KPI and bonuses for product managers

Product management is hard to instrument in the traditional ways; the temptation is to create a measurement program based on product revenue. While this sound good at first, the problem is that it encourages product managers to focus on existing products and put their energy into actively selling what we have. But what about next year's products?

Product management (and Development too) should be focused on next year's products; there are plenty of people dedicated to marketing, selling, and supporting the products we have today.

The focus of product management should be on activities this year that result in new products next year. And for that I recommend onsite visits. The typical product manager gets US$12,000/year in bonuses--usually based on this year's product performance. However, this doesn't really motivate since you cannot control it. But you can control (to some extent) your schedule. Therefore some portion of bonus and KPI should be on onsite visits.

If senior management wants to have new products, features, and markets next year, they should bonus product management on that goal. I recommend that we pay bonuses on onsite calls to customers and non-customers (the untapped market); that's where product manager's get the most valuable information for developing new ideas. Check out Barbara Nelson's article on the subject.

Regardless of whether your management sees this, you'll want to do it anyway: onsite visits are the source of product management credibility. Developers are desperate for statistically-valid market data yet all they get is product management and executive opinion as well as deal-of-the-day requests from sales people.

Steve Johnson

Steve Johnson

Steve Johnson was a founding instructor at Pragmatic Institute, a role he held for more than 15 years before he left to start Under10 Playbook. In his return to Pragmatic Institute, Steve supports the complete learning path for product teams, ensuring they are fully armed for success. 

Over the course of his career, Steve has helped thousands of companies and tens of thousands of product professionals implement product management processes. He has worked in the high-tech arena since 1981, rising through the ranks from product manager to chief marketing officer. Steve has experience in technical, sales and marketing management positions at companies that specialize in both hardware and software. In addition, he is an author, speaker and advisor on product strategy and product management.


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