Product management glosary

Key Performance Indicator (KPI)

Product Management Glossary: Key Performance Indicator (KPI)

What is Key Performance Indicator (KPI)?

A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company, team, or individual is achieving key business objectives. KPIs are used to evaluate success at reaching targets and are an essential tool in product management for monitoring and improving performance.

Why are KPIs important in product management?

In product management, KPIs are crucial for several reasons:

  • Focus: KPIs help product managers and teams concentrate on what matters most, ensuring that everyone is aligned with the organization's goals and objectives.
  • Decision-making: By tracking KPIs, product managers can make data-driven decisions to prioritize features, allocate resources, and identify areas for improvement.
  • Communication: KPIs provide a common language for discussing performance, making it easier for product managers to communicate progress and results with stakeholders.
  • Accountability: Establishing KPIs creates a sense of responsibility among team members, as they can see how their work contributes to the overall success of the product.

Types of KPIs in product management

There are various types of KPIs that product managers can use to measure the success of their products. Some common categories include:

  • Financial KPIs: These KPIs measure the financial performance of a product, such as revenue, profit margin, or return on investment (ROI).
  • Customer KPIs: These KPIs focus on customer satisfaction and engagement, including metrics like Net Promoter Score (NPS), customer retention rate, and customer lifetime value (CLV).
  • Operational KPIs: These KPIs track the efficiency and effectiveness of product development processes, such as development cycle time, defect rates, and feature adoption.
  • Team KPIs: These KPIs measure the performance and productivity of the product team, including metrics like employee satisfaction, turnover rate, and team velocity.

How to choose the right KPIs for your product

Selecting the appropriate KPIs for your product depends on your specific goals and objectives. Here are some tips for choosing the right KPIs:

  1. Align with business objectives: Ensure that your KPIs are directly tied to your organization's overall goals and objectives.
  2. Be specific and measurable: Choose KPIs that are quantifiable and can be tracked over time to monitor progress.
  3. Keep it simple: Focus on a few critical KPIs rather than trying to track too many metrics, which can lead to confusion and dilute focus.
  4. Ensure relevance: Select KPIs that are relevant to your product and industry, as well as the specific stage of your product's lifecycle.
  5. Review and adjust: Regularly review your KPIs and make adjustments as needed to ensure they remain relevant and aligned with your evolving goals and objectives.


Key Performance Indicators (KPIs) are an essential tool in product management for measuring success and driving improvement. By selecting the right KPIs and using them effectively, product managers can make data-driven decisions, align their teams with organizational goals, and ultimately deliver better products to their customers.