Data-driven decision-making is the cornerstone of modern product management. But with a flood of available metrics, knowing which KPIs truly matter can be overwhelming. Effective PMs focus on a carefully selected set of indicators aligned with their product’s goals, business model, and growth stage. These metrics provide insight into product health, user behavior, and financial viability—helping PMs prioritize initiatives and prove impact.

User engagement metrics form the foundation of product health assessment. For consumer apps or SaaS platforms, tracking Daily Active Users (DAU), Monthly Active Users (MAU), session duration, and feature usage reveals how often and how deeply customers interact with the product. High engagement often signals strong product-market fit. For example, if an e-commerce app sees rising session lengths and repeat visits, it’s a sign users find value beyond initial purchases.

Churn rate—the percentage of users who stop using the product over time—is vital for subscription-based or recurring revenue products. High churn may indicate onboarding issues, poor product fit, or competitive pressure. Pairing churn analysis with cohort analysis (tracking specific groups over time) helps pinpoint when and why users leave. For example, if a cohort of users drops off after the first week, the onboarding process may need improvement.

Financial metrics like Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC) are critical for understanding growth efficiency. CLV estimates total revenue from a user, while CAC measures the cost to acquire them. A sustainable business typically maintains a healthy ratio between CLV and CAC, ensuring marketing and sales investments pay off. Monitoring these metrics helps PMs justify budgets and prioritize features that improve retention and upsell.

Conversion rates through the funnel—from visitor to signup, free trial to paid user, or basic to premium feature adoption—highlight friction points that need optimization. A/B testing different onboarding flows or pricing pages can help improve conversions. For example, a SaaS company might test two signup processes to see which reduces drop-off and increases trial-to-paid conversion.

Consistently tracking and interpreting these KPIs, combined with qualitative insights, empowers PMs to make informed decisions that maximize impact, reduce churn, and drive revenue growth.