KPIs are the navigational instruments guiding your product's journey. They are not just numbers but a reflection of your strategy and goals.
Metrics and KPIs are the backbone of data-driven product management. They quantify your hypotheses, track progress, and guide decisions. Without them, you are steering blind.
The trap is confusing metrics with KPIs. All KPIs are metrics, but not all metrics are KPIs. Your actual job is to pick the right ones — the few numbers that truly measure whether your product is delivering value and moving the needle on your business goals.
Metrics and KPIs are contextual — there is no one-size-fits-all
Metrics are data points that reflect the state of any business process. KPIs are a subset of metrics that target critical areas linked directly to strategic objectives.
For example, a metric might be website traffic. A KPI would be conversion rate from that traffic to paying customers. The difference is subtle but crucial.
"Context allows business metrics to make an impact. This is where the line between KPIs and performance metrics becomes blurry." — Talvinder Singh
The first question to ask yourself: What business outcome are you trying to influence? That outcome defines your KPIs.
Metrics can be many and varied — page views, app installs, bounce rates, number of logins. KPIs are the handful of measures that tell you if you are winning or losing at your goal.
The 3A’s of metrics: Actionable, Accessible, Auditable
What makes a metric or KPI good? Eric Ries coined the 3A’s:
- Actionable: It must guide you to a decision or next step.
- Accessible: The team must understand it without ambiguity.
- Auditable: You must trust the data source and collection method.
A vanity metric — like total app downloads without engagement — fails these. It looks good but doesn’t tell you what to do or if you are creating value.
Characteristics of effective KPIs
An effective KPI:
- Aligns with strategic objectives. It measures what matters most to your company’s success.
- Is measurable and quantifiable. You need clear data to track progress.
- Provides a clear indication of performance. You should know if you are on track or not at a glance.
- Is actionable. It prompts decisions and changes.
- Is time-bound and comparable. You can measure it over time or against benchmarks.
Take Swiggy, for example. Their key KPI is delivery time. It directly impacts customer satisfaction and retention. Tracking delivery time daily and across cities lets them prioritize operational fixes where the delay is worst.
Avoid the mistake of tracking everything. You will drown in data and lose focus.
Common pitfalls in selecting KPIs
- Chasing vanity metrics. Metrics that look impressive but don’t drive value.
- Tracking too many KPIs. Dilutes focus and confuses priorities.
- Ignoring business context. KPIs must reflect the company’s stage, market, and product.
- Using KPIs without clear ownership. Every KPI should have a team responsible for it.
- Failing to revisit KPIs. What matters changes as your business evolves.
Indian market context shapes KPI choice
India’s diversity and digital adoption patterns mean KPIs must reflect local realities.
For instance, a fintech app might use number of UPI transactions as a KPI — a uniquely Indian payment rail that drives product value.
Flipkart’s conversion optimization focused on app performance in tier-2/3 cities, where low-end smartphones and regional languages dominate. Their data showed these users had lower conversion rates, so they invested in regional language support and app speed.
Examples across business functions
Marketing metrics and KPIs
Marketing teams track:
- Traffic sources: Referral, search, direct
- Campaign incremental sales: Adwords, email, social ads
- Sentiment analysis: Negative, neutral, positive mentions
- End action rate: Purchase, lead, bounce, social shares
A marketing KPI might be incremental sales by campaign rather than just website visits. It ties marketing efforts directly to revenue.
| Metric Examples | KPI Examples |
|---|---|
| Website visits | Conversion rate |
| Social media followers | Lead conversion rate |
| Bounce rate | Cost per acquisition (CPA) |
Sales metrics and KPIs
Sales teams monitor:
- Sales growth year-to-date
- Average purchase value
- Units per transaction
- Top products by revenue
KPIs here connect sales activity to revenue targets such as monthly sales growth % or customer retention rate.
| Metric Examples | KPI Examples |
|---|---|
| Number of new leads | Sales conversion rate |
| Calls made | Deal closing rate |
| Average deal size | Revenue growth YoY |
Financial metrics and KPIs
Finance tracks profitability, liquidity, and solvency:
- Quick ratio, current ratio
- Debt-to-equity ratio
- Cash flow trends
KPIs include gross margin %, operating cash flow, and burn rate for startups.
| Metric Examples | KPI Examples |
|---|---|
| Total revenue | Profit margin |
| Expenses | EBITDA |
| Debt amount | Debt-to-equity ratio |
SaaS-specific metrics and KPIs
SaaS businesses focus on subscription health:
- Monthly Recurring Revenue (MRR)
- Churn rate
- Customer Lifetime Value (CLTV)
- Expansion revenue
KPIs are MRR retention rate and net revenue retention, which measure recurring revenue stability and growth.
| Metric Examples | KPI Examples |
|---|---|
| Number of active users | MRR retention rate |
| Customer cancellations | Customer lifetime value |
| Trial signups | Churn rate |
The momentum formula: Metrics × Velocity
Talvinder explains:
"Your goal is to improve retention by 10% in one month. Retention is the metric. Velocity is 10% per month or 2.5% per week. That’s momentum. Metrics quantify your efforts. Velocity measures speed towards the goal."
This helps teams set realistic targets and track progress quantitatively.
Leading vs lagging indicators
- Leading indicators predict future performance. Example: trial signups forecasting revenue growth.
- Lagging indicators confirm past performance. Example: quarterly revenue numbers.
KPIs can be either, but leading indicators enable proactive decisions.
The PM’s actual job is to pick the right KPIs and use them to make decisions
If you cannot answer: What is the one number that tells me if this product or feature is working? you are not ready to ship.
If you pick the wrong KPIs, you optimize for the wrong things. If you pick too many, you dilute focus.
A day in the life: How a PM uses KPIs
Weekly product review at a Series B fintech startup in Bangalore
You (PM): “Our customer retention dropped 3% last week. Let’s look at the segments driving this.”
Data Analyst: “Retention dropped mostly among tier-3 city users on Android low-end devices.”
Engineering Lead: “We saw a spike in app crashes on those devices last week.”
You (PM): “This is actionable. Let’s prioritize the crash fix and monitor retention next week.”
Marketing Lead: “Meanwhile, we’ll run a push campaign targeting those users to re-engage them.”
You (PM): “Good. Our KPI is retention, but we use multiple metrics to diagnose and act.”
Retention is the North Star, but fixing it requires drilling into multiple metrics.
Field exercise: Identify your product’s KPIs
- List all the metrics you currently track or have access to.
- For each metric, ask: Does this directly indicate if the product is delivering value or meeting strategic goals?
- Select the top 3 KPIs that best reflect your product’s success.
- For each KPI, define:
- Why it matters
- How it is measured
- Who owns it
- Share your list with a peer or mentor and get feedback.
Judgment exercise: Prioritizing metrics at an Indian SaaS startup
You are a PM at a Series A SaaS startup in Hyderabad focused on SMB accounting software. The CEO asks you to report on the company’s health. You have access to dozens of metrics: user signups, daily active users, monthly recurring revenue, trial-to-paid conversion, churn rate, customer support tickets, and average session duration.
The call: Which three KPIs do you select to present to the CEO, and why?
Your reasoning:
You are a PM at a Series A SaaS startup in Hyderabad focused on SMB accounting software. The CEO asks you to report on the company’s health. You have access to dozens of metrics: user signups, daily active users, monthly recurring revenue, trial-to-paid conversion, churn rate, customer support tickets, and average session duration.
Your task: Which three KPIs do you select to present to the CEO, and why?
your reasoning:
From the field: Talvinder on Indian SaaS KPIs
The line between metrics and KPIs blurs but your focus should not
You will hear arguments that KPIs are just metrics with labels, or that everything is a KPI. Ignore that noise.
The actual job is to find the handful of numbers that matter most — that tell you if your product is succeeding or failing — and rally the team around improving them.
If you cannot answer "What is our North Star KPI and why?" you are not ready to lead product decisions.
Where to go next
- If you want to learn how to translate KPIs into product vision: Product Vision and Strategy
- If you want to develop deep user insights to inform metrics: User Research Methods
- If you want to build dashboards and reports: Data Analytics for PMs
- If you want to understand ethical use of data: Ethical PM