Top 10 Product Marketing KPIs Every PMM Should Track
Product marketing is becoming more crucial in the SaaS industry. Companies have realized that it’s not enough to do regular marketing to attract customers. They need to find a way to stand out in the market, attract customers, AND constantly engage these customers so that they’re always experiencing the value of their product. If companies don’t do this, they risk losing customers to competitors.
But how do you even know if your efforts are successful? In this article, we’ll dive into the top product marketing KPIs and metrics you need to know to improve your all-round product marketing game and stay ahead of the competition.
What are Product Marketing Metrics/KPIs?
Product marketing KPIs are the essential metrics you track to measure the effectiveness of your strategies and tactics. In other words, they show you whether you’re meeting your business goals in that department and the areas that need improvement.
Analytics tools help you track these metrics, giving you the insights you need to refine your strategies and improve profitability.
Conversion Metrics and KPIs
Product marketing managers play a critical role in driving conversions. They have to use the right messaging to inspire the target customer to convert to a paying customer or upgrade their plans.
A conversion rate shows the number of users that carried out a conversion goal (i.e. paid for a product). Tracking conversion metrics will help you know where users are disengaging so that you can focus on improving and optimizing their product messaging or positioning.
Here are four conversion metrics and KPIs for you to check out:
Visitors-to-Free Trial Conversion Rate
If you’re wondering how effective your go-to-market strategies are, check your free trial conversion rate. A successful product marketing strategy will drive visitors who discover your product to take that next step to sign up.
This percentage represents the number of visitors who signed up for your free trial.
Visitor to Free Trial Conversion Rate =
(Number of free trial signups / Total number of visitors on the signup page) x 100
Free Trial-to-PQL Rate
For PLG companies, this is a crucial revenue metric. Product-qualified leads (PQLs) are the users taking product actions that give your sales team a hint that they are ready to upgrade to high contract values.
To calculate your free trial-to-PQL conversion rate, you need to divide the number of users who became product-qualified leads by the total number of users who signed up for the free trial.
Free trial-to-PQL rate = (number of PQLs / number of free trial signups) x 100
Free Trial-to-Paid Conversion Rate
The free trial-to-paid conversion rate is the percentage of free trial users who opted to become paying customers. It’s calculated by dividing the number of users who converted after the free trial by the total number of users who signed up for the trial.
Free Trial-to-Paid Rate (%) = (number of trial users / # of converted trial users) x 100
Adoption Metrics
Product marketing goals often involve user onboarding campaigns to get the user to be activated as quickly as possible. That’s why product marketing managers care deeply about user onboarding and adoption.
Let’s look at some relevant metrics:
Product & Feature Adoption Rate
Product adoption rate shows the percentage of individuals who first tried out your product and continued using it frequently, showing that they’ve adopted it. It’s directly related to retention and hints at how sticky your product is for new users.
Feature adoption rate tells how often a specific product feature is being used. It contributes to the broader goal of product adoption in two ways. First, it shows you which feature is most valuable to users. Second, you can know how many features are adopted (aka breadth of adoption). The more features are adopted, the more likely users will adopt your product.
Product Adoption Rate = (# of New Users / Total # of Users) x 100
Feature Adoption Rate = # of monthly active users using a specific feature / # of users logging in within the same period
Feature Exposure
This metric measures how well you’re spreading the word about a product feature. It helps you figure out how many times you need to reach out to a customer before they actually use a feature. For example, sending just one email to a user might not cut it. At the same time, bombarding them with 500 emails might be overkill.
Engagement Metrics and KPIs
When you nail your product messaging, it encourages users to interact with your product to find out how it delivers on its promises. The more engaged users are with your product, the more familiar they get with it and adopt it, and the more loyal they’ll become.
Monthly Active Users (MAU)
The number of unique users who log into your product in a month. It’s an indicator of how well you’re retaining users.
MAU = Total sum of each month’s unique users / 12
Daily Active Users (DAU)
DAU is the number of unique people who use your product daily. To get DAU, add up each day’s unique active users. Then, divide by the number of days in the month.
DAU = Total sum of each day’s unique users / Number of days in the month
Pages/Clicks/Actions Per Session
- Pages per session is the average number of pages users visit in one session. You can calculate it by dividing the total number of page views by the number of sessions.
- Clicks per session is the average number of clicks a user makes in your app. To calculate this, you divide the number of clicks by the total number of sessions.
- Actions per session refers to the average number of activities a user takes per session. To get it, divide the number of activities by the total number of sessions.
Pro tip: If these metrics have a high average, it’s a sign that your product has great UI/UX elements, making users engage for longer.
Product marketing KPIs according to the AARRR framework
Product marketers at PLG companies can use Dave McClure’s popular AARRR framework to track their efforts at every stage. Here are the key metrics to track:
Acquisition Stage Metrics
KPI #1 CAC (Customer Acquisition Cost)
CAC refers to the cost of acquiring a new customer. It measures how much a company spends on marketing and sales to convert a potential customer into a paying customer.
This metric is frequently compared to the LTV to determine the profitability of a specific period for a business.
CAC = Cost of Sales and Marketing in a period / Number of New Customers in exact period.
KPI #2 Free Trial signups or Demos booked in a given period.
Activation stage metrics
KPI #1 Activation Rate
A high activation rate means your product onboarding is effective and helps users realize value faster. To calculate your activation rate, determine which in-app events will act as “activation milestones.” When a user completes these milestones, they will count as an “activated user.”
From there, calculate your activation rate by dividing the number of activated users by the number of users who signed up for the trial, then multiply it by 100.
Activation rate = (# of activated users / # of signups) x 100
KPI #2 Time-to-Value (TTV)
Users are always eager to find value in a new product, but when they can’t discover that value quickly, they easily get frustrated and lose interest. That’s why TTV matters.
TTV measures how long it takes a user to experience value from your product. The faster your product solves users’ unique pain points, the better the customer experience, which can improve the customer’s lifetime value (LTV). Ideally, you want this figure to be low.
Retention stage metrics
KPI #1 Churn
If you want to gauge product marketing success, there are two critical types of churn to think about. The first is Customer Churn, which reveals the percentage of customers who canceled their subscriptions in a given period. We already looked at this earlier in the article.
The second is Revenue Churn, which dives into the financial implications of losing specific customers.
You need to track both because only tracking the number of customers lost may not tell the full picture. Some customers pay more than others, so losing high-value customers will have a bigger impact on your revenue than regular customers.
The formula for Revenue Churn is:
MRR lost – MRR from upgrades in a given period x 100
MRR at the start of the period
KPI #2 LTV (Customer Lifetime Value)
LTV predicts how much revenue a business can expect from a customer throughout its relationship with them. You want to calculate this because you want to plow back at least the money you invested in acquiring the customer and hopefully make a profit from them.
Calculating LTV can be tricky, but a more straightforward method most businesses use for a single user or group of users is by adding up the revenue you’ve made from them and then subtracting the acquisition costs.
KPI #3 LTV:CAC Ratio
The Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC) ratio is a yardstick that measures how effectively your product marketing brings in customers.
If your LTV to CAC ratio is less than 1, it’s a sign that you’re shelling out more money to acquire customers than the revenue they bring in. This is not sustainable and no business can keep that up for the long haul.
In SaaS, a healthy LTV to CAC ratio is when your customer lifetime value is at least three times greater than your customer acquisition cost.
KPI #4 Customer Retention Rate
Customer Retention Rate (CRR) measures how well your product retains its customers. It’s an essential metric product marketers track to know if their promotional and engagement strategies are translating to increased revenue and higher LTV.
Plus, it’s closely linked to building and assessing customer loyalty. Loyal customers also make great referrals, boosting the company’s reputation.
To calculate your customer retention rate, subtract the number of new customers within a given period from the total number of customers in the same period.
Then, divide the result by the number of existing customers at the start of that period. Finally, multiply the obtained figure by 100 to get your CRR. The formula is,
CRR = ( (E – N) ÷ S ) x 100
where
E = number of total customers at the end of a particular period.
N = number of new customers within a particular period.
S = number of existing customers at the beginning of a particular period.
Revenue (Referral) stage metrics
KPI #1 NPS (Net Promoter Score)
It’s a fantastic way to measure customer loyalty and satisfaction. The score predicts how likely customers will recommend your product.
It’s based on one question we’re pretty sure you’ve come across before: “On a scale of 0 to 10, how likely are you to recommend us?“
Customers who respond with 9 or 10 are classified as “Promoters,” while those who respond with 7 or 8 are “Passives,”. Customers who respond with a score of 0 to 6 are called “Detractors.”
NPS = % of Promoters – % of Detractors
Other Essential Product Marketing Metrics and KPIs
To track the success of your efforts, you need to identify and measure the right metrics and KPIs. Let’s start with some basic metrics every product marketing team should track:
MRR (Monthly Recurring Revenue)
Your business’s revenue constantly fluctuates, especially every month, because you’re either getting new signups, current customers are churning, or both.
Having a good look at your MRR can help product marketers figure out how much revenue you’re really making monthly and if you need to level up your customer acquisition and retention game.
To calculate MRR, multiply the number of monthly customers by ARPU.
Monthly Recurring Revenue (MRR) = Number of Monthly Customers x Average Revenue per User (ARPU)
Early Churn
Early churn happens when users stop using your services within 30-60 days after signing up. It differs from regular churn, which happens later in the process. Early churn is a warning sign that something’s not clicking with customers.
Maybe they’re finding your product difficult to use, making them not realize the value of your product, or it’s not meeting their expectations. It’s the product marketer’s job to make customers understand how to get the best out of your product and experience maximum value out of it.
Tips for measuring success
As we’ve seen above, there are many areas product marketers can analyze and improve. But what matters is doing it right. On that note, here are a few tips product marketers can note down to measure metrics correctly.
Imagine What Success Looks Like
Before diving into any project, it’s crucial to set the stage for what success means and how you’ll measure it. Success is a collaborative effort; people from various teams like product, sales, marketing, and customer success will have their say at different stages. Without nailing down this initial step, it’s difficult to know what to analyze.
For instance, if you’re rolling out a new feature and your goal is to have 60% of your users using that feature, you know you need to measure feature adoption.
But beyond that, you should also look into the factors that contribute to that adoption. If you’ve sent an announcement email, an in-app message, and produced a tutorial video, they can all help boost adoption. In that case, you’ll want to know:
- How many people actually opened the email?
- How many clicked on that in-app message?
- How many users watched the entire video?
Tap into the Right Tools
Having the right tools at your disposal can make a world of difference in tracking the metrics that matter. There’s a whole bunch of tools out there these days to help with this, but often, it involves combing through various sources and piecing together critical data like traffic, conversions, and revenue. That can eat up a lot of your time.
We recommend teaming up with your data or IT teams to build analytics tools to automatically keep tabs on the key metrics. That way, you and your team can access the most important stats whenever you like.
Steer Clear of Vanity Metrics
Don’t let irrelevant data sidetrack you. Focus on the right numbers. For instance, let’s say you launch a new feature, and it pulls in 5,000 users in the first week. That might sound great, and it’s easy to get all excited about those big numbers.
But here’s the catch: if your goal was to hand over 500 product-qualified leads to the sales team, and only 100 of those 5,000 visitors actually qualified, it’s not really a success. Something might be off with either the messaging on the landing page or the audience you’re targeting.
To stay on track and not be swayed by irrelevant data, create a list of the data that really matters to you alongside your objectives.
Conclusion
KPIs allow you to optimize your product marketing performance and achieve maximum results.
You don’t have to fly blind. Use analytics tools like Userpilot to track these key metrics and get insights into your strategies to help you improve your acquisition, adoption, and retention rates.
