As a product manager I spend a lot of time thinking about key performance indicators (KPIs). How can I measure the success of my initiatives and how can I track that my products are contributing to organizational goals like revenue targets or market penetration?
Decide what to measure.
What are your objectives for your product? What organizational goals does your product contribute to? These questions should drive the metrics you choose to pay attention to. Choosing what to measure is perhaps not as difficult as choosing what not to measure, or at least what not to pay as much attention to. There are some great articles out there on different strategies and types of product measurement.
Your KPIs should give you a complete view into your product performance, but how can you use these metrics to guide product decisions? What happens if your KPIs show poor product performance? Ideally you would want to take a step back, re-examine the market and your product position and make a strategic decision to steer your product back to where you want it to be. But in the real world, there isn’t always time for this. End-of-quarter reviews loom overhead. Board meetings and resource allocation adjustments are being made. It’s tempting to make changes specifically to change KPI values, instead of focusing on the broader product strategy and what the metrics are supposed to be indicators for.
Expect the unexpected.
A standard part of any business or financial analysis is the “sensitivity analysis” where we determine the impact if there is any variance in figures determined through assumption or that carry any significant risk. Business strategists use something similar called scenario planning, sometimes called a “what-if” analysis. The goal here is to think about what you are most dependent on, and think through what would happen and what your plan of action would be if your dependencies are compromised. What if a competitor lowers prices? What if your infrastructure’s firewall is breached? What if a key resources becomes unable to work?
Because we are measuring the success of our product based on our KPIs, we have clear criteria for scenario planning that we can then use to make actionable plans. Rather than reacting to an unexpected metric, we can get ahead of the game and come up with a game plan to shift strategy or execute tactics to regain ground towards our goals.
Get ahead of the game.
Scenario: My product’s free-trial downloads are hitting targets but conversions are well below estimates.
This is a very real scenario, but if we’ve planned ahead we can take action early and potentially solve the problem before the next generation of trial users reach the paywall. Have a pre-written loss analysis survey that you can send to that first batch of lost customers. Have UX metric funnel reports pre-generated so you can quickly find out what the points of frustration are in your product’s usability. Have a backup pricing strategy you can run by lost customers to see if it appeals to them more. The plan of action will vary, but if you think through the possibilities of what might happen with regard to your metrics you can realign your product performance before it veers too far off course.
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