20 Key Product Management Metrics and KPIs

Key performance indicators (KPIs) are numerical measures of the overall success of your business. KPIs in the context of software development demonstrates how successfully your development efforts are in line with business goals. They also show how closely your development efforts adhere to your corporate objectives. Selecting the appropriate software metrics is the first step toward understanding your KPIs.

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KPIs and Metrics for Product Management provide information on how successfully your software development activities are aligned with corporate goals.

KPIs and Metrics for Product Management

In order for the product to be successful, it is necessary to understand the main indicators of the trade. These indicators should be divided into 3 groups

  • Indicators for predicting the business success of a product
  • Metrics to analyze and increase user engagement
  • Metrics to measure product/feature popularity

TOP Metrics to Forecast the Business Success of a Product

From rudimentary metrics to understand user engagement to high-level metrics that indicate the health of the business, these metrics help forecast the business success of a product. Some of these top metrics include:

  • Gross Margin

Gross Margin=(Revenue − Cost of goods sold) / Revenue

  • Sales Revenue
  • Net Promoter Score

 NPS = % promoters – % detractors

  • Net Profit Margin

Net Profit margin = Net Profit ⁄ Total revenue x 100

  • MRR (Monthly Recurring Revenue)

MRR = Total Number of Active Accounts x Average Revenue Per Account (ARPA)

Monthly Recurring Revenue (MRR)

Monthly recurring revenue is the anticipated sum of money that your business will make from all of the active subscriptions in a particular month (MRR). It only includes recurring costs from discounts, coupons, and add-ons; it excludes one-time prices.

Using MRR, you may evaluate the company’s current financial situation and forecast its future earnings based on active subscribers.

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TOP Metrics to Analyze and Grow User Engagement

User engagement cannot be recorded without also tracking other engagement metrics that are used to measure user engagement. You will at the very least need to pay attention to those two indications because engagement is calculated as active users divided by all users for a certain cohort over a specified period of time. There are a few additional metrics that should also be tracked, though. Here are a few of them:

  • Churn rate
  • Retention rate
  • Total active users
  • DAU, WAU & MAU
  • Net promoter score (NPS)

Daily Active User/Monthly Active User ratio

The ratio of daily active users (DAU) to monthly active users (MAU) measures how frequently people interact with your product. The total number of unique users who interact with your product over the course of a day is known as DAU. MAU is the total number of unique users who interact with your product over a 30-day period (usually a rolling 30 days).The DAU to MAU ratio calculates the proportion of monthly active users who utilize your product in a single day.

Session duration

The length of a session is the amount of time a person spends actively using a website on a regular basis. The session expires if the user is inactive for a certain amount of time (30 minutes by default). The session length is a measurement of how long a person stays on a website. It essentially shows how much time was spent on each page of a website during a single session. The visitor will spend exactly 0 seconds on the last page before leaving.


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Traffic (Paid/Organic)

Organic traffic refers to visitors who find your website as a result of your website’s placement in the SERPs. Paid traffic, on the other hand, originates from internet adverts. The price is the key distinction between the two. The focus of increasing organic traffic is on natural, cost-free ways. The majority of organic traffic is generated with the use of various SEO techniques. While sponsored traffic is obtained through the placement of paid advertisements online or by the payment for a spot in the “paid ads” area that appears above the SERPs.

Metrics to Keep Users Interested

Site engagement is the primary indicator of a website’s success. Here are some metrics to measure that keep the users interested:

  • Page views
  • Time on page
  • Bounce rate
  • Top exit pages
  • Pages per session
  • Page/Scroll Depth
  • Unique Visitors
  • New vs. Returning Visitors
  • Conversion Rate
  • Abandonment Rate

Retention Rate

The retention rate is the proportion of customers that continue to use your product or service over a predetermined time frame. A high retention rate is a crucial metric since it shows that your present customers love your product and are a consistent source of cash, whereas a low retention rate shows a bucket leak. No matter how many consumers you bring in through your acquisition strategy, they will keep leaving, and you will keep losing money.

However, there will be some attrition. Customers who have already bought your products stop using them for unknown reasons. The first step in converting churn-prone customers into euphoric brand evangelists is calculating your product’s retention rate.

Churn Rate

The churn rate often referred to as the attrition rate, is the rate at which customers discontinue doing business with an organization over a defined period of time. Churn may also refer to the number of subscribers that cancel their subscriptions or choose not to renew them. Your company’s churn rate increases when more customers stop purchasing from it. Your client retention rate decreases as you retain more customers. Generally speaking, a lower turnover rate is preferable.

Number of Sessions per User

The average number of sessions started by each user or visitor to your website or application is recorded as Sessions per User. This measure is mostly used to gauge user re-engagement with your website or app.

Number of User Actions per Session

The crucial actions that your users take per session are measured by user actions per session. How many of your new users actually finish those tasks? From the beginning to the finish of a session, how many times do they occur?

You can make sure your product is moving in the right direction by concentrating on these indicators and tracking how they change over time.

To boost team productivity, managers can use software analytics to recognize, prioritize, track down, and report any difficulties. This makes it possible to rank challenges in software development projects according to importance, allowing for effective management. Software metrics can be utilized by teams working on software development projects to monitor, enhance, and more effectively manage their workflow.

Metrics to Measure Product/Feature Popularity

The main goal of measuring a product or feature’s success is to increase its efficiency while raising your customer health score in line with your KPIs. The most typical and relevant metrics to gauge a product’s popularity are listed below:

  • Net Promoter Score (NPS)
  • Client Retention Rate (CRR)
  • Active User Percentage (DAU, WAU, MAU)
  • Monthly Recurring Revenue (MRR)
  • Customer Lifetime Value (CLTV)
  • Customer Acquisition Cost (CAC)

Customer Lifetime Value (CLTV or LTV)

The average revenue you can make from customers over the term of their account is known as customer lifetime value (CLV) (CLV or CLTV). Simply explained, it is the sum of money you would have made from a customer had they stayed.

For instance, a customer’s lifetime value will be determined by the amount they will spend on your product over the period of, say, a nine-month subscription.

Customer Acquisition Cost (CAC)

The customer acquisition cost, or CAC, is the price associated with gaining a new customer. The CAC is a critical business indicator that measures the whole cost of sales and marketing activities, as well as any property or equipment, needed to convince a customer to buy a good or service.

It is common to analyze CAC along with Lifetime Value (an estimate of how much revenue an account will bring in over the course of its lifetime by continuing to buy from or subscribe to for a longer period of time) or Monthly Recurring Revenue to ascertain whether a business is operating efficiently (the measurement of revenue generation by month).

TOP KPIs for Software Development Companies

During a software development process, you may not find any set of standard metrics to use in the process. However, you may select from a range of effective KPIs and metrics in accordance with your certain goals and long-term objectives. You may use the below-mentioned metrics for your project:

  • Lead Time
  • Cycle Time
  • Team Velocity
  • Active Days
  • Release Burndown
  • Code Churn
  • MTBF and MTTR
  • Escaped Defects
  • Defect Removal Efficiency (DRE)
  • Net Promoter Score (NPS)

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Why Do KPI Engineering Metrics Matter?

When working on a software development product, project teams many times rely on just gut instincts rather than working systematically. In addition, when managing processes and workflow the much-overlooked part is not paying proper attention to essential KPIs and metrics which ultimately result in further consequences.

If a project fails, you must have the answer to all the queries your potential consumers have including:

  • Why does it happen?
  • How to resolve the issue?
  • What elements lead to failure?
  • What strategies should be utilized for a robust comeback?

You must have a satisfactory answer to all the aforementioned queries. Key performance indicators and metrics can help evaluate the team’s efficiency and productivity, analyse if it is giving its best, as well as plan strategies to boost effectiveness.

Software Metrics Types

You can pick from a range of software product metrics and a few essentials are as below:

Test Software Metrics

The completeness and accuracy of product testing could influence product excellence. It includes automated code coverage, test percentage, and production flaws to evaluate the competence of the testing process.

Formal Code Software Metrics

As the term implies such metrics are used to measure the comprehensiveness and code quality of the software product during the testing process. These metrics are majorly used to enhance the constancy among developers and team members in the project group.

Operational Software Metrics

One of the highly influential software tools for testing application operational software metrics are used to determine the durability of products. Project managers can utilize these metrics to further improve the product’s features.

Benefits of Software Development Metrics

Software development metrics and KPIs provide endless benefits to users. Build products that emerge as the next ‘record’ and help generates maximum yields. Beneath are the advantages KPIs and metrics would provide to the users:

  • Assess to ascertain the current project status concerning initiatives and objectives.
  • Characterize to comprehend all methods, tools, and settings used in product development processes.
  • By comprehending connections between processes and products and mapping these connections, one may forecast future product development phases.
  • Enhance by identifying inefficiencies, obstacles, and other threats and mapping out how to overcome them.

Key Principles to Use Software Metrics

Product managers often assume that the more metrics the better would be the end results. However, this could simply be a misperception as obtaining too much data might result in further complication as inadequate data management and more.

Managers should focus simply on gathering effective resources and data and make sure to utilize the already collected information to the best level for the best results. Beneath is what you need to take into account when using product development KPIs and metrics:

1. Interlink or Connect Software Metrics to Objectives

Make sure to connect every measure you employ in order to accomplish certain goals. For example, the development crew may focus on certain objectives such as decreasing complications and errors, completing assignments faster, or minimizing product code. Developers may effectively grasp requirements and adhere to each important factor in order to improve user experience and the durability of the software product by closely taking metrics as primary goals.

2. No Numbers but Track Trends

Software development metrics might help in analyzing the success of the project in a brief period using routine happenings and updates.

Nevertheless, it might not help when the entire product development is concerned. Understanding the general trend and keeping an eye on changes are considerably more important for the outcome.

3. Measure in Shorter Periods

Developers do not intend to stop their work to assess if they were successful or unsuccessful. The progress is, however, more precisely assessed when the assessment periods are divided into shorter time frames.          

Metrics, for example, can identify a specific issue as it arises and avert major failures after the project completion as well. Additionally, if anything goes wrong, you might give the team fresh instructions to increase productivity before something catastrophic occurs. It helps in building the best product with the utmost features to offer to your potential consumers.

4. Don’t Employ KPIs That Don’t Work

Why would you continue using metrics that do not bring any results? So make sure to avoid utilizing those metrics that are no longer beneficial for your projects. Try to choose metrics that can provide comprehensive data and insight to enable you to complete your projects successfully.

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Metrics and KPIs are essential for software product development since they help you increase team productivity and efficiency, which ultimately produces the best product. You should choose the KPI metrics that work best for you now that you have researched the best ones for project management and product development. To achieve the finest results, make sure to consider every significant component, such as the type and nature of your goods.


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