Assessing the ROI of Your Product Strategy

Assessing the ROI of your product strategy can be challenging, but as a product leaders we need to do this assessment to ensure our teams are focused on making an impact to our customers and our business. 

Most product leaders I talk with understand the importance of this, but it is also not uncommon for those same product leaders to skip over it. Not because they don’t think it is important, but because we all get caught up in our day to day and it starts to fall to the side.  This makes you run the risk of looking back at your strategy a year after it was rolled out and realizing you launched a bunch of stuff but nothing made a real impact. This is not the place any of us want to be in.

So, let’s dig on how to do this as an ongoing assessment and how to overcome some of the challenges that arise with it.

Challenges to Assessing ROI

First, let’s start with the challenges because I find this can get in the way and prevent product leaders from moving forward on the assessment. Here are some common challenges I have seen as both a product leader and as a product coach/advisor working with clients:

• Indirect revenue impact: Not everything product teams do ties directly to revenue. Some investments improve retention, engagement, or efficiency, but the financial impact takes time to show up.
• Hypothesis-based investments: Many product bets start as educated guesses. We believe they’ll drive impact, but we need time and data to validate the assumption.
• Long-term results: Some strategic initiatives don’t show results in a quarter or even a year. B2B sales cycles, adoption curves, and foundational investments often take longer to pay off.
• Cross-functional dependencies: Success isn’t just on prod-dev. Marketing, sales, and customer success all play a role, making it harder to attribute impact to a single initiative.

As I share some of the ways to assess the ROI, I will also focus on addressing these challenges. The key is - do not let these challenges stop you from driving forward.  They should not be stopping points, but instead considerations for you as you assess the ROI.

How to Calculate ROI and defining "good" 

Now, let’s go into the calculation for assessing ROI. 

(note: the revenue driving calculation is for companies where revenue growth is the return they are looking to achieve. If profitability is the return you are looking to achieve, the numerator would be (revenue growth - investment costs))

A few key things as you evaluate the calculation:

• Use confidence intervals.  If you’re unsure how directly an initiative impacts revenue, multiply revenue gain by a confidence % to avoid overstating results. Be transparent with your team and stakeholders about when and how you use confidence intervals. 
• Avoid double counting. If a cross-functional team (e.g., product, marketing, sales) is working together toward a shared goal, align upfront on whether you are calculating a combined impact. If so, ensure that costs, gains, and savings are assessed together rather than each team reporting their own separate ROI. If teams are measuring impact separately, be transparent about how you're assessing ROI to prevent inflated results.
• Set clear expectations on what “good” looks like. This will vary by company but here are some parameters based on what I’ve typically seen:
  • In high-growth SaaS, ROI benchmarks often range from 3:1 to 5:1, with a minimum of 2:1 for established companies.
  • Early-stage companies may accept a lower ROI while validating growth.
  • Define the appropriate timeline. Some initiatives are quick wins and you can attribute value immediately. Other strategic initiatives may take longer to pay off;  B2B results might take 18-24 months, while B2C can show impact in 6-12 months. 

The key is to define what’s “good” for your company upfront so you know how to interpret the results later. You don’t want to be in a situation where you are looking at the numbers and having a debate after the fact.

Look Beyond the Calculation

The ROI equation gives us a starting point, but it’s not the full picture. Sometimes, when results aren’t what we expected, the problem isn’t the work itself but it’s how the work is being executed.

Some key areas to assess beyond just the numbers:

• Process inefficiencies. Is your process slowing you down or impacting your progress? Work with your tram to understand if if your product operations are preventing you from making an impact. Consider digging into the following:
  • • Do the teams have a strong prioritization framework that helps them say yes to the right things and no to the distractions?
    • How are stakeholders and prod-dev communicating? Is there anything that is slowing the team down (i.e. too many approvals needed, delay in responses, etc)
    • Do we have the right level of customer research to inform our product and help us build confidence that we are building the right things that will drive outcomes for our customers?
    • Do we have the right tools and data to help us make strong decisions?
• Resourcing mismatches. Do the prod-dev teams have the right investment of time and people? Invest your resources at the same level of confidence you have in the initiative itself driving value. Use this as a way to determine where to scale up and scale down teams. 
• Identify learning goals.  Perhaps it is too early to assess ROI as we are still in early stages of our hypothesis.  Add in learning goals that you need to see in order to start to assess ROI.
  • For example: When entering a new market, you may need time to assess ROI. Set learning goals- start with X users in an alpha program, then measure willingness to pay. By beta, you should have a clearer sense of ROI potential. If confidence doesn’t grow, it may be time to reconsider the investment. 

Lastly, beyond just the ROI there are some strategic considerations:

• Check metrics. Just because a KPI goes up doesn’t mean it’s a win. Are we improving one area at the expense of another? For example: growing conversion but at the cost of shrinking the top of the funnel. Sometimes this is ok and sometimes it is not. Knowing this in advance and documenting our comfort level with where the check metrics can can help guide the conversations as you monitor these.
• Strategic trade-offs. Sometimes, a lower short-term ROI is acceptable for a larger long-term gain. For example: a company shifting from one-off transactions to a subscription model, knowing it would temporarily reduce core business revenue but increase long-term retention. Align on this trade-off upfront, before emotions get involved.
• Stakeholder alignment. ROI discussions shouldn’t happen in a vacuum. Product leaders should proactively align with stakeholders to ensure everyone is on the same page before major shifts in investment.
• Keep iterating. Don’t let perfection hold you back. Be transparent about the unknowns, and keep adjusting. We can (and should) retro on our own ROI process. It won’t be flawless, but teams that refine how they measure ROI over time will make better, more data-informed decisions.

Closing Thoughts

ROI calculations can be challenging, but don’t let that hold you back from assessing the outcomes your teams are delivering. Be transparent about the challenges and how you are addressing them in your assessment. And, also remember that it doesn’t all lie in a calculation - there are operational and strategic considerations you, as a product leader, will need to make to set the team up for success to deliver on outcomes.