Pendo Ebook 2021 10KPIs
Pendo Ebook 2021 10KPIs
Pendo Ebook 2021 10KPIs
Introduction:
Laying the foundation
for data-driven
product management
If you ask five product managers (PMs) to name the most With effective measurement in place, product leaders can
important product metrics to track, you’re likely (read: base decisions on data, and build products that both meet
definitely) going to end up with five completely different (and exceed) users’ needs and propel the business forward.
answers—and grounds for some healthy debate. This is Product-led companies go so far as to rally the entire
because when it comes to data, today’s product leaders find organization around product data as a central resource and
themselves in a paradox of choice. There are so many product shared language. So, they better make sure they’re measuring
metrics you could be tracking, but it’s not always clear which the right things.
ones you should be tracking.
The right KPIs for any one company to track will ultimately
Gone are the days of a lack of access to meaningful product depend on its product, growth stage, and overall goals, but
data. Instead, product practitioners of all levels are tasked we believe there are ten that every product leader should
with honing in on the metrics that will be most impactful— have on their radar. Whether you’re a PM who’s deeply
those that will help them understand how users navigate their involved in the day-to-day or a product executive who cares
product, how product usage correlates with positive outcomes, more about the big picture, the metrics in this guide will
and how their product impacts the business’ bottom line. provide a foundation for your product analytics strategy.
The 10 KPIs every product leader needs to know 3
02 Adoption
03 Stickiness
04 Growth
06 Retention
07 Time to value
10 Product performance
The 10 KPIs every product leader needs to know 5
01
retained from your existing customers over a given period of
time. Put simply, it’s the difference between expansion and
churn. NRR is generally expected to be a value above 100
percent, with the assumption that you’re going to lose some
customers, but you’re also going to find ways to expand the
BUSINESS OUTCOMES
value of the customers that you keep.
NRR
Net revenue retention by month
Monthly recurring revenue of the last month
125%
50%
Why NRR matters
July Aug Sept Oct Nov Dec
NRR is a particularly valuable metric to track because it is
all-encompassing—it takes revenue, expansion, and churn
all into account. Product teams should always be looking to
increase net revenue retention since it represents key goals
of expanding customer value and minimizing churn. And
there’s no question executives, investors, and the rest of your
company will want to know how much revenue your product
is able to generate and retain.
The 10 KPIs every product leader needs to know 7
02
Adoption is an activation metric that measures how many
users interact with your product (product adoption) or specific
features within it (feature adoption). By understanding how (or
if) customers adopt and use your product, you’ll have a clear
sense of whether the product is delivering on its intended value.
PRODUCT USAGE
Product adoption can be expressed over time by the number of Measuring feature adoption is similar to that of product
monthly active users (MAU), weekly active users (WAU), or daily adoption, except you instead track a specific feature (or
active users (DAU). You can also measure product adoption features) within the product. One common way to track
as a rate relative to new user signups for a given period of feature adoption is by the percentage of features that
time. The way you choose to measure product adoption will generate 80 percent of click volume.
largely depend on what it means to be an active user of your
product. If your software is one customers should be accessing At Pendo, we recommend measuring feature adoption
every day, a DAU metric might make the most sense. Or, if through the lens of your product’s most important features,
your product is B2C, you might want to look at frequency of also known as its Core Events. By focusing feature adoption
conversions (e.g. purchases) or time spent in the app. around the core parts of your product, you’ll have a direct
view into whether customers are adopting the features
that are associated with positive outcomes. Once you’ve
established your Core Events, you can measure feature
adoption using this formula:
100
Total number of CEs
PRODUCT USAGE
be calculated three different ways:
Do users keep coming back to Monthly users who return weekly (WAU/MAU)
the product?
DAU/MAU
user base. For example, after examining the behaviors of your
highest-frequency users, you can then encourage similar
workflows (e.g. through in-app guides and walkthroughs) with
the rest of your users.
04
How to measure growth
PRODUCT USAGE
track the percentage growth of users or accounts within a
given time period. At Pendo, however, we use Quick Ratio
Growth
to measure growth because we think it best captures user
growth, retention, and churn in one easy number. In short,
Quick Ratio describes how efficiently your product is growing.
You can think of it as a way to measure the “heartbeat” of your
Is the product acquiring product, since it shows how many users are joining, staying,
and retaining new users and leaving in a given period.
faster than existing users
are abandoning it? Mathematically, the growth calculation for a given time period
looks like:
-250
Month 1 Month 2 Month 3 Month 4
Product
provide product leaders with a single metric to measure
how users or customers engage with the product. PES is
Engagement
a composite metric, taking the average of one’s adoption,
stickiness, and growth rates. The goal? To make it easy to
Score (PES)
quickly understand how your product is performing.
Once you’ve calculated values for adoption, stickiness, and Product Engagement Score
growth, you can calculate your PES by simply taking the
average of the three numbers and multiplying by 100: 82.4%
Adoption
06
accounts) still using your product after they initially install
or start using it. The two main types of retention are user
retention and customer retention: user retention looks at
the individual who logs in to use the product, and customer
PRODUCT USAGE retention looks at the account that pays for access to the
product. Another way to think about retention is as the
APP RETENTION
FEATURE RETENTION
07
deriving value from it. Many refer to the latter point as the
“aha” moment—when a user has a clear grasp of why they
need a specific piece of software.
PRODUCT USAGE
How long does it take for users around Core Events, which are the ten (or fewer) key features
in a product. In this case, time to value represents how long
to find value in the product? it takes new users to engage with a Core Event. Ideally, your
product analytics tool can tell you the average, minimum,
and maximum time it takes new visitors to first interact with a
Core Event. Bonus points if you’re able to compare this to the
previous time period to see trending changes.
The 10 KPIs every product leader needs to know 24
The UserTesting team used product usage data Feature C 14.8 days
0 4 8 12 16 20 24 28 32 36 4
4
to understand where users were dropping out of
their onboarding flow, and identified a key step
that 99% of users were failing to reach (drafting a Feature D 24.1 days
0 4 8 12 16 20 24 28 32 36 4
test). Since they knew engaging with this feature
correlated with long-term usage, the team created
an in-app onboarding experience that walked
users through how to create a test. This led to a
29% increase in users who make it to the “Draft
Test” stage and successfully activate the product.
Here’s how they did it.
The 10 KPIs every product leader needs to know 25
08
you’d recommend this brand to a friend or colleague?” and
customers answer on a 0-10 scale. Although some claim
NPS to be too simplified, it has remained one of the most
pervasive KPIs for customer satisfaction.
BUSINESS OUTCOMES
# Promoters # Detractors
NPS 100
# respondents # respondents
The 10 KPIs every product leader needs to know 26
50
Remember to measure NPS at the account and visitor level.
to numerical scores.
10
0.1
1 2 3 4 5 6 7 8 9 10
Score
The 10 KPIs every product leader needs to know 28
09
The idea of knowing which features your users are requesting
is pretty straightforward, but the tricky part is figuring out
which requests are the most important. In this case, “top”
can mean features that are requested most often, or requests
that are tied to customer accounts with the highest ARR, and
BUSINESS OUTCOMES
therefore have the highest business impact potential.
Top feature
How to measure top feature requests
requests
As a product leader, you’re probably familiar with feature
requests coming at you from all angles—one-off conversations
What do users want from the
with customers, your own sales team, user interviews, in-app
product? surveys, social media, support tickets. The list goes on.
The 10 KPIs every product leader needs to know 29
team’s work.
Report sharing
It’s also useful to analyze feature requests at the user and
account level, and segment by things like company size, ARR,
industry, NPS response, or subscription type (if you have a Public access reports
free and paid version of your product). The way you choose to
segment and analyze requests will depend on your business’ Clone items
goals. For example if you’re trying to go after a new persona,
you’ll want to look at requests from those users specifically
Export CSVs
to see if there are any patterns. To help prevent churn from
your biggest customers, it’s useful to analyze top requests by
account to see if there are improvements worth investing in.
The 10 KPIs every product leader needs to know 30
10
and the number of bugs. Taken together, these measures will
help your team stay focused on not only building a product
that delights users, but one that doesn’t let them down.
PRODUCT QUALITY