Generally speaking, the KPIs product managers utilize in order to define and measure success largely depend on the following factors: the product, customers and overall process for bringing the product to market. What’s more, there are approximately more than 30 different KPIs PMs can utilize to measure performance, according to research marketplace Toptal.
So, how do today’s PMs determine which KPIs are most useful for their team and product?
At logistics software company Flexport, success is defined and measured by the customer.
“Success in my book is knowing that you have substantially improved or simplified something for your customer,” Sophie Hartshorn, director of product, marketplace, said.
As such, Hartshorn’s team utilizes a variety of controllable metrics, such as tracking the time spent per associate on creating a quote, to identify measurable customer success outputs.
Below, the director of product shared more about the KPIs her team utilizes in order to define and measure customer impact.
How do you define success for your product team?
Ultimately, success for any product team should be defined by how much value you create for your customers. Success answers questions like, “Did we radically improve a customer issue or process?,” or “Did our product make it easier for our customer to perform their job?” In fact, the most successful product teams dig in to know their customer and stay close throughout the product development and delivery lifecycle. Therefore, success in my book is knowing that you have improved or substantially simplified something for your customer. This can be measured through metrics like revenue growth, net promoter score or customer retention, but can also be measured in less quantitative ways.
Thinking back on my career, the products that I am the most proud of are ones where the customer takes the time to give you feedback like, “this product has really simplified my day to day and now I can focus on the thing I love, which is growing my business.” Those are the customers who are going to be loyal to you, tell their friends about you, and ultimately help to drive all of the other metrics that we love to see trending upward.
The most successful product teams stay close throughout the product development and delivery lifecycle.”
What metrics do you use to measure that success, and why?
Defining customer impact can be super tricky. Frequently, it is measured through output metrics (lagging indicators) like revenue growth, the number of customers, sales numbers, etc. Focusing on these metrics can be good — it shows you how you’re stacking up against company goals. However, output metrics are also less actionable and less controllable, and can thus lead teams to inaccurate conclusions.
The classic story might be a company that focuses solely on revenue growth and thinks everything is growing well without realizing that the revenue growth is driven by pricing increases that are unsustainable and leading to customer dissatisfaction. For this reason, I’m a really strong believer in focusing on your input (controllable) metrics. So, for my product area that involves building the tools for our associates to create customer quotes, we should be tracking the time spent per associate on creating a quote, the number of steps or clicks that they need to make per quote, and other controllable metrics. These can be surprisingly difficult to identify and get right.
Long story short: isolate and track the controllable inputs that dictate measurable customer success outputs.
