For any business, measuring the success of a product is essential. A successful product can boost revenue, increase customer loyalty, and enhance brand recognition. However, measuring product success can be challenging as there are several different approaches to take. To get a comprehensive understanding of their product's performance, companies need to track product success in several different ways, using several different metrics.

7 Must-track Product KPIs

Tracking critical metrics can help businesses identify areas for improvement and guide decision-making when it comes to product success. Below, we'll identify seven key performance indicators (KPIs) that companies can use to measure product success.

1. Sales Growth

Sales growth is one of the most crucial KPIs to measure product success. By measuring the percentage increase or decrease in sales over a specific period, businesses can understand how well their product is performing in the market. Analyzing sales growth regularly is vital to identifying trends and patterns and making necessary adjustments to improve the product's performance. It can help businesses determine whether their product is meeting the needs of customers and how well it is resonating with the market.

For instance, if a company's sales growth is decreasing, it might indicate a problem with the product's quality, marketing strategy, or customer experience. In contrast, consistent sales growth indicates that the product is performing well in the market and meeting the customer's needs.

2. Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is another crucial KPI for measuring product success. It measures the cost of acquiring a new customer, including all marketing and advertising expenses, and helps businesses determine whether their customer acquisition strategy is cost-effective. By keeping CAC low, businesses can increase profitability and maximize their return on investment.

High CAC indicates that the cost of acquiring a new customer is too high relative to the value that the customer brings to the business. Therefore, companies must measure CAC against other KPIs such as customer lifetime value (CLV) to ensure that they are spending their resources effectively.

3. Customer Retention Rate

Customer retention is an essential factor for the success of any product. A high customer retention rate means that the product is meeting the needs of the customer and providing value. Measuring customer retention rate helps businesses understand how well their product is retaining customers over time.

A high customer retention rate also indicates that customers are satisfied with the product, which can lead to positive reviews and recommendations. Customer retention rate can also help businesses identify areas for improvement in customer experience and product quality.

4. Net Promoter Score (NPS)

Net Promoter Score (NPS) is a customer loyalty metric that measures how likely customers are to recommend a product to others. This KPI provides valuable insights into customer satisfaction and loyalty and can help businesses identify areas for improvement. Customers who score high on NPS are likely to become brand advocates and spread positive word-of-mouth marketing.

NPS also helps businesses identify areas of improvement in customer experience, product quality, and customer service. A low NPS may indicate problems with the product, customer service, or overall customer experience, requiring businesses to make necessary improvements.

5. Return on Investment (ROI)

Return on Investment (ROI) is a critical KPI for measuring the financial success of a product. It measures the profit generated from a product relative to the resources invested in it. A high ROI indicates that the product is profitable and provides value to the business.

ROI helps businesses determine the effectiveness of their investments in product development, marketing, and advertising. A low ROI may indicate that the resources invested in the product are not generating enough profit, requiring businesses to reevaluate their investment strategy or make changes to the product to improve its profitability.

6. Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) is a metric that measures the total revenue a customer is expected to generate over their lifetime. By calculating CLV, businesses can determine the long-term value of their customers and make informed decisions about customer acquisition and retention strategies.

CLV helps businesses understand how much a customer is worth and how much they are willing to spend to acquire and retain that customer. By identifying high-value customers, businesses can focus on retaining them and providing them with personalized experiences that will help maximize their lifetime value.

7. Time to Market

Time to Market is a KPI that measures how quickly a product is developed and launched. A shorter Time to Market can provide a competitive advantage and increase profitability by allowing businesses to capitalize on market trends and meet customer needs more quickly.

A shorter Time to Market can also help businesses identify potential issues and make necessary improvements before the product's release. By tracking Time to Market, businesses can ensure that their products are launched at the right time, when they are most likely to succeed in the market.

Develop Your Product Management Potential

In conclusion, measuring product success is crucial for any business. By tracking the seven KPIs we've identified, businesses can get a comprehensive understanding of their product's performance and make informed decisions about future product development and marketing strategies. Additionally, for those interested in advancing their skills in Product Management, WorkForce Institute offers a Product Management Bootcamp that provides certification, improving your earning power and providing the skills necessary to advance your career.