A Product Manager's Guide To Business Metrics
How to gain confidence in commercial conversations - learn the essential business metrics that help Product Managers build business acumen and connect your work to company strategy.
A few years ago, the conversation was dominated by product led growth and how to drive engagement, conversions and other common product metrics. In my experience coaching and working across the Product field, I’ve seen us get significantly better at measuring customer behaviour over the years. We can talk about retention, activation, and engagement a lot more confidently - but there is still a massive gap that remains.
Productboard’s 2024/2025 State of Product Management report highlighted that nearly 60% of product leaders believe business acumen will be the most critical skill for PMs over the next two years. I can confirm this is also what I see executive teams expecting from Product Managers these days - but we are yet to close the gap and grow our confidence in business metrics.
When I talk to PMs, many still don’t know how they should actually grow their commercial skills. They often tell me they feel financial metrics are “someone else’s responsibility” - the executive team, finance or commercial team. Or, they simply feel they aren’t “businessy enough” to be in those conversations.
It’s time to close that gap. To grow your influence, you don’t have to read every single line in a financial statement. But what your executive team expects is that Product Managers can connect the dots between a user’s action and the company’s business goals. That’s why I want to help demystify the most commonly used business metrics in this article.
What are Business Metrics
I like to think of Business Metrics as operational health metrics. While Product Metrics tell you if people are using your feature, business metrics describe whether you are actually running a healthy and efficient business.
The danger of not being clear on the key business metrics that truly matter is that efforts across the company become more and more siloed. Marketing is tracking leads, Sales is tracking demo bookings, Product is tracking engagement - but nobody is looking at how they link together towards the broader goals. As a Product Manager, mastering business metrics means you stop being a backlog manager and start being a trusted cross functional leader who understands how the whole engine works.
Disclaimer before we get into it: this is a list of key operational business metrics, not an exhaustive list of detailed financial metrics - but if that’s something you want to dig into later, let me know!
1. Company Financial Goals
Every financial year, your leadership team sets a target. In companies that operate for profit, this is typically a financial goal. In a nutshell, every company is aiming to either increase revenue, reduce costs, or usually a combination of both to drive profitability - but those financial goals may be shared in a few different common ways, for example:
Increase annual revenue by X%
Grow the company by X% (typically this also means growing the annual revenue)
Grow Monthly Recurring Revenue (MRR - often used in SaaS)
Grow Average Revenue Per Customer/User (ARPC/ARPU) - the average amount of revenue generated per customer (or account) over a specific period.
Reduce Operational Costs - for example to acquire new customers or support existing customers, in order to drive profitability.
Increase Profitability - this is either achieved by increasing revenue or reducing costs, or a combination of both; it’s important to be aware whether the company is trying to reduce direct costs of delivering the product (such as product development or hosting costs) which determine your Gross Profit, or whether they aim to reduce broader operating costs (such as sales, marketing or finance), which impact your overall Operating Profits.
The PM’s Job: You need to get crystal clear on where the increase in revenue, or cost reductions are expected to come from - this is essentially the business strategy that will lead to those business outcomes if successful.
Your company may be looking to grow their customer base in a new geographic region, or increase revenue by introducing a new product line. If the business goal is to grow revenue without necessarily increasing the number of customers, your focus as a PM could shift to expansion - introducing premium features or add ons to existing customers that help drive this number up.
If you’re working for a bank, revenue growth might come through growing the amount of loans in a particular sector. If you’re in SaaS, it might be expanding your conversion to paid subscribers, and so on and so forth.
These business goals should ideally already be shared with you in company wide sessions. If you’re working for a publicly listed company, you can also read up on your goals in the annual shareholder reports. If neither is available to you, or the goals are still not quite clear - reach out to your business leaders and ask. There are no stupid questions, and in my experience good business leaders will always appreciate when their teams show genuine interest in the business’ goals and performance.
If you want to dig deeper into how to unpack your company’s business goals, I’ve written an in depth article with a real life example here.
2. Commercial Efficiency Metrics
In the growth at all costs era, we were taught that a growing user base was the only metric that mattered. But as the market has shifted toward profitability, we’ve learned that it’s not just about how many users you have, but how much it cost to acquire them - and how quickly you can make that investment back. While some of those metrics may read as sales or marketing related metrics, our products often have significant impact on those areas as well.
Here are a few key business metrics that help you track the efficiency of acquiring and retaining your customers:
CAC (Customer Acquisition Cost): How much does the company spend on marketing and sales to acquire one paying customer? For Product Managers, better onboarding conversion can have significant impact on CAC by driving onboarding conversions.
LTV (Lifetime Value): How much total revenue do you expect to get from a customer over the entire time they use your product? Driving up product engagement typically increases Lifetime Value of customers.
LTV:CAC Ratio: This is the ultimate comparison metric. If it costs $100 to get a customer (CAC) but they only bring in $80 of value (LTV), you lose money on every new customer. While it’s not always a simple equation like this and those new customers may contribute to larger vision in the future, it’s a useful metric to measure efficiency of your customer acquisition.
Payback Period: This is the number of months it takes for a customer to pay back the cost it took to acquire them (CAC). If your payback period is 18 months, the company is in the minus on that customer for 18 months - if you as a Product Manager can improve onboarding to lower the CAC, you shorten this window and free up cash for the business faster.
Retention & Churn: While we often measure this in our product metrics already, it’s worth listing here as a key factor to increase Lifetime Value (LTV) of customers, which in turn will have positive impact on your LTV:CAC ratio - in other words, every dollar spent acquiring customers brings in more revenue per customer if we keep customers retained for longer.
3. Industry Specific Business Metrics
This is a bit more of a catch all list of “it depends” metrics. I found over the years that no matter how much I want to standardise the common list of metrics, every industry and company has its specific health metrics that are unique to its business model.
These are essentially operational metrics that ensure business continuity and success beyond just revenue - for example working in highly regulated industries, revenue goals can only be achieved if the company continues to offer their products in a compliant way. Or in other words - if s*** hits the fan, there is no more revenue growth no matter how good your new product feature was.
A few examples of business critical metrics I’ve come across are:
Platform Stability: For an API-based product, platform uptime and latency are critical business metrics because the business is the platform and its availability to power other products.
Fraud & Compliance: In FinTech and Insurance for example, fraud reduction rates are critical. A 10% increase in revenue means nothing if fraud losses increase by 20%.
AI Accuracy: With the new wave of AI first products, customer trust is lost very quickly if the product hallucinates or generates incorrect results.
Data Accuracy: The same is true for any data products that generate some sort of calculations, reports and insights - data accuracy is key for customer trust.
How to Start Connecting the Dots between Product and Business Metrics
If you want to grow your business acumen and become a more business savvy product leader, start by mapping your company’s key business metrics and how your product initiatives link to these business metrics. In my experience this doesn’t have to be a perfect calculation, but the pure exercise of thinking through how things connect with each other is immensely valuable.
I like to create a Metrics One Pager for this - with the business metrics at the top, and product metrics like product acquisition, activation, engagement and retention underneath. The key is to get started mapping them out, and that you can tell a story how those things are linked.
When you are clear on the business goals and you propose a new feature, instead of saying “This will improve engagement”, you can now say “By improving this specific user behaviour, we expect to increase the Lifetime Value (LTV) of this customer segment, which supports our 10% annual revenue growth goal.”
That is the language of the C-Suite, and what they mean when they ask Product Managers to be more business savvy.
Final Thoughts
Business metrics shouldn’t be someone else’s problem. They are the bridge that connects your daily product work to the growth of the company. Especially as building products becomes more democratised and companies are under more pressure to deliver financial returns, Product Managers who can speak the business language will become invaluable.
My two cents - ignore all the “Product Management is dead” chatter. Focus on delivering true value to both your customers, and your business, and you'll be a trusted leader and huge asset to any company. When you understand the operational health of the business, you earn a seat at the table. You move from being someone who ships features to someone who drives impact.
Which of these metrics does your team currently track? What have I missed? If you want to dive deeper into more financial metrics, leave a comment or reach out!
Want to master product & business metrics?
We provide online workshops and self learning resources for product teams at Fortune 500 companies and startups to help product leaders align their metrics and speak the business language.
📈 #1 Amazon New Release book The Insights Driven Product Manager -
- one of the top resources for PMs in ‘25 by Mind The Product!
📈 Our self paced video course Master Product &Business Metrics