One of the subtle differences between an internal and external product is in what key metrics are measured. This isn’t because of some technical difference in the product, but primarily because of the difference in who the customer is. Since an internal product’s customers are internal to the organization it serves (hence the term), typical KPIs used to measure external-facing cannot, in general, be applied directly. Also, because internal products are generally not sold (they are also referred to as “non-revenue generating products”), business KPIs are also applied a bit differently. So what does that difference look like for internal products?
Internal product KPIs depend largely on the team that it is supporting. Unlike profit-generating products, internal products can also be measured in metrics related to efficiency, cost-saving, compliance, security, and (internal) user behavior.
Understanding these subtle differences can help you succeed in your role as an internal product manager. Let’s take a deeper look at some of the key metric categories that are more common to internal product management. If you want to learn about the key differences between internal and external product management, check out this post.
Efficiency & Savings Metrics for Internal Products
An internal product manager often looks for ways to improve performance by reducing the friction from existing processes. Success can be defined by measuring the efficiency achieved and translating it to cost savings for the business.
Here are some examples of internal product metrics focused on efficiency & savings.
| Problem | Solution | Key Metric |
|---|---|---|
| Delivery drivers are getting lost in new areas. | In-app navigation system to aid drivers with optimized routes. | 10% reduction in miles driven leading to $20,000 saved in fuel cost per month. |
| Cashiers spend a lot of time scanning individual items, even when they are all the same products. | Added feature to scan the barcode and input the item count to quickly process the order. | Increase in the # of scans per minute (SPM), from 87 SPM to 120 SPM. |
| Luggage bags that get misplaced on international flights are hard to track and return to the customer. | Additional monitoring mechanism to detect misplaced luggage and prevent luggage loss. | Decrease in the number of misplaced luggage by 65% |
Metrics around efficiency can almost always be calculated in some dollar value impact. This is a great way to communicate to the executive leadership who may not be familiar with the importance of specific metrics used internally to the team.
Compliance Metrics for Internal Products
New rules and regulations can be introduced into your industry which often means changes to the product. Failing to meet compliance requirements can mean serious legal consequences or impact the ability to conduct business altogether. This is why compliance projects are often regarded as a high priority in most companies.
Here are some examples of internal product metrics focused on compliance.
| Problem | Solution | Key Metric |
|---|---|---|
| GDPR requires companies to be able to erase all user data from their database upon request. | Implementation of a new admin dashboard to manage user data. | Reduction in the amount of time needed to delete all user data from 20 minutes to 1 minute. |
| New labor law requires additional information to be collected from employees. | Development of a new information collection page on an existing HR platform. | Collection of required information from 97% of all employees by the end of the year. |
| Labor union mandates a limit on total monthly overtime. | Provide visual feedback to employees on their total hours worked. | Reduction of employees working overtime from 15% to 5% of less. |
When setting KPIs for compliance projects, it is also a good idea to communicate the risk if the company fails to meet the requirements by the deadline. Doing so will make it clear the need for prioritizing it and help you get support across the organization.
Stability & Security Metrics for Internal Products
Internal products are working behind the scenes to support the business but they are often deprioritized when it comes to paying down technical debt or improving stability. Growing digital threats also means enterprises must constantly be on the lookout for new vulnerabilities and patch them quickly to avoid compromising sensitive data.
Here are some examples of internal product metrics focused on stability and security.
| Problem | Solution | Key Metric |
|---|---|---|
| Log4J vulnerability discovered | Upgrade all instances of Log4J to the latest version + all dependencies | 100% coverage of security patches applied within 1 week. |
| Increase in time spent on fixing issues. | Dedicate 15% of development resources in paying down technical debt | Reduced time spent on “bandaid” solutions. |
| The current roll-back process is manual and takes a long time | Development of a new CI/CD pipeline to automate the roll-back process. | Reduce the time to roll back from 20 minutes to 1 minute |
When implemented correctly, it’s hard to feel the impact of efforts focused on stability and security, but when neglected, the pain that follows can seriously damage the reputation of your product and business. If you have a customer license agreement that requires a certain service uptime % and failure to meet it can also mean compensation or at worst, lawsuits.
User Behavior Metrics for Internal Products
Internal products are similar to external products in that they have an intended user in mind. So naturally, there is a lot of value in tracking user behavior. Some common metrics that are used to measure user behavior are:
- Acquisition rate
- User funnel
- Session duration
- Conversion
- Customer Acquisition Cost (CAC)
- Churn rate
- Daily/Monthly active user
- Number of sessions per users
- Net Promoter Score (NPS)
- Retention rate
Not surprisingly, these common metrics can also be applied to measure the success of an internal product. Imagine you’ve just released a new social platform for your internal users that allow employees to join and participate in clubs and activities together. It is easy to see that acquisition rate, active users, churn, etc. are all metrics that are valuable to monitor and track.
Conclusion
Knowing how to properly set key metrics for your internal products can make it easy to track navigate your product in the right direction. Without proper metrics in place, it is difficult to understand the values gained, and therefore it makes the next steps uncertain. While there are some metrics that are more common to internal products, there are no metrics that are exclusive to internal products (and vice versa).
Lastly, it is important to make sure that the metrics you’ve set are things that you can directly impact. Often metrics that seem important to the product, but ones that are dependent on external forces, are not good metrics to set. Remembering this can help you set clear and impactful metrics to guide your journey as an internal product manager.
