8 KPIs that every product team should measure

One of the central pillars of being a product-led organization is being data driven. Ideally, anyone at a company can easily access product data to inform their work and spur new ideas—whether they work in sales, marketing, customer success, product, or otherwise. As a result, there are certain metrics that matter most for each team and ways to best leverage all of this information.

For product teams in particular, this data replaces a past reliance on anecdotal information or gut instinct in decision making. By understanding what’s happening in their product and what users really think about it, today’s product leaders are equipped to create a product experience that truly adds value to their customers’ lives.

Although there are many metrics to choose from, below are eight KPIs that every product team should track and use to fuel their organization’s product-led strategy.

1. Adoption

Adoption helps product teams determine if the product is delivering on its intended value, measured by how many users interact with the product (product adoption) or specific features within it (feature adoption). In the most basic sense, adoption is a leading indicator of a healthy software product (and company), and therefore something every product leader should care about.

Depending on what it means to be an active user of your product, it’s best to measure product adoption over time in one of three ways: the number of monthly active users (MAU), weekly active users (WAU), or daily active users (DAU). For feature adoption, it’s useful to understand both your most- and least-adopted features, so you can start to spot behavioral trends and identify areas of the product where users seem to find the most value. 

It’s a good idea to continuously monitor adoption, but can be particularly insightful after a feature launch. This way, you can see what percentage of users initially adopted the new feature and how many continued to use it as time went on.

How to take action on adoption data

• If you see low adoption for a recently-launched feature, create in-app guides to remind and steer users towards the feature, or even a full walkthrough that offers a quick tutorial on how to use it. Also consider whether a certain segment of your user base would benefit from the feature the most, and target in-app communications to them specifically.
• To improve overall product adoption, build an in-app onboarding experience that welcomes and educates new users about key features as they navigate your product for the first time.
• Create contextual tooltips for any features or areas of the product where you notice low adoption, as these may be places where users are getting stuck and need additional help to complete workflows.

2. Stickiness

Stickiness helps answer the question, “Do users keep coming back to the product?” This is important because product teams don’t just want to build products that attract new users—they want to keep users engaged and continuously returning to the product over time. 

Since stickiness measures how many users return to the product on a regular basis, it’s best represented by a ratio that can be calculated in three ways: Monthly users who return daily (DAU/MAU), weekly users who return daily (DAU/WAU), or monthly users who return weekly (WAU/MAU). Choose your stickiness measure based on what ideal engagement with your product looks like, for example your platform might be suited for daily use (like a project management tool) or less frequent use (like a healthcare patient portal).

In addition to quantifying how frequently users return to the product, stickiness also gives product managers (PMs) insights they can use to drive higher engagement throughout their entire user base.

How to take action on stickiness data

• Identify which features are used by those who access your product most frequently. Are these highlighted in your in-app onboarding flow? Work with the appropriate team(s) to ensure your onboarding experience introduces new users to these key features.
• After examining behaviors of your highest-frequency users, create in-app guidance and walkthroughs to encourage similar workflows and increase stickiness for the rest of your user base.
• If you see low stickiness, work with your marketing team to utilize external channels or programs to nudge users back into your product and encourage continued usage.

3. Growth

Growth represents the net effect of your user acquisition and retention efforts, whether achieved by adding new customers or increasing usage within existing customer accounts. While product teams often focus on innovation and building the next great product or feature, they must also root themselves in a foundational metric like growth. If you’re not able to effectively grow your user base (and keep the users you already have), the work you and your team put into improving your product could go to waste.

One simple way to measure growth is to track the percentage growth of users or accounts within a given time period. To go a bit deeper, teams can use the Quick Ratio, which captures user growth, retention, and churn all in one number. For a given time period, calculate growth by adding the number of new and recovered users, then divide that by the number of dropped users.

How to take action on growth data

• If you’re struggling to add new users, partner with your marketing and sales teams to strategize ways to increase the number of new users trying your product. And if you have a free product, think about how you can use in-app messages to offer upgrade options at natural points in users’ workflows.
• To help combat high levels of churn from existing users, work with marketing and customer success to identify ways to improve retention, for example by using product usage data to proactively identify users who are at risk. From there, use in-app guides to provide relevant resources and help users discover more value in the product.

4. Product Engagement Score (PES)

The Product Engagement Score (PES) is a composite metric that averages a product’s adoption, stickiness, and growth rates and provides a single view of product engagement. It can be measured at the visitor level or the account level, and is even more beneficial when tracked over time. If your product is used by individuals (vs. teams), then it’s best to measure each PES component at the visitor level. However if you’re focused on new logo acquisition, you should measure growth and overall PES at the account level.

PES is particularly useful for product teams since it boils engagement down to one number that can be used in monthly or quarterly reporting. It’s also extremely valuable in helping PMs understand where they can improve. Since it takes the average of a product’s adoption, stickiness, and growth, it’s easy to identify which metric is bringing down the average, and then dig in further to see trends over time and uncover the “why” behind each value. 

At product-led organizations, PES is a shared measure of engagement that every team can use to understand product success and friction. If product, marketing, sales, and customer success are all tracking PES, it acts as a common language and helps them collaborate around things like improving adoption or streamlining onboarding.

How to take action on PES data

• If your PES increased, determine which metric (or metrics) caused the spike and use product analytics to understand how users’ behaviors in the product may have changed over time.
• If your PES decreased, look at product usage data to see where users are dropping out of workflows and pinpoint problem areas in the product that could be causing churn—and thus bringing down your growth value.
• To increase your adoption value, identify which features or workflows are most important for user success, and then create in-app messages to guide users through those areas of the product.

5. Time to value

Many product teams focus on their product’s “aha” moment, or when a user clearly understands why they need a specific software product. Time to value quantifies this experience and measures the amount of time from when a customer starts using your product to when they start deriving value from it. PMs can use their analytics tools to measure time to value, and even track the average, minimum, and maximum time it takes new visitors to interact with the product’s key features.

The shorter the time to value, the better. So product leaders need to ensure their users’ first impressions of and experiences with the product are educational and actionable. This is where having a streamlined in-app onboarding experience is crucial. New users should be able to quickly understand both how your product works and the value it will bring them.

How to take action on time to value data

• Learn from your users with short time to value. While customers finding value in your product right away is worth celebrating, it’s important to learn from their in-app behavior so you can replicate it for the rest of your user base. Use product analytics to examine how these users navigate the product, and then make sure your onboarding flow properly highlights the features that these successful users are engaging with.
• Understand what’s causing a long time to value. For users on the opposite end of the spectrum, use your analytics to see exactly where they’re getting stuck or missing out on an important feature. Understanding where users are having trouble will help you take the appropriate course of action—whether it’s making changes to the product’s functionality itself, using in-app guides to provide contextual help, or adjusting the onboarding experience.

6. Retention

Retention measures the percentages of users or customer accounts still using the product after they initially install or start using it. It can be measured at the overall product level (app retention) and individual feature level (feature retention)—both of which are important for product teams to monitor. 

In addition to being another way to understand product engagement, retention also directly impacts a company’s revenue. Since the cost to acquire a customer can often exceed the initial contract value, low retention can mean money lost after signing a new customer. As more companies embrace product-led strategies and recognize the product team as a strategic partner in driving the business forward, retention is even more critical to a product’s success.

How to take action on retention data

• If app retention is trending down over time, use product analytics to try and identify what’s causing the dip. Is it related to the seasonality of your product? Are users struggling to complete key workflows?
• Segment your feature retention data by things like company size, role, or free users vs. paying customers to compare feature retention across different subsets of users. This will help you understand how behaviors differ and if certain types of users need different levels of support or guidance in the product.

7. Top feature requests

Product managers are no stranger to feature requests coming at them from a variety of sources—including informal conversations with customers, the sales team, user interviews, in-app surveys, social media, and support tickets. The difference between a laundry list of requests and valuable insight into what users want from the product lies in your ability to make sense of these requests as a whole, so you can spot common themes, identify the most important requests, and better prioritize development work.

To truly be product led, this requires product teams to establish a single place where all feedback lives that everyone can access. While the product organization is tasked with management and upkeep of this system or tool, teams across the company benefit immensely from having a central source of customer information.

How to take action on feature requests

• Segment your feature request data (e.g. by company size, ARR, industry, NPS response, or subscription type) to understand if certain types of users have different needs from the product.
• If you see a common theme (or themes) across multiple requests—especially if they’re from your target persona or high-value accounts—it’s worth exploring how you might build the requested capability into your product. Work with engineering to scope the new functionality and set up customer interviews to learn about the context behind these users’ needs.

8. Net Promoter Score (NPS)

Net Promoter Score (NPS) is a way for companies to gauge customer loyalty. It’s delivered through a one-question survey that asks, “How likely is it that you’d recommend this brand to a friend or colleague?” Customers answer on a 0-10 scale, and teams mark scores of 9 or 10 as “Promoters,” 7 or 8 as “Passives,” and 0 through 6 as “Detractors.” To calculate your NPS, simply subtract the percentage of Detractors from the percentage of Promoters.

Although teams like marketing and customer success are often the primary proponents of NPS data, it’s especially valuable for product teams since a customer’s sentiment is the direct result of their experience with the product.

How to take action on NPS data

• As you track NPS over time, note how (or if) it fluctuates around the time of any product updates or major releases.
• Measure NPS at the account and visitor level so you can understand both average sentiment and if any specific personas are driving your score up or down.
• Use your product analytics tool to plot NPS against product usage to determine if certain features or product areas correlate with particularly high or low NPS. From there, you can serve NPS Detractors in-app guides that steer them towards features they may be missing out on, or use an in-app survey to find out where your Promoters are finding the most value in the product. 

Keep learning

Check out the Pendo e-book, The 10 KPIs every product leader needs to know, to learn more about each of these KPIs, the roles they play in building great product experiences, and how to measure and act on them.