How do you define the proper KPIs for your specific product and product team?
The framework I use for setting KPIs for a new product or area typically looks something like this:
- Framing: I think big picture about the product, what is the purpose, and how can I measure whether or not we are tracking towards that ultimate purpose. This can even be thought of in terms of a user story, “As an [x] user, I want to be able to [y], so that [z].”
- Brainstorming: I like to start with many different categories that we can consider for KPIs such as usage, adoption, customer sentiment (NPS), sales friction, impacted ARR, tangentially related products, direct ties to business value, the list goes on. During this time I recommend not curating the list.
- Crowdsourcing: At this point, enlist your team to keep building off this list. I can’t say this enough - Product Management is not a one person team. I just went through some pretty big launches and the core working team of PMM, engineering, product operations, customer success, and PM all collaborated on the many facets of the launch. Work is way more fun this way and you get the benefit of an entire teams collective experience.
- Prioritizing: This is where the focus comes in. I recommend whittling down your target KPIs list to a few items that you can talk about and share often to really focus on. I'm definitely guilty of having a ton of different items on my dashboard, and those extra things can definitely be useful to understand what is happening with your product in the market. When it comes time to share cross functionally or with a leadership team, I find that fewer, focused targets can be useful.
- Measuring: Whichever framework you like to work with, OKRs, KPIs, BPMs, make sure you are able to measure your targets.
- Iterating: Start tracking, making reports or dashboards, sharing, and analyzing. Without the analysis we just have data points on a page. Ask for feedback and adjust when needed. When in doubt, share again!
When defining the proper KPIs for a specific product and product team, I tend to do the following:
1. Understand the company's broader business objectives. This may require a conversation with your manager.
2. Once I understand the company's broader business objectives, I then find a way to tie my product and team's work to those objectives. This typically leads to a handful thing 3-6 objectives that I want to reach.
3. I then break down those objectives and form key results that would show how I can reach my objective through the key result.
4. Once I have an idea of by OKRs, I then share these with managers and stakeholders to get their perspective and alignment on what I've written.
5. Now that I have alignment, I establish how I am going to report on the data and what tools I'm going to use (e.g. Google Analytics, Pendo) and the the frequency in which I am going to update the broader organization.
Defining the right KPIs is quite risky. There are few steps we can follow that can help define the right KPIs
Follow these steps when defining a KPI:
What is your desired outcome?
Why does this outcome matter?
How are you going to measure progress?
How can you influence the outcome?
Who is responsible for the business outcome?
How will you know you’ve achieved your outcome?
How often will you review progress towards the outcome?