“Success has many fathers, but failure is an orphan.” — John Kennedy
(This quote may originally come from Tacitus, and has a slightly different tone in Latin: “This is an unfair thing about war: victory is claimed by all, failure to one alone.”)
It’s difficult to determine relevant metrics for products and product managers because the product management role is inconsistent from company to company. In most cases, success is a team effort, not the result of any one person or role.
Metrics can give you insights if you can understand what they’re telling you. Common metrics such as revenue and profit are lagging metrics—they report success or failure after the fact. Daily Average Usage (DAU) can be a leading indicator—they predict whether a client will renew or not.
Unfortunately, metrics can also be weaponized. They are sometimes used to measure employee productivity and value to the organization. Lines of code produced and number of blog posts are simple to count but not an indicator of quality or impact.
There are three roles of product management: business strategy, technical planning, and growth tactics. Each has role different metrics to track.
Growth tactics impact the products we have today—finding ways to sell more of the products we currently offer. Technical planning drives the next version of your existing products, defining new features and capabilities to be delivered next. Business strategy determines new products to build or new markets to serve. These three areas of focus correspond roughly to what’s called The Three Horizons of Growth.
While most product managers are primarily focused on what’s next—the technical planning—most product metrics are about the existing product—the product in the market now.
This is why it’s hard to know what to measure.
Leading and lagging indicators
Most metrics are what are called "lagging indicators." They tell you what happened. Revenue, daily usage, and customer satisfaction all report success (or failure) after the fact.
What's more insightful is to identify activities that lead to success.
For example, customer discovery leads to fresh insights that result in better products or more targeted promotions that increase your chances of success.
One VP felt that the team was disconnected from real customers so he set up a continuous discovery program. Each product manager was expected to connect with one customer each week. The result was a better understanding of their issues which drove better insights for development, marketing, and sales teams.
So, what can be measured? Consider activities, outputs, and outcomes.
Activities can be counted. How many did you complete and how many are documented? Outputs can be counted too but really should be rated for quality. Are the outputs complete? Do they show critical thinking and deep analysis? Outcomes are measured in business results, usually revenue or adoption numbers.
Let’s start with the product manager who is focused on business strategy. That person is focused on exploring options for new products to build, new markets to serve, or both.
A product manager focused on business strategy would be evaluating and prioritizing business options. Researching possible new products and new markets—and creating the summary business plans to share with leadership. A strategic product manager would likely lead a prioritization exercise to guide leadership or investors to choose from many options to identify the one or two most attractive possibilities. Choosing the vital few from the compelling many.
So what activities are needed to do this work? And what outcomes could be measured?
Activities. Research problems to be solved in multiple markets. Review and share trends based on reports from analysts and research firms as well as feedback from sales, support, and success teams. Interview existing customers. Interview non-customers.
Outputs. Business canvas or business plan. Prioritized list of possible opportunities.
Outcomes. Number of opportunities evaluated. Number of opportunities to move into a business planning process.
The product manager responsible for next release planning—or the Planning Manager, if you prefer—is focused on what new features or capabilities will be enabled in a near-term deliverable. Those capabilities might be software or hardware features, or new services.
This role feeds the design and development of products and services with problems to be solved. These usually take the form of stories or requirements, prioritized for business value.
Activities. Interview customers. Identify problems to be solved. Communicate problems to the technical team. Validate potential solutions with customers or serve as the customer representative.
Outputs. “Groomed” stories including personas, problems to be solved, and acceptance criteria. Roadmaps. Prioritized backlog of stories in business-priority order. Release status updates with stakeholders.
Outcomes. Successful deployment of features. Customer satisfaction for new features. Pending sales enabled with new features. Increased adoption.
The product growth manager focuses on how to increase sales for today’s products and services—what is in the field now. In particular, they examine areas of friction in selling and onboarding new customers.
Activities. Identifying impediments to buying. Working with marketing to define new campaigns to address buyer friction and pain points. Interviewing lost prospects and customers to better understand buying criteria. Interviewing recent purchasers to understand why they chose the product and to identify ways to simplify onboarding.
Outputs. Buyer personas. Buyer journey. Sales playbook. Documented onboarding process. Win-loss analysis. Launch plan.
Outcomes. Increased adoption of the latest release by existing customers. New customers acquired. Existing customers who didn’t renew (ie., “churn”). New product sales revenue. Customer retention.
The key is to combine leading and lagging indicators. For example, a drop in Daily Average Usage (DAU) today is an indicator that foreshadows customer churn later.
Activities and outputs are easy to measure but are not outcomes. That said, many activities drive outputs that lead to outcomes. Ultimately, you want to tie the work you do—the activities and artifacts—to the business and customer outcomes that are achieved.
Harry Truman notes: “It’s amazing what you can accomplish if you don’t care who gets the credit.”
Join our free on-demand video program on research techniques for product managers. Watch the videos at your pace and explore the methods of research that should be in the skillset of every product professional: interviews, observation, experiments, surveys, and more.