The 23 Product Management KPIs You Must Track in 2023

As a product manager, you can‘t afford to fly blind. To build successful products in today‘s hyper-competitive landscape, you need real-time visibility into how your products are performing and where the opportunities lie to improve.

That‘s where key performance indicators (KPIs) come in. By definition, KPIs are measurable values that show how effectively a company is achieving its business objectives. For product managers, KPIs provide a quantitative lens into a product‘s health, growth, and trajectory.

The question is, which product management KPIs should you be tracking? With dozens of metrics to choose from, it‘s easy to get lost in a sea of data without a clear focus.

Based on our research and interviews with product leaders, we‘ve identified the 23 most critical product management KPIs to monitor in 2023. These metrics span the customer lifecycle from acquisition to retention to expansion and cover important dimensions like engagement, satisfaction, and revenue.

Whether you‘re managing a new product or an established one, these are the KPIs you need on your radar this year. Let‘s dive in.

Customer KPIs

1. Monthly Active Users (MAU)

MAU measures the number of unique users who engage with your product in a given month. It‘s a key indicator of your product‘s reach, growth, and "stickiness."

Tracking MAU over time shows whether your product is gaining or losing traction with users. Steady MAU growth signals strong product-market fit and ongoing value delivery. Plateauing or declining MAU points to problems with retention, engagement, or the product experience.

According to Mixpanel‘s 2022 Product Benchmarks Report, the median B2B SaaS product has 2,632 MAUs, while the top 10% have over 338,050. Of course, this varies widely based on the market, audience, and business model.

To grow MAU, focus on acquiring new users through effective marketing and referrals, and retaining existing users with an engaging product experience.

2. Net Promoter Score (NPS)

NPS measures customer loyalty and satisfaction by asking users, "How likely are you to recommend this product to a friend or colleague?" Respondents choose a rating from 0 (not at all likely) to 10 (extremely likely).

Ratings of 9-10 are considered "promoters," 7-8 are "passives," and 0-6 are "detractors." The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters.

Rating	Category
9-10	Promoters
7-8	Passives
0-6	Detractors

According to Bain & Company, companies with high NPS scores (above 50) tend to outgrow their competitors by 2x. In a 2022 Retently study, the average NPS for SaaS companies was 41.

To improve your NPS, proactively reach out to detractors to understand and address their issues. At the same time, learn what promoters love about your product and double down on those strengths.

3. Customer Retention Rate

Retention rate measures the percentage of customers who continue using your product over a given time period (monthly, quarterly, annually). It‘s the inverse of churn rate.

To calculate retention rate, divide the number of active customers at the end of the period by the number of customers at the start of the period. For example, if you had 1,000 customers at the start of the quarter and 900 at the end, your retention rate would be 90%.

Retention Rate = (Customers at End of Period / Customers at Start of Period) X 100

According to Mixpanel, the average 8-week retention rate for SaaS products is about 35%. The top 10% of products achieve over 61% retention.

To boost retention, invest in an exceptional onboarding experience, gather and act on customer feedback, and proactively address at-risk accounts. Even a small improvement in retention rate can have an outsized impact on customer lifetime value.

4. Customer Health Score

Customer health scoring is a method to measure and predict the likelihood that a customer will churn or renew based on their product usage, feedback, and/or firmographic data.

Health scores are usually calculated on a scale of 0-100, with a higher score indicating a "healthier," more satisfied, and more loyal customer. Many factors go into the score, such as:

• Login frequency
• Depth of feature usage
• Sentiment from NPS or CSAT surveys
• Customer support interactions
• Contract value and renewal date

By tracking customer health scores, PMs and customer success teams can proactively identify and intervene with at-risk customers before they churn. It allows you to provide a high-touch, white-glove experience to your best customers while automating touchpoints with healthy accounts.

According to Gainsight, companies that use health scoring have a 20% lower churn rate on average compared to their peers.

Financial KPIs

5. Monthly Recurring Revenue (MRR)

MRR is the lifeblood metric for any SaaS business. It measures the total amount of predictable revenue you expect to receive on a monthly basis from active subscriptions.

To calculate MRR, multiply the number of active customers by the average revenue per customer. For example, if you have 100 customers paying $50/month on average, your MRR would be $5,000.

MRR = # of Customers X Avg. Revenue per Customer

According to KeyBanc‘s 2022 SaaS Survey, the average growth rate in MRR for private SaaS companies was 44% year-over-year. Top-performing companies (90th percentile) achieved over 115% MRR growth.

To grow MRR, focus on acquiring new customers, retaining existing ones, and expanding revenue through up-sells and cross-sells. Even a small increase in MRR can compound significantly over time.

6. Expansion MRR

Expansion MRR measures the additional recurring revenue generated from your existing customers through up-sells, cross-sells, and add-ons. It‘s a key driver of growth efficiency and profitability.

To calculate expansion MRR, sum up the MRR from account expansions (upgrades to higher tier plans, additional seats, etc.) in a given month. Then divide by the total number of customers who were up for renewal that month.

Expansion MRR = Total MRR from Expansions / # of Customers Up for Renewal

According to SaaS Capital‘s 2022 survey, the median expansion MRR rate for SaaS companies was 17%. Companies in the top quartile achieved over 30% expansion MRR.

To boost expansion MRR, proactively identify accounts with high product usage and satisfaction. Reach out to them with relevant, personalized offers. Also look for opportunities to increase pricing on your most valuable features.

7. Customer Acquisition Cost (CAC) Payback Period

The CAC payback period measures how long it takes for a customer to generate enough revenue to cover the cost of acquiring them. It‘s a key measure of sales and marketing efficiency and cash flow health.

To calculate CAC payback period, divide the CAC by the average monthly recurring revenue per customer (ARPU). The resulting number is the number of months to recoup the acquisition cost.

CAC Payback Period = CAC / ARPU

For example, if your CAC is $1,000 and your ARPU is $100, your payback period would be 10 months.

According to KeyBanc, the median CAC payback period for SaaS companies in 2022 was 19 months. The top decile achieved payback in under 7 months.

In general, shorter CAC payback periods are better, as they allow you to recoup acquisition costs and reinvest in growth faster. If your payback period is over 12 months, look for ways to reduce CAC and/or increase ARPU.

Usage and Engagement KPIs

8. Daily Active Users (DAU)

DAU measures the number of unique users who engage with your product on a daily basis. It‘s a key indicator of "stickiness" and habitual product usage, especially for consumer apps.

According to Mixpanel, the average DAU for a consumer product is 13% of its total user base. So if you have 1 million registered users, roughly 130,000 of them use your app every day.

To grow DAU, focus on building features and experiences that users want to engage with regularly. Use push notifications, email, and in-app messaging to bring users back into the product. Also look for opportunities to increase the frequency and variety of use cases.

9. Product Adoption Rate

Product adoption rate measures the percentage of users who are actively using your product‘s key features and deriving value from them. It‘s a leading indicator of retention and growth potential.

To calculate product adoption rate, divide the number of active users of a feature by the total number of users who have access to it. For example, if 100 out of your 1,000 users are using a new feature, the adoption rate would be 10%.

According to a 2022 Pendo survey, the average product adoption rate for a new feature in B2B software is about 20%. The top quartile of companies achieve over 40% adoption.

To increase product adoption, make sure you are building features that address real user needs and pain points. Invest in in-app guidance and onboarding flows to help users discover and derive value from key features.

10. User Retention/Churn by Cohort

Cohort retention analysis measures the percentage of users who continue engaging with your product over time, broken down by the month or quarter they signed up (i.e. their cohort).

This analysis is usually visualized as a retention curve or heatmap showing the percentage of users in each cohort who are still active in subsequent time periods. It‘s a powerful way to identify how well you are retaining users and where drop-off is occurring.

According to Mixpanel, the average Week 1 retention rate for SaaS products is about 21%. By Week 10, it drops to around 6%. Top-performing products retain over 50% of users after Week 1 and 35% after Week 10.

To improve cohort retention, dig into the behaviors and attributes of your most retained users. Double down on acquiring similar users and building features they care about. Also look for common drop-off points in the user journey and smooth out those friction points.

Process KPIs

11. Release Frequency

Release frequency measures how often your team deploys new code to production. It‘s an indicator of your team‘s velocity and agility in delivering product improvements.

According to Google‘s 2021 State of DevOps Report, elite performers deploy code multiple times per day, with lead times of less than one day. High performers deploy between once per day and once per week.

Of course, release frequency must be balanced with other factors like quality and reliability. The goal is not to ship for the sake of shipping, but to deliver value to customers as quickly and safely as possible.

To increase release frequency, invest in continuous integration and deployment (CI/CD) pipelines, automated testing, and feature flags. Break work down into small, shippable chunks. Foster a culture of experimentation and rapid iteration.

12. Cycle Time

Cycle time measures how long it takes for a unit of work to move from start to finish in your product development process. It‘s a key predictor of your team‘s throughput and efficiency.

To calculate cycle time, track the number of days from when a work item (story, task, bug, etc.) is started to when it is completed. Then take the average across all completed items in a given period.

According to LinearB‘s 2022 benchmark report, the average cycle time for a GitHub pull request at a high-performing organization is 2.4 days. The top 25% achieve cycle times under 1.2 days.

To reduce cycle time, look for bottlenecks and waste in your development process. Break work down into small, achievable chunks. Automate manual steps like testing and deployment. Foster a culture of team ownership and collaboration.

Putting KPIs to Work

Tracking the right product management KPIs is critical, but it‘s only half the battle. To get value from your KPIs, you need to analyze the data, glean insights, and take action. Here‘s a quick playbook:

1. Focus on a small set of 3-5 KPIs that are most relevant to your product, stage, and goals. Don‘t try to track everything at once.

2. Establish a regular cadence (e.g. weekly) to review and discuss KPIs with your team. Look for trends, anomalies, and areas for improvement.

3. Set clear, achievable targets for each KPI. Align them with your product strategy and roadmap.

4. Based on the data, generate hypotheses and experiments to move the metrics in the right direction. Prioritize the highest-impact initiatives.

5. Rally the team around the KPIs and the actions needed to influence them. Make metrics highly visible and celebrate wins along the way.

6. Rinse and repeat. Regularly re-evaluate your KPIs to make sure they are still relevant and useful. Don‘t be afraid to change them as your product evolves.

Tools like Mixpanel, Pendo, Amplitude, and Looker make it easy to track and visualize product KPIs in real-time. But don‘t get lost in the tools and data. Remember, KPIs are a means to an end – building amazing products that customers love.

Wrapping Up

In today‘s data-driven world, product managers can‘t afford to make decisions based on gut feel alone. You need quantitative evidence of what‘s working, what‘s not, and where the biggest opportunities lie.

By tracking these 23 essential product management KPIs, you‘ll have your finger on the pulse of your product‘s health and trajectory. Use them to generate insights, rally your team, and make the right product bets at the right time.

Of course, don‘t forget the human side of product management. KPIs are a powerful tool, but they are no substitute for empathy, vision, and bold, customer-centric thinking. The best product leaders use metrics to augment their judgment, not replace it.

Now it‘s your turn. Pick a few KPIs to start tracking and see where the data takes you. You might just uncover the next big breakthrough for your product and business.