10+ Product Management KPIs

A product manager’s job is to make sure that their product meets the needs of customers, and is valuable enough for them to pay for.

But how do you know if you're succeeding at this?

That's where KPIs (key performance indicators) come in. They're a way for you to measure your performance as a product manager, so that you can see how well your products are doing, and adjust accordingly.

When it comes to KPIs, there are two different types: qualitative and quantitative. Qualitative KPIs measure things that aren't easily quantifiable, like customer satisfaction or user engagement. Quantitative KPIs are those that can be measured with numbers — how many users signed up for your service in a day, or how many payments were processed last month.

But besides overlapping metrics, product management KPIs should be different from those of a sales manager or marketing manager. In fact, they're often quite different from what you would expect and they require a different skill set to track.

‍In this article, we’ll get into the details of the unique product manager KPIs you shouldn’t overlook.

🎥 Want to learn even more about product metrics? Check out this recording from the North Star Metric Clinic with hosted with product management expert John Cutler. Check out our free Slack community to learn about future events, and check out the LaunchNotes Podcast for all the recordings.

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Retention rate

Retention rate is an important KPI for any product manager because it helps them understand how long their customers will stay with the product. If customers only stick around for a day or two, that could be an indicator that something needs to change in order to keep them engaged and coming back for more.

How to calculate it

Retention rate is a measure of how many users are retained over time. It's calculated as the percentage of users who returned to a product within a certain period.

Activation rate

Activation rate is the percentage of users who go from become a new user to hitting your activation milestone.

It’s a great way to understand how many people are taking action on your product, and it can help you understand what parts of your product need improvement.

Activation rate is one of the most important metrics for product managers, because it tells you how well you’re doing at getting users to try out products. If you can get more users to activate, this will help improve retention rates, which ultimately leads to more revenue and growth.

How to calculate it

Divide the number of activated users by the total number of users sold.

Activation Rate = Activated Users/Total Users

Activation rates are typically calculated over a period of time, such as three months or six months. The longer you wait to measure your activation rate, the more accurately you can compare it to previous periods and see whether it has increased or decreased over time.

Churn rate

Churn rate is one of the most important metrics for measuring customer satisfaction. It's a measure of how many customers are leaving your product or service, and it's often used as a gauge for customer loyalty.

How to calculate it

Churn rate KPI is calculated by dividing the number of customers lost by the total number of customers you have. So if you have 100 customers when you start measuring your churn rate and 10 leave after one month, your churn rate would be 10%.

In general, a high churn rate can indicate that something is wrong with your product or service. There may be some underlying problem with either the product itself or the way it's delivered to customers.

Session duration

Session duration is the amount of time it takes for a user to complete a particular task or interaction with your app.

It’s typically measured in seconds, minutes, or hours. For example, if a user opens an app and looks at it for one minute before closing it, you would say that their session lasted one minute. A session may be comprised of multiple activities within your application.

How to calculate it

Session duration is calculated based on two metrics: page views and page load times. You can see these two metrics in Google Analytics under Audience > Behavior > Site Speed.

The first metric, page views, shows how many times a particular page was viewed by users. The second metric, average load time, shows how long it took for each user to load that page. For instance, if you have 10 users who view one particular page and their average load time for that page is 3 seconds, then the session duration would be 30 seconds (10 x 3).

Average revenue per user (ARPU)

Average revenue per user (ARPU) measures the average amount of money customers spend on products over time. It is used to measure how well a company's products or offerings are performing, and how profitable they are.

How to calculate it

ARPU can be calculated by dividing total annual revenue by the number of users or subscribers, or it can be calculated by dividing total monthly revenue by the number of users or subscribers who convert into paying customers during that time period.

Net promoter score

Net promoter score (NPS) is a number that helps you measure customer satisfaction. It’s calculated using survey questions that ask customers to rate on a scale of 0-10 how likely they are to recommend your product or service to friends and family.

How to calculate it

Net promoter score is calculated by subtracting the percentage of detractors (those who rate a 6 or below) from the percentage of promoters (those who rate 9 or 10). The result is a number between -100 and 100.

The higher your NPS number, the more likely people are to recommend your company to others. NPS is an important metric for measuring how successful your product is at delighting customers, which in turn will help drive up sales and revenue for your organization.

Defects and detection effectiveness (DEE)

Defects and detection effectiveness (DEE) is a KPI for product managers that measures the ability of a product or feature to detect defects prior to release. It’s an indication of how good your product is at identifying and removing defects before shipping. The higher the DEE, the better your product performs in this area.

How to calculate it

DEE is calculated by dividing the number of defects detected in quality assurance (QA) testing by the number of defects found in customer-reported issues. The higher the DEE, the better your product's ability to identify and remove defects before shipping.

Support ticket escalation

Support ticket escalation measures how well your support team is resolving customer issues.

The number of support tickets that progress to a higher level of support may indicate that customers are unhappy or dissatisfied with the current service levels, or they may be satisfied with the service they are receiving.

Support ticket escalation is often used as an indicator of quality management in organizations, where it can help ensure that customer issues are being resolved at the appropriate level and in a timely manner. This can improve customer satisfaction and loyalty, as well as employee engagement and motivation.

How to calculate it

You should measure support ticket escalation over time so that you can see any trends or changes in behavior over time. 

For example, if you notice an increase in the number of escalations over time that may be indicative of increased demand for certain products or services from your customers. You could then work with your sales team to ensure that they have enough capacity to meet this demand without compromising their existing commitments.

Net promoter score (NPS)

Net promoter score (NPS) is a metric used to measure customer loyalty. It’s an indicator, understood by customers and employees, of how likely people are to recommend a product or service to others.

How to calculate it

It’s calculated by subtracting the percentage of detractors (those who respond with a 0-6 score) from the percentage of promoters (those who respond with a 9-10 score). A Net Promoter Score above zero indicates that more people are promoters than detractors — in other words, that the product or service is providing value for its users.

A positive NPS means the company has room for improvement; it doesn't mean that everything is perfect. In fact, if you're doing everything right but have a negative NPS, then you have an even greater opportunity to improve your customer experience.

Team velocity

Team velocity is used to manage backlogs and prioritize projects. It should be measured and tracked regularly to ensure that it's on target or increasing over time. If team velocity is decreasing over time, then it indicates that something needs to change in order to improve productivity.

How to calculate it

A typical team velocity calculation looks something like this:

Team Velocity = Total number of completed story points / Time period

So, if your team completes 100 story points over the course of one week and your team has four people on it, then your team velocity would be 44 (100 / 4).

But, how do you improve all of these product management KPIs?

Tracking KPIs is great, but if you want to actually improve these metrics you're going to need to improve your overall approach to product success. LaunchNotes gives product teams the right tools to continuously learn and take action. Learn more about LaunchNotes today.