Defining Business Metrics

In a small organization, the CEO of the company is often the default product manager. In medium-sized organizations, there are multiple product managers managing different aspects of the product. And in big companies, there are teams of product managers who are in charge of the different products and their features. Depending on the size of the product team we are part of, we might not have full ownership or visibility into all of the business metrics being measured and monitored across the organization, but it’s important to learn about business metrics so that we can understand the priorities that are being communicated to our team.

Business metrics include measuring the financial impact of the product as well as the efficiency and effectiveness of things such as marketing, sales, and operations that don’t have to do with product development. With metrics such as revenue, adoption, and churn, we can figure out how much our product is really worth. Growth metrics keep track of the marketing and sales efforts that bring in new customers. Operations metrics—such as support metrics, operations costs, and infrastructure costs—can also be used to figure out how much the costs are worth compared to the money they bring in.

Growth efforts help bring in more money for the organization, but the costs of running the business and the turnover of employees cancel out the benefits of growth. To build a profitable business, it is important to come up with a complete product strategy that will help bring in more money.

Important business metrics for API

The following illustration shows the most important business metrics for APIs, including revenue, growth, adoption, churn, and operations.