Product Marketing KPIs & Metrics
There is an all-encompassing term for SaaS marketing: it’s closely related to content marketing, customer research, sales, product positioning, product optimization, product launch management, and more.
This over-arching term is called Product Marketing, and it sits right at the core of any SaaS company’s marketing strategy. In a competitive market like SaaS, standing out with your product amongst competitors is only possible through a good Product Marketing strategy. Read more to find out what Product Marketing is and how you can improve your strategy with the right metrics.
What is Product Marketing?
Product marketing is about creating, advocating for, and selling products shaped around the market’s and customers’ needs. Contrary to common perception, Product Marketing isn’t only about the marketing process after launch. While it’s true that Product Marketing is responsible for announcing and raising awareness for a new product, it’s also responsible for providing insight into the creation process. So, Product Marketing’s goals can be separated into three:
- Raising Awareness for Products
After launching a new product, companies must ensure that prospective customers know about it. Product Marketing uses inbound marketing techniques such as publishing comparisons or guest blog posts to promote new products. Product Marketing also deals with paid ads and the launching process of the product so that it gets as much attention as possible. In short, Product Marketing communicates the product’s value to the market.
2. Optimizing Existing Products
One of the best ways to promote a product is constantly improving it and boasting with your updates. By adding new features or acting upon feedback, companies can continue to generate demand. Product Marketing tracks essential metrics, which I talk about below, to find areas of improvement within existing products.
3. Creating New Products
Product Marketing aims to make new products more attractive to potential customers. A good Product Marketing strategy uses competitor research, customer segmentation, and pricing analysis. Competitor research helps businesses see the gaps in the market to create products that address those gaps. Customer segmentation ensures that companies keep the right customer profile’s needs in mind while creating targeted tools. Pricing analysis is crucial as it lets businesses decide on the most appropriate pricing model or cost.
What is a Product Marketing KPI?
KPI is short for Key Performance Indicator. A Product Marketing KPI is thus a metric that measures the success of your product marketing efforts. If you’re successful, you’ll acquire more customers, retain existing ones, have an engaged user base, and get the appropriate numbers from the metrics below.
While there are countless metrics you could use, the 12 metrics below are the ones that every SaaS company should be measuring as they give you an idea about fundamental aspects.
12 Product Marketing KPIs and Metrics You Should Track
- Why is Revenue an important metric for Product Marketing?
Businesses create products because they want to profit off of them. So, one of the reasons behind doing Product Marketing is to increase sales and the resulting revenue. If you’re successfully creating awareness for your new product in the market, if you’re reaching quality leads and moving them down the SaaS marketing funnel, you’ll also be increasing sales and revenue. In short, an effective Product Marketing Strategy should increase revenue.
Note that revenue isn’t the most critical metric for Product Marketing. It is a signal to an effective marketing strategy, but this metric relies upon more than just Product Marketing. So, it’s crucial to use it together with some or all of the metrics below to reach an accurate conclusion.
- How do you measure revenue?
There isn’t a single way of measuring revenue. For instance, you could measure your income based on individual customers by looking at the Average Revenue Per User (ARPU.) A high ARPU indicates that your product reached the right customers, who were willing to spend money on your products and services. Depending on how your subscriptions work, you can also measure revenue using MRR or ARR.
HockeyStack’s customizable dashboards can help you measure the MRR generated by each piece of content you’ve published 🙂
Frequency of High-Value Actions
- Why is the Frequency of High-Value Actions an important metric for Product Marketing?
One of the common vanity metrics used by SaaS companies is DAU (Daily Active Users.) It’s called a “vanity metric” because having a stable DAU doesn’t mean that your users are delighted with your product. Neither does it mean that they know all about its new features and updates. You could have a high DAU with high churn and an underperforming Product Marketing strategy.
What makes the Frequency of High-Value Actions different is that each business knows the actions that indicate a successful customer. By following their trends and using their predictive algorithms, companies can understand the indicators of a valuable and engaged customer. For example, this indicator may be using a certain number of features or the number of free-trial sign-ups.
- How do you measure the Frequency of High-Value Actions?
Tracking this metric is quite simple. You first have to define what high-value actions are for your business. You should do this based on evidence backed up by analysis.
Let’s say that your high-value action is a free trial sign-up. You must divide the number of free trial sign-ups by the period to measure the frequency. For example, if you’re measuring the Frequency of High-Value Actions for the week, you would divide the number of free trial sign-ups by seven and get the frequency in terms of days.
- Why is Product Usage an important metric for Product Marketing?
By creating awareness for your product and improving it based on feedback, you’re hoping to increase product usage. If people use your products more, this means that they’ve integrated your services into their daily work lives. This makes them less likely to churn.
However, this doesn’t mean that you should track daily usage and jot down numbers. You should compare use throughout a certain period, especially when you make essential changes to your platform or tool.
- How do you measure Product Usage?
One of the best ways to measure Product Usage is using the equation below.
Product Usage = [ # of Unique users today ] / [ # of Unique Users In the last 30 days ]
This equation doesn’t give you a plain number for the day, but it gives you the engagement relative to the month. If you’ve been using a new email marketing technique in the past month, one that’s directed at winning back idle customers, and see that this fraction is getting closer to 1 or even exceeding 1, then you’ll know that your campaign is being successful at getting customers’ attention back.
Cost per Acquisition (CPA)
- Why is CPA an important metric for Product Marketing?
Product Marketing is costly. Businesses, especially small or middle-sized ones, have to make sure they’re using each dollar to its fullest potential. CPA tells you about the performance of your:
- PPC ads
- Social Media spending
- Content Marketing spending
CPA takes into account all that you’ve spent on advertising to a customer before they’re “acquired.” Here, acquisition can mean becoming a paying customer, or it can mean a user signing up. However you define acquisition, your CPA will look at the amount you’ve spent before that action has happened. If you have a high CPA, you’re spending huge amounts to convincing a customer, meaning that your Product Marketing strategy isn’t persuasive or cost-effective. This idea is also important for the Average Length of a Sale, which I discuss below.
- How do you measure CPA?
CPA is calculated with the equation below:
[ Total marketing spend ] / [ # of acquisitions ] = CPA
If you spend $5000 on Product Marketing and acquire only ten users, your CPA is $500. For SaaS, it’s best to judge your CPA based on your CLTV (which you can learn more about below.) A good CLTV to CPA ratio is 3:1, so your customers should be worth three times your marketing spend. If lower, your strategy is ineffective. If higher, you may not be paying enough.
Customer Lifetime Value (LTV)
- Why is LTV an important metric for Product Marketing?
LTV measures the revenue generated by a customer based on their engagement with your products and services. By considering their subscription, upgrades, and additional spending, LTV tells you how much value customers generate for your business.
How is LTV different from ARPU or other revenue metrics? LTV combines the revenue generated by an average user with their retention and gives a number that can estimate their value soon. Using ARPU to make predictions is not logical, but you could use customers’ LTV to predict customers’ future value.
LTV is important for Product Marketing because high-value customers are users who have understood the value of your features and services enough to invest in them. If you have a high LTV, this means that your marketing strategy was effective in broadcasting and optimizing your products.
- How do you measure LTV?
ARPU / Churn = LTV
Knowing this, it makes sense that your LTV should be higher than your CPA. If a customer spends less than what you had put into acquiring them, you’re losing money.
Net Promoter Score (NPS)
- Why is NPS an important metric for Product Marketing?
NPS measures customer satisfaction via a survey. This survey asks customers to rate customers’ likelihood of recommending their products to a friend on a scale of 1 to 10. Then, by looking at the distribution of the answers, businesses can understand how useful their products seem to a customer. Suppose a large proportion of customers say that they would recommend your products. In that case, this means that you’ve communicated your services’ value and customers are willing to talk about this value with others.
Also, a high NPS score means that your Product Marketing strategy extended to referrals. So, even if you’re not actively telling people about your products, your “promoters” are making more people aware of your company.
- How do you measure NPS?
First of all, you need a good NPS survey tool (HockeyStack’s free NPS surveys can help you!) After sending out your surveys and collecting the results, you should separate your customers into three segments:
- Promoters: those who answered with 9 or 10,
- Passives: those who answered with 7 or 8,
- Detractors: those who answered with 6 or lower.
Your NPS will be the subtraction of your detractors from your promoters, so:
% Promoters – % Detractors = NPS
- Why is Customer Retention an important metric for Product Marketing?
Product Marketing isn’t only about creating and selling products to new customers. It’s also about optimizing and selling your products to existing users. For SaaS, the process of re-selling your products is important as this is how you keep your subscribers. Via competitor analysis, product optimization, and targeted inbound marketing, Product Marketing proves to your existing users why your brand is the best option in the market. Customer Retention measures the number of convinced customers who choose to stay with you after a certain period.
- How do you measure Customer Retention?
The formula below will give you the percent of customers you’ve retained over a month. You could, however, measure retention for a year or week.
[ # of customers at the end of the month – # of acquired customers ] / [ # of customers at the start of the month ]
Usage of Product Marketing Assets
- Why is the Usage of Product Marketing Assets important for Product Marketing?
Specific metrics don’t tell you a lot about your impact on customers. However, this doesn’t make them less valuable. The usage of your product marketing assets may not tell you about the change in customer engagement, but it’s a helpful metric when you’re optimizing your strategies. For instance, if a case study is used frequently by your product marketing team, such studies inevitably increase productivity within the group, which may not directly reflect the other metrics.
- Why is the Win Rate an important metric for Product Marketing?
Your win rate looks at the proportion of opportunities closed-won to the total number of opportunities. For SaaS, a reasonable win rate is said to be around 50%, which means that you should successfully close one of every two deals you have.
Your Product Marketing efforts should be directed at your ideal customer profile. If you keep advertising to unqualified leads, you won’t be closing any deals. This doesn’t mean that your product is useless; it just means that those leads don’t have the budget or aren’t interested enough. Thus, a low Win Rate indicates a mistargeted Product Marketing strategy.
- How do you measure your Win Rate?
It’s crucial for you to accurately document all of your deals, whether or not they’re closed won. Once you have the numbers, you’ll perform the calculation below:
# of Deals Closed Won / Total # of Deals = Win Rate
For instance, if you close 30 deals and all of these deals turn into paying customers, and you have a total of 50 deals in your pipeline, your Win Rate would be 60%.
Feature Engagement and Adoption
- Why are Feature Engagement and Adoption important metrics for Product Marketing?
An important part of Product Marketing is about explaining the ins and outs of your products. By doing so, you ensure that existing and prospective customers know about all of the features that can bring them value. When users know about your handy features, they’ll make a habit of using those features, which is called Feature Adoption. A good Product Marketing strategy means high Feature Engagement and Adoption.
- How do you measure Feature Engagement and Adoption?
There are several steps customers go through before fully adopting a feature. They’re first exposed to the feature, meaning that they realize its existence. Hopefully, this happens early in their journey, at the onboarding process. Then, users test the feature to see if it’s useful. Adoption and engagement happen after these steps when users frequently go back to using the feature.
Using a good analytics tool is necessary to track Feature Engagement and Adoption. HockeyStack’s Product Dashboard can show you Feature Engagement by dividing customers into different segments, providing you with an in-depth understanding.
Internal and External Qualitative Feedback
- Why is Internal and External Qualtitative Feedback important for Product Marketing?
While quantitative metrics are easy to track and improve, qualitative metrics tend to give you more details. For example, you can only get a precise idea about how your customers view your products by asking them. Sure, the NPS survey does this to an extent, but the resulting number doesn’t tell you what you’re doing wrong. However, the qualitative feedback gives you an understanding of your areas of improvement because customers directly tell you what they do and don’t enjoy about your products. This is the case for External Qualitative Feedback.
Similarly, your Product Marketing team has more to say about your Product Marketing strategy than a bunch of metrics. Getting Internal Qualitative Feedback ensures that you hear your Product Marketers’ ideas about lead quality and brand positioning, as well as new ideas for improvement.
Average Length of a Sale
- Why is the Average Length of a Sale an important metric for Product Marketing?
A successful Product Marketing strategy doesn’t take too long to convince a prospective customer. If you find your sales teams dealing with the same customer for a long time, you may be wasting your time and money on a customer who won’t even be staying with you for that long. Usually, the length of a sale is long because you’re trying to win a lead that’s out of your profile, though there may be other problems with your strategy as well.
This length may be different for different customer segments, though your ultimate goal should be to spend the appropriate amount of resources before acquiring a customer in each segment based on their LTV.
Product Marketing is impossible to do perfectly. There are always features that can get more engagement, more customers who could become promoters or more money that could be saved on marketing. So, it’s essential to keep in mind that tracking your Product Marketing KPIs is a never-ending process, and that’s a good thing. Since you always have room for improvement, you can always reach new leads, increase your revenue and optimize your sales process.
B2B product marketing KPIs rate the success of your Product Marketing efforts. These KPIs include the customer lifetime value, revenue, product and feature engagement, and more.
By using a mix of KPIs that track sales, engagement, and retention. The success of these aspects relies on your product marketing, so they’re good indicators.
Some of the most important product marketing metrics are LTV, Average Length of Sale, Revenue, Retention, and CPA.