KPI-Driven Reporting

Key performance indicators, also referred to as KPIs, offer a useful means for companies to assess how well they are doing concerning set goals. Investopedia defines it as “a set of quantifiable measures that a company uses to gauge its performance over time.”

Apart from high-level KPIs, there are also low-level ones that relate to sections or teams in an organization. These include project management KPIs that guide expectations around the work of the team and monitor its progress. In other words, these indicators help assess the performance of product managers and their teams. Here’s what to know about KPI-driven progress reporting.

Why KPIs Are Important

KPIs form the basis for measuring how well a business, a business activity, or a product is doing in relation to its goals. They not only help to set and monitor goals but also to ensure that all hands are on deck to achieve them.

These tools offer a powerful means of aligning people around common objectives. They make clear the direction that the project management team should be heading towards. This, of course, improves the chances for successes and guards against wasting of resources.

KPIs vs. Metrics

KPIs are taken for metrics in many cases. They are not the same, however, although related.

A metric is a quantifiable rule for defining and analyzing the success of a product. Metrics help you to appraise key performance indicators, which ideally need to be clear-cut business objectives. You may use multiple metrics for the definition of these important indicators.

When defining a KPI, you have to identify an outcome that you are interested in and determine its importance. You will then figure out how you will be able to influence this outcome to achieve it and how to measure success. What will success look like?

Let’s say you’re targeting an increase in profits as a business objective. Revenue from sales can serve as a metric for measuring how well you’re doing toward this goal.

Important Project Management Metrics

More recently, some organizations go for the One Metric That Matters (OMTM) approach in determining what should be the center of attention. This is based on the idea that the fewer the metrics you track, the more focused you become. Companies use this approach because they believe it promotes better alignment.   Product managers often work several sub metrics that support the OMTM, but are more specific to the affects of the product, isolated from other affects from Marketing or other departments.  This is a reasonable way to measure specific contributions to the superset business metric everyone is aligned to.

Common Product Metrics

Product Management generally will focus on conversion and engagement related metrics. These metrics help to measure the ability to move users through the signup or sales funnel, and the ability to keep them using the product after signup. Here are a few of the most common:

Engagement

• Daily active users – Number of users that you have using your product or that sign in and perform a “valuable” activity per day
• Monthly active users – Number of users completing valuable activities in a month
• Daily active user/monthly active user ratio – A comparison of daily active users relative to monthly active users (a reading of at least 20% suggests something good)

Other metrics that can help to track user engagement include session duration, bounce rate, and traffic.

Satisfaction metrics

Measuring tools of this nature can help you to understand better how satisfied customers are with your product. They sort of confirm what other metrics might have suggested. Two notable ones are:

• Customer Satisfaction (CSAT) – Measure of how pleased or displeased that customers are with a feature based on a scale, say, 1 to 10
• Net Promoter Score (NPS) – A reading that gives an idea of the number of users that are likely to recommend your product to other people and those that would speak against it

Feature/Popularity metrics

With these, it becomes clearer how users are interacting with a product or feature. They can help to uncover new ideas to work on and include:

• Sessions per user – Number of times that users come back to use your product, feature, or site
• Actions per session – A figure showing the number of actions that a user takes every time they open an app or visit a website

How to Create Effective KPIs

The stage of your business should inform the best KPIs for assessing performance. Industry-recognized indicators will not cut it. For example, are you in a growth stage focused on acquiring new customers?  Or is the business in a later stage of the lifecycle and focused on maximizing revenue?

Here are important steps to follow when looking to have powerful KPIs:

It is worth stating, however, that there should not be excessive reliance on quantifiable metrics for assessing product management’s performance. Qualitative measures, including analytic thinking, customer focus, communication skills, and attention to detail, should not be neglected.