Product KPIs (Key Performance Indicators) and metrics both evaluate product success but in different capacities. KPIs are broad indicators linked to business goals, like boosting revenue through new customer acquisition. Metrics, however, offer granular insights, such as the conversion rate of site visitors becoming new customers, supporting the overarching KPI.

How do KPIs and metrics shape product management?

KPIs and metrics are vital for product managers because:

  • Data-driven decisions: They provide insights into product performance, allowing you to pinpoint and prioritize areas for improvement.
  • Stakeholder communication: They offer a common language for discussing product success, building trust, and gaining support for your plans.
  • Measuring progress: They give an objective view of your product's trajectory, helping you track achievements and identify areas needing attention.

The art of designing KPIs for product success

Product managers use KPIs to gauge progress towards business goals. However, crafting meaningful KPIs can be challenging. Here's a simplified guide to creating effective KPIs:

  • Understand business objectives: Begin by clarifying your business goals and understanding how your product supports them.
  • Determine product focus areas: Identify crucial product aspects that drive your business objectives. For a social media app, this might include user acquisition, engagement, retention, and revenue.
  • Set specific metrics: For each focus area, define clear metrics. For instance, for user acquisition, the metric might be the number of new users.
  • Craft aligned KPIs: Develop KPIs that resonate with your metrics. A KPI example could be aiming for a 10% rise in new users over the next quarter.
  • Review and refine: Continuously monitor your KPIs, adjusting them as necessary to ensure they remain relevant and aligned with your goals.

Use this template for writing effective product KPIs:

  • Definition: Clearly define the KPI.
  • Objective: Highlight its main goal.
  • Target value: Set a specific and attainable target that aligns with the objective.
  • Rationale: Detail why this KPI matters and its role in the broader strategy.
  • Related KPIs: Mention other KPIs that complement this one for a holistic view.
  • Measurement method: Outline how you'll measure the KPI, including data sources, calculations, and measurement frequency.
  • Responsibility: Name the person or team in charge of this KPI.
  • Action plan: Specify steps to take if the KPI doesn't meet the target, noting responsible parties and timelines.
Note: Include any additional information or notes related to the KPI that may be relevant for stakeholders or team members.

Let’s take an example of the Instagram application here.

KPI: Boost Instagram's Monthly Active Users (MAUs) by 20% in the upcoming year.

  • Definition: Unique users who posted on Instagram at least once in the past 60 days.
  • Objective: Elevate Instagram's MAUs to enhance ad revenue and user interaction.
  • Target: Achieve a 20% rise in MAUs within a year.
  • Rationale: Instagram, as a primary revenue source for Meta, plays a pivotal role in its growth. More MAUs mean heightened user engagement and a more appealing platform for advertisers.
  • Related KPIs: Alongside MAUs, monitor conversion rates and user time spent on the platform for a holistic view.
  • Measurement: Use Instagram's analytics platform for monthly MAU reports.
  • Responsibility: Instagram's team oversees MAU tracking and reporting.
  • Action plan: Should MAUs not meet targets, the team will:
    • Research user preferences for enhancement areas.
    • Launch marketing campaigns to boost user numbers.
    • Collaborate with the Ads team to optimize user visibility.

By adhering to these steps, you can formulate and establish impactful KPIs that efficiently track your product's performance while contributing to your business objectives. Effective KPIs empower data-driven decision-making, facilitate transparent communication of performance to stakeholders, and ultimately pave the way for your product's success.

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Essential KPIs and metrics every product manager should know

In the bustling digital world, selecting the right KPIs is akin to setting a compass for a ship, guiding it towards its destination. Let's embark on a journey with Instagram as our vessel to understand this better.

Instagram, at its heart, is a vibrant space where stories unfold and conversations flourish. The platform's pulse is often measured by the satisfaction of its users. By keeping an ear to the ground, Instagram listens to user reviews, gauges their Net Promoter Scores, and ensures that any distress signals, like customer support tickets, are addressed swiftly.

But a platform's heartbeat is its engagement. Instagram thrives when users linger, sharing moments and engaging with content. The longer they stay, the more stories they share, and the more ads they view, the healthier the platform's heartbeat.

Yet, every ship seeks new shores, and for Instagram, this means acquisition. The platform is always on the lookout, casting its net wide with every app download, website visit, and new registration, hoping to bring more users aboard.

The treasure that every ship seeks? For Instagram, it's revenue. The platform's treasure troves fill up with every ad viewed, every story sponsored, ensuring the journey continues and the ship stays afloat.

However, a ship is only as strong as its crew. Retention is Instagram's way of ensuring its crew, the users, stay loyal and engaged. By tracking how often they return and how long they stay, Instagram ensures its crew is content and committed.

And finally, every journey has milestones. For Instagram, conversion is that milestone, marking every user who takes a desired action, be it a purchase or a subscription.

As Instagram sails through the digital seas with these KPIs as its guiding stars, it not only charts its course but also ensures a journey filled with stories, successes, and shared moments.


Choosing the right KPIs and metrics can feel like navigating a maze, with countless paths to consider. To find your way, keep these guiding principles in mind:

  • Consistency is Key: Regularly track your KPIs to spot trends and shifts, helping you make informed decisions about product tweaks.
  • Stay True to Your Goals: Your KPIs should mirror your business's ambitions. If revenue growth is the target, zoom in on metrics like customer acquisition and conversion rates.
  • Embrace Simplicity: Don't drown in data. Focus on core metrics that clearly chart your journey towards your objectives. Too many signposts can lead you astray.
  • Seek Actionable Insights: Your metrics should be more than just numbers; they should inspire action. If you're measuring user engagement, be ready to adapt based on what the numbers reveal.

Remember, the right metrics light up your path, making every step in your product journey deliberate and impactful.


KPIs and metrics are the compass for product managers, guiding them towards business goals. They empower decision-making with data and foster clear communication about product achievements. For impactful results, align these tools with your business aims, keep them straightforward, actionable, and monitor them regularly. By staying true to these principles, your product's path to success becomes clearer and more attainable.