Product performance is an important area of concern for any product manager. To keep a check on it and derive inferences out of it helps in improving the quality of the product. Product managers, across the globe have these numbers handy all the time. These are termed as Product performance metrics.
A KPI is used as a measure for performance. It keeps track of activities, costs, revenue and expenditure. Product managers use KPI info to decide success and failure of the product.
Is it uniform across all products in the market ?
Definitely not. The KPIs depend on the industry and the product type. KPIs evaluated for a banking industry is different from the one for the smartphone industry. In this article, we are going to give a list of KPIs that product managers use for evaluating their products. Not all are applicable to all industry types.
How to identify the KPIs required for your product ?
Choosing the right indicators is never an easy job. To ease it out, we have a 5 step process.
Identify the business goals of your product
Quantify the goals
Use Qualitative and Quantitative KPIs
Don't restrict yourself to Financial and Customer Indicators
Use Product Assessment Scorecard
Once you identify your KPIs using the above, it is time to discuss some indicators which are quite commonly used across industries.
Monthly Recurring Revenue
This applies to products that offer its customers an option to subscribe to a monthly plan. The KPI helps in deriving the number of customers who are continuing with the subscription. Depending on the threshold point set by the Product Manager, a conclusion is derived on whether the product is able to engage and provide value to the customer.
Customer Retention
This applies to all sectors except few where the proximity of customer purchasing an upgraded version of the same is less. This includes smartphone industry. Since the average time in which an individual goes for an upgrade is substantial, this parameter does not hold much value. It applies to regular usage products and ones having lower shelf life. Customer showcases its utter loyalty by making purchases again and again. It can be a grocery store or a restaurant or a hotel.
Customer Acquisition Cost
This metric is used to assess the cost incurred to bring the customer onboard. It is used when specific campaigns are launched for customer attention.
CAC = (Sales & Marketing spendings for the campaign)/(total number of onboarded customers during the campaign)
Bounce Rate
It is used to keep a check on users who have left the site without performing a transaction. It helps in tracking the user behaviour so that a lower bounce rate can be maintained.
Customer Satisfaction Scorecard
It is used to calculate the satisfaction quotient of the user for a particular product(s). The data is collected when customers are asked to rate the product on a 1 - 10 scale. The average score is calculated by adding the scores and dividing it by the number of respondents. Feedback can be taken at any point during the customer journey.
Conclusion
KPIs are always important for any Product Manager. To decide whether to continue or discontinue the product is solely taken based on these indicators.
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