of the top KPIs for product managers is the customer acquisition cost. This KPI tells you how much money you are spending on acquiring your customers and whether your business is profitable overall. The CAC involves advertising costs, content creation, and promotion costs, salaries of marketers and salespersons, cost of sales and marketing tools, operational costs for customer engagement, market research, and other similar costs. You need marketing and sales budget management and financial analysis skills to reduce customer acquisition costs.

Weightage for success: CAC also has high weightage because it directly impacts the profitability of a business. 

ALSO READ: How to Become a Product Manager in 7 Steps

All the above KPIs for product managers are important for businesses to track their revenue, profitability, and growth. Therefore, the need for skilled product managers is increasing along with the need to gain competitive advantage. Hence, the modern product manager and the project manager job description focuses more on interpersonal skills such as adaptability, problem-solving, and risk management so that professionals can tackle the evolving challenges in the product industry. So, explore Emeritus’ online product management courses to accelerate your career in product management!

Write to us at content@emeritus.org