Revenue as a Lagging Indicator

Revenue is one of the most simple metrics to watch to see if your product is successful. After all, the product needs to drive income in some way. A Product Manager or team that is not aware of the way their product influences revenue is missing one of the easiest (if not the easiest) indicators of where to focus time, energy, and resources. It is relatively straight forward to dissect bookings data into the various buyer personas to understand who purchased what and begin identifying trends. Investing in the areas where the trends and the overall strategy intersect almost always wins.

However, revenue is not the complete metric to see if your product is successful and analyzing revenue only puts teams at a disadvantage. Simply looking at revenue keeps teams focusing inward by prioritizing what’s important to us (money we’re making). Instead, focus on metrics that include them. Metrics like customer count, call volumes caused by product issues, CSAT, or renewal rates are almost always just as available and are often better indicators of your future success than revenue.

They’re very closely linked, yes, but prioritizing metrics that represent the customer show what you value, which is seen and felt in every interaction they have with you. Measuring metrics that include your customer immediately put you on the same team when facing a problem. They want the issue they’re experiencing gone and your metrics now include wanting that, too.

Begin treating revenue as a lagging indicator. When you’ve connected with the customer and kept their needs as your top priority, you’ll attract a tribe of advocates based on years of solving problems on the same team. You’ll build an incredible customer base that will become an extension of every activity you do in the business. Metrics that start with the customer are the seed to true ‘community’ that many organizations are looking to build. While this may feel obvious and straight from a Product Management 101 book, it is so very rare to see in practice. Very few actually do this well. It takes time to build, but the result is an incredible joy to experience. It’s been a personal focus of mine and I invite you to try as well.