What are the Product Manager's KPIs

KPI - Key Performance Indicators -
a strategic approach or just a means to an end?

Product managers and those responsible for products deal with a number of challenges every day: the next requirement, the most important customer and their requirements, development is behind schedule, sales and marketing need information, the boss is on the back of his neck and wants a reason for his product idea is not implemented ...

A large number of tactical and operational measures regulate the daily routine of many product managers. At the end of the day, product managers and product marketing managers can't really answer the question, "What did I do today to make my product more successful?"

The frightening fact is that most product managers do the essentials KPI or. KPIs, so Key performance indicators, have not defined or do not understand for the product, do not measure it, not to mention action plans that have to be initiated if goals are missed.

KPIs serve more than just control, they have to reflect the company and product strategy. Connections and deviations have to be analyzed and understood. How you can proceed, which KPIs gain relevance at what point in time, where the data is recorded and some practical examples, this series of articles on the topic of KPIs should shed light on.

In order to convey the basics, the strategic approach, the operational implementation and the stumbling blocks in the analysis, the following subject areas are considered:

  1. Why KPIs are strategically important for product management
  2. KPI basics: What should be considered when defining KPIs
    • Goals, comparative values, categorization
    • External key figures and operational key figures
    • Data collection, measurement and dashboards
  3. Financial metrics and company metrics - KPI examples and explanations
  4. Sales key figures - KPI examples and explanations
  5. Market key figures - KPI examples and explanations
  6. Marketing metrics - KPI examples and explanations
  7. Product key figures - KPI examples and explanations

If you like the articles, have questions or want to add something, I look forward to your feedback.

Why KPIs are strategically important

Before reading this article, answer the following questions:

  1. Do you want to be a (professional) leader of your product?
  2. How high is the product profitability of your product?
  3. How has profitability developed in the last 6 months?
  4. Which KPIs do not develop according to your planning?

You answered yes to the first question, but you cannot give any or only imprecise answers to one of the following questions?

This is not good! However, you are not the only one who feels this way!

In my practical experience, almost 90% of the product managers claim to be the product leader and answer the first question with yes. Exceptions here are technical product managers who mainly write specifications and have a "business" colleague in product management. In the same breath, of the 90% who answered yes to the first question, more than half cannot answer the follow-up questions at all or only to a limited extent, and only about 25% can answer relatively precisely or exactly.

Then I always ask the first group the following question: "If today a successful managing director receives a new, attractive-sounding offer from another - previously unknown - company, what do you think will be the first thing he will find out about?"

It's the company metrics! How is profitability, turnover, margin, compared to the market, how have the key figures developed in recent years, in addition to other aspects such as innovation, brand awareness, area of ​​responsibility, size and maybe also salary.

A managing director will not blindly accept a new challenge without knowing roughly what the general conditions are. It makes a difference to lead a company that has been highly profitable for several years to the next summit than to join a company that has only made losses for years and is on the verge of bankruptcy.

Good sales managers act in a similar way, they know their current sales figures very well and what results can be expected, or at least they should.

Why do good product managers know so few key figures for their product? An incomprehensible phenomenon, because they should - according to the hackneyed phrase - act as “the manager of their product”. Anyone who has held the role of product manager for a little longer knows that in practice they are often not “the managing director” because “after all, they do not make the final decision”. That is correct, but even managing directors do not make every decision themselves.
When you make decisions, this is ideally based on fact-based information and solid decision-making bases. At the same time, product managers should think very carefully about "why they don't have the final decision-making authority for their product".
Probably because nobody trusts them to have this competence. Is that a miracle

What if the product manager is not even familiar with the most important key figures or the profitability of his product? To be the leader of your own product means that colleagues and employees follow. They will do this if they recognize a strategic direction and the intrinsic value of the strategy - this also includes the management.

Product managers who are professional leaders of their product know the current status of the most important KPIs, can analyze them and explain how they support the current strategy.

It is therefore important to first define the strategy of your own product. This can be learned in the product management seminar "Strategic Product Management", using the Open Product Management Workflow ™ procedure.

Questions that product managers should answer for identifying the relevant key performance indicators (among many others):

  • What is the overall goal for my product in the next 6, 12, 24 months?
  • Should a large user community be built up first, or should sales grow from day one?
  • How much margin or profit should the product generate?
  • Do you have to save to become more profitable?
  • How is the sales pipeline built?
  • What is the product's roadmap, in which direction (target markets, problems with new customer groups, functionalities, market share) is the product developing - and why?
  • As soon as new functionalities should help to address new markets or customer groups, when is the earliest realistic time that sales will be generated with new customers?

These few questions alone show that the most important ones should be selected from a large number of KPIs in order to reflect the current strategy and at the same time keep an eye on the medium-term.

A good product manager acts strategically like a managing director, better like a leader.

Interestingly, product managers in the private sector act “strategically” when making investment decisions, “Do I invest in a house or do I continue to pay rent?” “Do I take out insurance or do I consciously take the risk?”, Etc.

Why don't they do it for their own product? Or give the management and top management the necessary foundations and reasons for good and strategic investments?

I hope the questions show the need to act strategically. If the explanations are not sufficient, I recommend the other articles from this series. They not only show dependencies, but also stumbling blocks that the product manager can better get out of the way and thus also improve his reputation in the company.

Where should product management start with KPIs?

First of all, every product manager should know and understand the company's key figures and balance sheets. He does not have to understand every single cost type and booking method, but the most important data, which is mostly available externally. My recommendation: sit down with the chief financial officer or controller to understand your company key figures and also the goals behind the key figures (sales, large profit, margin and margin target, costs and their allocation, cogs, opex costs, etc. ... ).

First there is the “understanding of the terminology”, next is the application of this terminology in discussions and decision-making. The manager will understand and expect the same language. If the product manager does not manage to use this language in decision-making documents or in meetings with management, he will not be seen by management as an “entrepreneur of his product” and will lose the reputation he needs to be successful, in the worst case one will deny him the relevant competence . The latter points lead to micro management and management interference in detailed decisions and ultimately to reactive action on the part of the product manager in response to requests from management.

The elevator pitch

I also want to show the importance of speaking the language of management with the following example.

Imagine that you are standing at the elevator in the morning, shortly before work begins, and you want to go to your office on the 7th floor. As you get into the elevator, your CEO will join the elevator that will go to the 15th floor. You're alone in the elevator. The CEO knows your face, knows that you work in product management, but does not know exactly which product you are responsible for.

CEO asks: "How is your product doing"

You answer: "Great, we are currently planning the new release, ... cool new technology, hot features in the next version, semantic intelligence, SOA based, ... technology & features blah blah .."

Before you can explain more or go into other topics, you have to get out of the elevator and say goodbye. The CEO still has 8 floors to travel alone in the elevator.

What will he think?

Probably the following: "What the hell is he talking about? Does he know what he's doing? Is that right for this job? I need to speak to his manager urgently ... It seems to me that the product management has no idea what they are there for or what they are doing ... "

You missed a huge opportunity to position yourself as an “entrepreneur” or a leader with the CEO.

Hence my tip - as trite as the “elevator pitch” may be - you should have all the information “in a nutshell” ready for the relevant in-house “buying” personas, decision-makers, influencers and team members. In addition to the management, you have at least the following roles, for which you have to have a short and crisp story. Each of them speaks a different language and has a different perspective on the subject.
Just as you create the positioning per buying persona for external communication, you should create an "elevator pitch" internally for your own product and cover the interests of the target person. (See also Product Management Training & Open Product Management Workflow ™)

  • CEO or top management: performance, growth and strategic impact for the company. (Why is your product relevant for the company in the future)
  • Sales and / or marketing manager: How can these people achieve their goals through you and your products, e.g. sales target, marketing program success. Why exactly do your products help these people so that their employees can achieve or exceed their goals?
  • Development manager: Needs a good feeling that his team is well involved, the planning and communication is going well so that he can deliver the products in the given time and quality. The planning is strategic and priorities don't change from one day to the next
  • Sales Representative / Account Manager: How can he sell more, "make more money himself because he exceeds sales targets". How can he better serve and support his customers.
  • Developer: How is his work recognized in management and with customers. What's next, how do we solve the "time problem"

Although there are far more than just these five personas (your direct supervisor, colleague from support, colleague from PM, ...), you should have an up-to-date overview at least for these five - mind you, a positive one!

As soon as the product manager understands the language and the goals of the decision-maker and can speak, he selects key figures, i.e. KPIs, that are important for the defined strategy.

You can find these basics in the article: "KPI basics: What should be considered when defining KPIs?"


To the overview: Articles and information for product management