5 Tips for Defining and Tracking Kpis for Product Success
In the fast-paced world of product development, measuring success is crucial for staying competitive. This article delves into expert-backed strategies for defining and tracking Key Performance Indicators (KPIs) that truly matter. From aligning metrics with business goals to balancing leading and lagging indicators, these insights will help product teams drive tangible results and customer satisfaction.
- Align KPIs with Business Goals and User Outcomes
- Select Actionable Metrics for Product Success
- Focus on Customer-Impacting Paired Metrics
- Balance Leading and Lagging Indicators
- Track KPIs That Predict and Measure Performance
Align KPIs with Business Goals and User Outcomes
My strategy for defining and tracking KPIs is simple but powerful: tie every KPI directly to a core business goal and user outcome.
When setting KPIs for a product, I start by asking two questions:
1. What behavior do we want to drive in our users?
2. How does that behavior support our revenue, retention, or growth goals?
Then I map KPIs backward from there. For example, instead of tracking just "number of logins," we focused on "percentage of users completing onboarding within 7 days," because that was proven to correlate with long-term retention.
We track KPIs through a living dashboard (usually in tools like Looker or Databox) and review weekly—not just quarterly—so we can catch early trends.
Advice for new product managers:
• Choose KPIs that you can act on. If you can't tie a KPI to a decision or action, it's just a vanity metric.
• Limit yourself to 3-5 critical KPIs at most. If everything is important, nothing is.
• Review and evolve KPIs as your product and goals evolve. Sticking to outdated KPIs can kill momentum.
Good KPIs don't just measure success—they guide your team toward it.
Select Actionable Metrics for Product Success
Defining KPIs is akin to creating a map for a long road trip—you need to select the right landmarks to ensure you're heading in the correct direction. At Spectup, our approach begins with understanding the core objective of the product or service we're developing. Is it intended to drive user acquisition, improve retention, or boost revenue? Once the purpose is clear, we work backward to select KPIs that directly measure progress toward those goals. For example, when assisting a SaaS startup in refining their subscription model, we focused on metrics such as churn rate, customer lifetime value, and activation percentage, as these could clearly indicate whether the product changes were resonating with users.
A piece of advice I'd offer to new product managers: don't get ensnared by vanity metrics. On one occasion, we collaborated with a founder who was fixated on measuring app download numbers without accounting for active user engagement. It was akin to trying to assess the success of a restaurant by counting reservations—completely overlooking the quality of the experience. Instead, select KPIs that drive actionable insights. An effective strategy I've observed is keeping your KPIs to a manageable number—three to five, maximum—so focus isn't diluted. Lastly, ensure your KPIs are adaptable as your product evolves. I recall how refreshing it felt when one of our team members suggested retiring a metric that had outlived its usefulness during a weekly progress review. Being flexible yet intentional is key to staying aligned with overarching goals.
Focus on Customer-Impacting Paired Metrics
At Fulfill.com, our KPI strategy centers on metrics that directly impact both sides of our marketplace: eCommerce businesses and 3PL providers. We track indicators that tell the complete fulfillment story, not just isolated data points.
For our platform, we focus on three KPI categories: matching efficiency (how quickly and accurately we connect businesses with the right 3PLs), partnership longevity (retention rates between businesses and their matched 3PLs), and performance improvement (measuring how our clients' fulfillment metrics improve after using our service).
From my experience in the 3PL world, I've found that many businesses either track too many KPIs or focus on vanity metrics that don't drive growth. When I started Fulfill.com, I'd seen countless eCommerce brands drowning in data while missing critical fulfillment issues.
For new product managers, my advice is threefold:
First, start with customer-impacting metrics. In fulfillment, order accuracy and on-time delivery directly affect customer satisfaction. For your product, identify the equivalent "moment of truth" metrics.
Second, implement paired metrics. For example, we track both speed and quality metrics for our matching process. If you optimize for speed alone, quality often suffers. Your KPIs should create healthy tension between competing priorities.
Finally, evolve your KPIs as your product matures. Early-stage products might focus on adoption metrics, while mature products shift toward retention and expansion. At Fulfill.com, our initial KPIs centered on marketplace growth, but now we're equally focused on successful, long-term partnerships.
Remember, KPIs aren't just for measuring performance—they're communication tools that align teams around shared objectives. The best KPIs create clarity about what matters most to your customers and your business.
Balance Leading and Lagging Indicators
I align KPIs with a dual purpose - what drives income and what actually matters to customers.
I've found that tracking both leading indicators (like engagement rates) and lagging outcomes (revenue growth) gives the fullest picture. For new product managers, I suggest starting simpler than you might think - pick just 2-3 metrics that genuinely predict success, not just report history. My team once obsessed over feature adoption stats while completely missing declining satisfaction scores.
That mistake taught me that sometimes the numbers you're not tracking tell the real story. Start with manual tracking before getting fancy with tools.
Track KPIs That Predict and Measure Performance
At Kalam Kagaz, I focus on KPIs that align with our business goals—be it customer satisfaction, revenue growth, or operational efficiency.
For example, when we launched our custom writing services, I tracked KPIs such as client retention rate, time taken to complete projects, and client feedback scores. These metrics helped me assess the quality of our work and also our ability to deliver on time, which is critical for maintaining client relationships.
For new product managers, I advise focusing on a mix of leading and lagging indicators. Leading indicators like website traffic, trial sign-ups, or early feedback help predict future performance, while lagging indicators such as sales or churn rate measure past success. It's also crucial to align KPIs with your product vision, ensuring that they reflect the outcomes you want to achieve, not just outputs. Keep it simple, track consistently, and always iterate based on data!
