Top B2B KPIs You Must Know for Your Next Product Management Interview

To categorize and segregate the provided KPIs, I will organize them into four main categories: Customer KPIs, User Engagement KPIs, Product Quality KPIs, and Business Performance KPIs. Here's a breakdown of the KPIs under each category:

Customer KPIs

1. Customer Satisfaction (CSAT):

   • Formula: Customer satisfaction = the number of positive responses ÷ the number of total responses x 100

   • Purpose: Measures how happy customers are with your product/service.

2. Retention Rate:

   • Formula: Retention rate = Customers at the end of the specific period – new customers ÷ customers at the start of the specific period x 100

   • Purpose: Tracks the percentage of customers who continue to use the product over a period of time.

3. Churn Rate:

   • Formula: Churn rate: Customer churn rate = customers lost ÷ total customers

   • Purpose: Measures the percentage of customers that stop using the product.

4. Conversion Rate:

   • Formula: Conversion rate = the number of paying customers ÷ the number of trial users

     Purpose: Tracks the percentage of free trial or sample users that become paying customers.

5. Customer Lifetime Value (CLTV):

   • Formula: Customer lifetime value = average revenue per user x average customer lifetime

   • Purpose: Estimates the total revenue a company can expect from a customer during their lifetime.

6. Customer Acquisition Cost (CAC):

   • Formula: Customer acquisition cost = sales and marketing spendings for a period of time ÷ total number of customers acquired over a period of time

   • Purpose: Tracks the cost of acquiring a new customer.

User Engagement KPIs

These KPIs are designed to measure how effectively users are engaging with your product. Also, these KPIs help evaluate how much value users find in the product by tracking their actions and interactions.

1. Daily Active Users (DAU) & Monthly Active Users (MAU):

   • Formula: Daily active user/monthly active user = the number of daily/monthly active users ÷ total number of daily/ monthly active users

   • Daily active user: the number of active users per day

   • Monthly active user: the number of active users per month

   • Purpose: Measures how many users actively engage with the product on a daily or monthly basis.

2. Session Duration:

   • Formula: Session duration = (take the average of the answer): the total time users spend on your product ÷ the number of users

   • Purpose: Tracks the average time users spend on your website or app.

   • Note: You can also use Google Analytics to calculate this number.

3. Number of User Actions per Session:

   • Purpose: Tracks the number of actions users perform in a single session, helping to evaluate product engagement and feature adoption.

Product Quality KPIs

These metrics focus on measuring the quality of the product by evaluating testing, defects, and support. Tracking product quality KPIs will result in continuous improvement, reduction in testing and defects, and fewer customer issues.

1. Defects and Detection Effectiveness:

   Formula : DDE = the number of defects identified by team ÷ the sum of all defects (identified by team and end users) X 100

   Purpose: Measures how effective the team is at identifying defects during testing.

2. Support Ticket Escalations:

   • Formula: Support escalation rate = the number of tickets escalated from first tier ÷ the total number of support tickets.

   • Purpose: Tracks the percentage of support tickets that require escalation to higher levels of support.

Business Performance KPIs

These KPIs help track the financial health of your business. To put it simply, it deals mostly with money.

1. Monthly Recurring Revenue (MRR):

• Formula: Monthly recurring revenue = average revenue per user on a monthly basis x the total number of users in a given month

• Purpose: Measures the predictable monthly income generated by the product

2. Annual Recurring Revenue (ARR) in B2B :

   • Formula: average revenue per users/accounts × total number of users/accounts in a given year

   • Purpose: Measures the predictable monthly income generated by the product.

3. Percentage of Revenue from New Products/Features:

   • Formula: Percentage of revenue from new products = total revenue ÷ revenue from the new products/features

   • Purpose: Tracks the contribution of new products/features to the overall revenue.

4. Average Revenue Per User (ARPU):

   • Formula: Average revenue per user = total revenue generated during period ÷ the number of users during the same period

   • Purpose: Measures the average revenue generated from each user.

5. Net Promoter Score (NPS): is a KPI that measures the number of existing customers who are likely to promote your product to someone else. A simple way to do this is by asking customers to rank your product from 0–10. You can consider them a promoter if they rank your product from 7–10 and detractors if they rank it between 0–6.

   • Formula: Net promoter score = % of promoters – % of detractors

   • Purpose: Measures customer loyalty and the likelihood of them recommending your product.