What’s the #1 KPI for Product Managers?
I asked 20 product leaders and got 20 answers.
User satisfaction. User delight. User experience. User flow. Risk reduction. Story points per sprint. Features released. “Define the product strategy.” (Is that a KPI?) “Being the glue.” (Can that be measured?)
I asked Google Gemini:
ChatGPT had a different opinion:
Product/Market Fit is ridiculous because most product managers are working on products that have already achieved PMF.
No wonder product managers are confused.
No wonder those outside of product management don’t get how we deliver value.
A Painful Lesson
In 2007, I was leading a digital product with terrible customer satisfaction. I pitched the exec committee:
“Better UX will boost adoption and usage. Our research says 70% of users would do more business with us if the experience improves.”
Proposal approved. Resources assigned. The team worked like crazy. We launched improvements. Satisfaction soared past 90%
Victory dance time? Nope.
The next year, my funding was slashed.
The CFO explained:
“Shardul, we invested to boost purchases and save money through digital. But your users are <2% of our base. We’re a $220M company. How can we continue to justify a $3M annual investment on such a small return?”
Ouch.
That’s when my eyes were opened:
Product Management’s primary KPI isn't velocity, features shipped, or even user satisfaction.
It’s one thing and one thing only
ROI.
Your Real Job
Your job as a Product Manager is to continuously deliver profitable customer value — things customers will profitably pay for, directly or indirectly.
When you do that, you drive the sustainable business growth of your product.
THAT is what Product Management is responsible for.
How do you measure monetizable value? Two ways:
Net Revenue Growth
Margin Velocity
Which leads to the #1 KPI for Product Management:
Return on Invested Capital (ROI)
As a product manager, you are a steward of the company’s R&D capital.
Your role is to ensure every R&D dollar (including your own salary) produces the maximum possible return.
Whether you're:
Launching a new product (how fast until it makes money?)
Supporting an existing one (should we keep spending or reduce costs?)
Growing a product (what will maximize revenue for the same spend?)
Expanding a product (does extra investment make sense?)
Every backlog grooming, roadmap debate, and delivery date negotiation boils down to this: maximizing ROI.
Why PMs Struggle To Tell This Story
Because PMs:
Lack the language. PMs talk in features, Jiras, velocity, user satisfaction — but what does that mean to the business?
Don’t know the link between their work and company results.
Were never taught this.
As a Product Manager, you need to understand the business of our product.
And as a product leader, you have an obligation to help connect the dots for your teams.
Let’s Break Down ROI in Product Terms
ROI = Net Revenue Growth + Margin Velocity
Net Revenue Growth = how fast we gain and keep profitable customers. The quicker we can earn revenue, the quicker we can make a return on the money we’ve invested in our product.
Margin Velocity = how quickly (velocity) and economically (margin) we can deliver product and capture that revenue.
Today, we’ll focus on Net Revenue Growth. I cover Margin Velocity in another article.
Net Revenue Growth
Net Revenue Growth breaks down like so:
Any well run company will know where it’s revenue is coming from.
How much is from new customers vs. existing ones.
How much customers spend with the company over time.
The specific financial and supporting metrics will depend on the specific business model. As a Product Manager, you need to understand what these are and how they connect to the company's financials.
Putting This Into Practice
Yes, revenue is a team sport. And, yes, some PMs are in roles that don’t directly deliver revenue.
Even in those situations, your “product” needs to deliver some form of measurable ROI. And as the product manager, you MUST know how to drive it.
Here’s something I want to sear into your mind:
Product Management has a critical influence on the financial performance of the product. You have the ability and the responsibility to drive both revenue growth and margin velocity.
PMs influence these two metrics in many ways — directly or indirectly. PMs typically find themselves in one of six roles:
Driving direct financial impact
Moving a supporting metric
Owning a specific feature
Leading a non-revenue “product”
Managing an “internal product”
Leading a re-platforming effort
Let’s go through them. Because knowing your role changes how you talk about your impact.
1. Driving Direct Financial Impact
You’re in this situation if your metrics are directly tied to revenue or a cost saving result.
Your prioritization, roadmap, and success stories should always connect to revenue or direct financial impact.
Some examples:
You work in a product management team that’s accountable for delivering a revenue number or owns the P&L for the product.
You’re responsible for reducing churn or improving retention for a monthly subscription SaaS product.
At an education payments company, one of my PMs was responsible for our tuition payments product. Share of the school's tuition payments and tuition dollars transacted were key financial metrics she was responsible for.
At a financial services company, one of my PMs launched an “auto pay” feature. The dollar payment volume was the primary financial metric. Conversions, enrollment, and usage were important supporting metrics.
2. Moving A Supporting Metric
EExample: You own the onboarding success rate. Do you know why that matters?
Bad onboarding causes churn. Churn shrinks customer lifetime value (LTV) — in actual revenue terms — which shrinks net ARR.
LTV is a critical unit economic metric. ARR measures net annual revenue growth.
See how the dots are connected? This is what you need to understand.
It’s not good enough to know the onboarding metric. You need to understand why that metric is important to the business.
Knowing this, would it change how you approach prioritizing product work?
Absolutely.
Would it change how you talk about your impact in performance reviews and job interviews?
100%.
Boring version:
“We did some user research and found 70% of users didn't like the onboarding experience. I wrote the requirements, worked with UX and engineering to design the new user experience, and blah, blah, blah. 80% of users liked the new experience.”
Impact version:
“40% of new customers were churning in 32 days, costing $500k in MRR. I led onboarding improvements, which dropped churn to 5%, and added $X in MRR.”
You tell me: Which one gets your attention?
3. Owning A Specific Feature
A PM I managed owned the scheduling module of our enterprise SaaS platform. Customers hated it.
Two big clients were threatening to leave. Sales said it was our #1 RFP loss reason.
Millions in potential lost revenue due to this one feature.
My PM drove the roadmap for the necessary improvements. Six months later customer satisfaction, task completion time, and task completion rate had dramatically improved.
So what? Who cares?
The account teams endorsed that the improvements went a long way toward winning back those two clients — $300K in annual contract value (ACV).
The sales team told us:
The scheduling feature was eliminated as the #1 product-related Deal Loss Reason.
4% improvement in sales pipeline velocity as a result of being more competitive in RFPs and sales conversations.
Overall improvement in sales qualified leads (SQLs).
Now, that's impact.
How could my PM talk about this?
Boring version:
“I managed our scheduling module. Customers were unhappy with the experience. Two customers were threatening to leave us and Sales was complaining too. I led the customer conversations to uncover the things they didn’t like and identified the requirements for the improvements. Then I worked with the design and engineering to blah, blah, blah. In the end, the customers were very happy with the new experience.”
Impact version:
“I was assigned to lead our scheduling module. Two logo clients were threatening to leave. Sales reported that it was the #1 Deal Loss Reason in RFPs representing $X million in pipeline value.
I developed and led the strategy to vastly improve the scheduling experience. We saved $300k in ARR, Sales endorsed that we became more competitive in RFPs, and we saw a 4% improvement in pipeline velocity and SQLs. We did this by improving C-Sat, task completion time, and task completion rate by X, Y, and Z.”
Based on which story would you hire her?
4. Leading A Non-Revenue “Product”
Remember: it may not deliver revenue, but the the company has decided to invest in this “product” because they believe it will indirectly protect or grow revenue or margins.
Example:
Switching costs for auto insurance customers are low and claim processing is expensive. So keeping customer satisfaction high and claim costs low is a big win.
You’re the PM of the mobile app. While sub-metrics like claim filing completion rate, response rate, and overall satisfaction will be important to track, real ROI could be measured in terms of:
Cost savings per digital claim vs. phone (human) claim.
Since you know what customers are paying for their insurance, it’s feasible to put an economic value on a customer, and then extrapolate to calculate the economic impact of customers leaving because of a poor mobile experience.
How can you talk about this in performance reviews and job interviews?
Boring version:
“I improved the user satisfaction of the claims filing experience on our mobile app. I did the user research, wrote the requirements, worked with engineering, provided updates, blah, blah, blah...”
Impact version:
“Our mobile app handled 60% of claims filed, but we wanted to see if we could do better. Every claim filed digitally vs. the phone saved the company $X. We set a goal to increase this to 75% by year's end. Plus, we knew every 1-point increase in the customer's claim experience resulted in $Y in incremental value in terms of customer retention.
By year’s end, we got to 70% and delivered $Z in cost savings. We estimated our overall economic impact in terms of additional customer stickiness was $N.”
Which story sounds more compelling?
5. Managing An “Internal Product”
Some PMs are hired to lead solutions for the company’s own users (for reasons I’ve never understood).
Like #4, the company has invested in this “internal product” for some measurable outcome. Know what that is, and you’ll know how to tell the impact story.
Example:
You’re the PM responsible for the system used by your company’s field sales reps to input customer orders.
You discover the following:
Difficulty in data entry, slowing order flow.
Lack of follow-up reminders, slowing the sales cycle.
Difficulty finding customer info, slowing opportunity follow-up.
Difficulty for supervisors to get a bird’s eye view of how each rep is performing, hampering optimal territory assignment.
If you know the average value of a customer order is $X, then:
Adding follow-up reminders could help reduce sales cycles by Y days, resulting in Y * $X acceleration in the sales pipeline.
Putting the best reps on the most ripe territories could improve win rate by Z%.
That’s Z% * $X in increased value for the bird’s eye view feature.
6. Leading A Re-Platforming Effort
An insurance company I consulted for wanted to modernize a key system used by their agents. The main issues were:
Frequent system outages and performance concerns.
High user dissatisfaction.
Disparate sub-systems making it difficult to deliver new capabilities.
High cost of ownership of current environment.
Compare these two PM narratives simply in terms of describing the problem space:
Boring, tech nerdy way:
"There were frequent outages and performance problems. Poor documentation and the different sub-systems made it hard to develop new features. The web servicing environment was well beyond its useful lifespan and had a high cost of ownership. And users were really unhappy.
So the goal was to build a new, more resilient infrastructure with a new tech stack that enabled new features to be delivered more efficiently and effectively, and deliver a more integrated and modern user experience."
Exciting, results nerdy way:
"The system had suffered 10 outages in the previous 6 months — $10M in lost business and productivity. Because it ran on multiple sub-systems, even changing a button would take 6 weeks to complete — $1M just to change a button! User satisfaction was at 10%. IT was spending $60M a year just to keep the thing afloat.
Re-platforming was going to be a 12-month $30M investment, but with an anticipated $120M in savings over the next 3 years, it was worth it."
Which nerd would you hire?
The Big Takeaway
The #1 KPI for Product Management is Return on Invested Capital (ROI).
Every metric you track — velocity, releases, C-Sat — should ladder up to ROI.
If it doesn’t, ask “So what?” until you find the link.
Your Action Steps
Identify which of the 6 PM roles you’re in.
Learn the financial and economic metrics for your product.
Connect supporting metrics to them.
Map your day-to-day work to those real business outcomes.
You don’t need an MBA to connect your work to ROI.
But you do need curiosity, business context, and the courage to tell your story in those terms.
Because the PM who can clearly link their work to ROI is the PM who gets noticed, listened to, funded, and promoted.
That’s it for today.
Have a joyful week, and, if you can, make it joyful for someone else too.
cheers,
shardul
Whenever you’re ready, there are 4 ways I can help you:
Inner Circle Membership: In addition to weekly battle-tested real-world PM tactics and strategies to take control of your career, get unlimited community events access, a strategic resume review, and exclusive PM Exchange roundtables. We’re not just building a community, we’re building a movement. Upgrade here.
One Week Product Roadmap: Learn to design a clear, outcome-driven roadmap in just 7 days — fast, practical, and stakeholder-ready. Read the reviews here.
Corporate Training & Strategy Workshops: Transform scattered priorities into a clear, actionable strategy through a customized workshop or level up your product team to think strategically, craft impactful roadmaps, and deliver results that matter. Book a call.
Improv Based Team Building Workshop: Boost creativity, trust, and collaboration through improv. Your team will problem-solve faster and work better together. Book a call.
Shardul Mehta
I ❤️ product managers.