Product Goals
“Product management is about saying no to good ideas, so you can say yes to the best ideas.”
– Ben Bickford
Welcome to Day 05 of the PM series – Product Management in 30 days!
Product management is a delicate balancing act. On the one hand, you’re responsible for shaping the product’s vision, and on the other, you must ensure that every action aligns with your goals and key performance indicators (KPIs). In this extensive post, we’ll explore the art of setting effective product goals and KPIs that drive your product and team towards success.
Learning Objectives
- Understand the Importance of Product Goals and KPIs: Recognize the crucial role that clear product goals and Key Performance Indicators (KPIs) play in effective product management, aligning teams, providing focus, and enabling measurability and accountability.
- Comprehend the Characteristics of Effective Product Goals: Understand the SMART criteria for setting effective product goals, including specificity, measurability, achievability, relevance, and time-bound attributes.
- Learn to Set Effective Product Goals: Explore the process of setting effective product goals, including examples that are specific, measurable, achievable, relevant, and time-bound.
- Familiarize Yourself with Appropriate KPI Categories: Identify common KPI categories, including product usage, revenue, user satisfaction, retention and churn, conversion rates, and market share.
- Understand the Relationship Between Goals and KPIs: Understand how KPIs serve as the compass guiding the journey toward goals, with examples illustrating the connection between specific goals and corresponding KPIs.
- Learn the Importance of Tracking and Adjusting Goals: Acknowledge the ongoing nature of setting product goals and KPIs, emphasizing the importance of regular tracking, team reviews, and the ability to adapt goals and strategies based on changing circumstances.
- Appreciate the Ongoing Process of Goal Setting and KPI Management: Recognize that setting product goals and KPIs is not a one-time task but an ongoing process that requires a deep understanding of the product, market, and team capabilities.
Introduction
Setting clear product goals and KPIs is the cornerstone of effective product management. Without a well-defined roadmap and measurable success criteria, your product journey becomes aimless. This post aims to demystify the process and equip you with the tools you need to set and track meaningful objectives.
The Importance of Setting Goals and KPIs 🎯
Before diving into the how, let’s explore why setting product goals and KPIs is crucial:
1️⃣ Alignment: Goals and KPIs align your product team with the overall business strategy. They ensure that everyone is moving in the same direction.
2️⃣ Focus: Clear goal help you prioritize tasks and resources. They keep the team focused on what truly matters.
3️⃣ Measurability: KPIs provide tangible metrics for tracking progress. They enable data-driven decision-making.
4️⃣ Accountability: Goals and KPIs hold teams accountable for results, fostering a sense of ownership.
5️⃣ Adaptability: As markets evolve, goal and KPIs can be adjusted to stay relevant and competitive.
Types of Product Goals
Generally, there are two kinds of product Goals. This should be easy to understand as product management revolves around these two things. Yes, you are thinking right! These are
- Customer Driven Goals
- Business Driven Goals
Customer Driven Goals are focussed on customer’s experience, satisfaction and eventually happiness. e.g. Increase Net promoter score (NPS) by 5 in points in next 6 months by revamping the login experience.
Business Driven Goals are focussed on bringing revenue, growth, cost saving etc. e.g. Increase revenue by 3% in next quarter by improving sales in north east region
Setting Effective Product Goals
Effective product goals are SMART:
- Specific: Clearly define the goal. Avoid vague objectives like “improve user experience.” Instead, use specifics like “reduce page load time by 20%.”
- Measurable: Goals should have quantifiable metrics. How will you measure success? Use metrics like revenue, user retention, or customer satisfaction scores.
- Achievable: Set goals that are challenging but realistic. Unattainable goals can lead to frustration and demotivation.
- Relevant: Ensure goals align with your product’s vision and the company’s objectives. They should make a meaningful impact.
- Time-Bound: Specify a timeframe for achieving the goal. This creates urgency and a sense of purpose.
Examples of Effective Product Goals
- Increase Monthly Recurring Revenue (MRR) by 15% within the next six months by expanding our product offering and upselling to existing customers.
- Improve customer satisfaction (CSAT) scores from 85% to 90% within the next quarter by enhancing our customer support processes and launching a user feedback program.
Selecting Appropriate KPIs 🚦
KPIs are the compass that guides your journey towards your goals. The choice of KPIs depends on your product and objectives, but here are some common KPI categories:
- Product Usage: Metrics related to user engagement, feature adoption, and usage patterns.
- Revenue: Metrics tracking sales, revenue growth, and profitability.
- User Satisfaction: KPIs gauging customer satisfaction and loyalty, such as Net Promoter Score (NPS) or Customer Satisfaction Score (CSAT).
- Retention and Churn: Metrics related to customer retention and churn rates.
- Conversion Rates: KPIs measuring the efficiency of your conversion funnels.
- Market Share: Metrics comparing your market share to competitors.
Examples of KPIs for Different Goals
Goal: Increase MRR by 15% in six months
- KPI 1: Monthly Recurring Revenue (MRR) growth rate
- KPI 2: Customer Lifetime Value (CLTV)
- KPI 3: Churn rate
Goal: Improve CSAT scores from 85% to 90% in one quarter
- KPI 1: CSAT scores
- KPI 2: Response time to customer inquiries
- KPI 3: Customer retention rate
😵💫 Confused between Product Goal, KPI and Metric?
You are not only the one! I was there too. The table will help you to understand the exact difference!
📆 Tracking Progress and Adjusting Goals
Once you’ve set your goals and KPIs, regular monitoring and adjustment are essential:
- Use analytics tools to track KPI performance.
- Conduct regular reviews with your team to assess progress.
- Be prepared to adapt goals and strategies based on market changes or new insights.
There are multiple online platform tool like aha.io, tability.io etc. that are helpful for product managers to keep track of their product goals. However, you as a product manager are ultimately responsible.
🔔 Conclusion
Setting product goals and KPIs isn’t a one-time task but an ongoing process. It requires a deep understanding of your product, your market, and your team’s capabilities. When done right, it empowers your product management journey, guiding you towards success.
Quiz Time
1. What is the role of product goals and KPIs in product management?
a. To create confusion
b. To ensure an aimless product journey
c. To align teams and provide measurable success criteria
d. To restrict team focus
2. What does SMART stand for in the context of effective product goals?
a. Strategic, Measurable, Achievable, Relevant, Time-Effective
b. Specific, Measurable, Achievable, Relevant, Time-Bound
c. Simple, Measurable, Achievable, Relevant, Timeless
d. Structured, Measurable, Achievable, Relevant, Time-Bound
3. Which of the following is an example of a SMART product goal?
a. “Improve user experience”
b. “Reduce page load time by 20% within the next six months”
c. “Enhance product features”
d. “Increase customer satisfaction”
4. What is the purpose of KPIs in the context of product management?
a. To create ambiguity
b. To serve as the compass guiding the journey toward goals
c. To complicate the decision-making process
d. To reduce accountability
5. Why is regular monitoring and adjustment of goals and KPIs essential?
a. To maintain a static product strategy
b. To adapt to changing market conditions and insights
c. To restrict team focus
d. To create confusion
✍️ Write your answers in the comment section. e.g 1-a, 2-b, 3-c etc.
If you want to learn more about product management, you can also find other posts. The Full series is available here
One of the recommended books to learn about product management is Good to Great by Jim Collins
💌 Do drop me a comment below if you found the content useful and/or want me to write on a specific topic. This will make my day! 🙂
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Disclaimer:
Please note that I don’t make any guarantees about the information supplied in this post. I share educational and informational resources that are intended to help you succeed in understanding product management. You nevertheless need to know that your ultimate success or failure will be the result of your own efforts, your particular situation, and innumerable other circumstances beyond my knowledge and control.
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