Improvements matter, and learning to measure those improvements is essential when trying to understand how a business is doing in the grand scheme of things. For product teams, improvements means being able to know if the product they spend all their time designing and innovating is actually being used (and more importantly, loved) by customers.

In order to figure that out though, product teams first need to identify what kind of measurements are used to track the success of their product goals. Even when pitching new ideas to internal teams or stakeholders, it’s important to have data on previous product trends as a way to create a stronger business case. By leveraging certain product metrics, product teams can demonstrate their proficiency at managing their product to support their vision and the company at large. But how do teams actually do this? Let’s first jump into understanding the different between metrics and KPIs.

Metrics

Product metrics are just a quantitative way to track product activity. A metric could be the average sentiment score of users, the number of clicks or usage activity on a specific portion of the product, or even the number of active users. Metrics are used by product managers as a way to help determine goals, detect problems, and make business decisions around the product. There are a ton of different metrics that product teams can choose from and should use to understand how a product is being engaged with by customers, but not every one of those metrics is going to be important to understanding how the product is impacting overall business goals. Those metrics that indicate how an action impacted overall business goals are called KPIs.

Key Performance Indicators (KPIs) are measurable values (aka metrics) that are used to demonstrate how effectively a company is achieving a specific business objective, generally over a period of time. These can be high-level KPIs focused on the overall performance of a business, or low-level KPIs focused on performance within different departments of a company. For product teams, KPIs tend to focus on product usage, quality, or development. For instance, KPIs can be a great way for product teams to understand the impact of their product strategy for driving customer engagement on the overall success of the business. So how can product teams find ways to self-assess and hold themselves responsible for supporting the product and company as a whole?

PM Self-Assessment

Different departments are held to various performance standards. If there’s a bug in the product, it falls to engineering to fix since they’re the ones coding the product. If there’s risk of customer churn or customer sentiment is low, it falls customer success and customer support as the front-line for customer interactions. If a company isn’t closing deals or there’s not high enough inbound interest, then it falls to sales and marketing to drive interest and urgency for product purchase.

Product managers sit in a very unique position at the heart of a company. They’re tasked with creating the product that drives each department even though they’re not always held accountable to specific metrics. Other teams have to sell, market, code, and help customers use the product they design. Moreover, these other teams are held accountable for work that product teams are directly responsible for assisting. Some product teams have their success measured by NPS. While NPS data may indicate whether or not your customers view your company favorably, it rarely illuminates the specific points in your product’s experience that contributed to their survey response. Outside influences, such as poor experience with customer support interactions, can drastically effect response scores.

Conduct Retros

Going into a product launch, teams are not always going to be able to hit the goals they initially set out to reach. In those instances, it’s important to understand the value add of the product: what have team excelled at and what portions of the product could be improved. There are a couple key questions product teams can ask themselves when reviewing KPIs to better understand their success at achieving the goal:

  • What were the goals and preferred outcomes?
  • How were those goals set, what metrics were factored in?
  • Were those metrics directly tied to the desired outcome?

It’s also important that KPI evaluation takes into account organizational factors influencing the metrics.

Interpreting KPIs

There can be multiple metrics associated with achieving a KPI so don’t be fooled into thinking that a KPI is just underperforming. Like all analytics and goals, you need to understand the ‘why’ behind the performance. KPIs are a guide post for teams to use, and when there’s a shift one way or another from that goal, it means there are external factors impacting the associated metrics. The job of the PM is then to go investigate the deeper cause of that shift. If it’s a positive shift, then PMs want to understand the specific metrics in question and what decision were made around those metrics so they can recreate and duplicate conditions to add product value. If the shift is negative, then it’s honestly almost more important for PMs to track what metrics have shifted and spend the extra time behind the why so that teams don’t keep repeating behaviors that aren’t going to benefit the product. Cross-functional collaboration is an essential part of maintaining department relations for product managers when setting and interpreting KPIs.

Increasing PM Efficiency

While PMs are not always held directly accountable for the metrics of other departments, their work does hold a great deal of influence. The more PMs understand about the specific requirements of other teams, the more efficient PMs can be about their process and handoffs. When designing a new feature, look for ways to better articulate specifications at each stage: design for prototypes, provide additional information on storyboards, tasks and handoff to engineering, product variations for QA and review. Essentially, the more product teams can make internal tasks run smoothly and quickly, the more time there is to take a step back and focus about the strategic aspects that go into being a PM: how do these new features fit in the market, how do they compare with competitors, how do new feature align with the greater product vision?

Conclusion

As the central home to the product, a product manager has the unique opportunity to influence teams and drive success for the overall company. Understanding how the product team and associated KPIs fit into each departments’ goals helps foster successful relationships. Keeping open lines of communication can help identify areas for improvement across the development and execution of product objectives.

The opportunity for product teams to drive business relies on knowledge, based on measurable data, of how long-term factors of the product are impacting business. KPIs and metrics help companies understand the impact of the product team as a whole and identify any gaps in the product. By continuously communicating successes, as well as quickly identifying and dealing with negative results, product teams can minimize product challenges.

How do you self-assess as a PM and what are the metrics you’re using?

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