Today's post is an excerpt from The MFS B2B Product Marketing Guide.
PMMs if they are not careful can easily get drowned in a sea of data. The many data points available to the PMM are themselves a manifestation of the diverse and wide-ranging set of activities the PMM encounters. In this section, we will outline some best practices to keep in mind when setting up your product marketing metrics. We will also pinpoint what we believe are the most important metrics the PMM should focus on.
B2B Product Marketing Metric Guidelines
Tracking, measuring, identifying, iterating, and improving are fundamentals of product marketing. Figuring out which metrics to focus on is vital. Before you choose your metrics, there are some key guidelines to keep in mind.
- Revenue Focus: Revenue is the ultimate metric. For all other metrics, your starting point should be - how does this data point link back to revenue.
- Product Marketing Metrics Dashboard: PMMs need to be agile in their approach to work. A dashboard can provide you with the up-to-date insights and key metrics that can help PMM’s make data-driven decisions in real time. Your dashboard should contain a mix of high level sales, marketing, product, and customer metrics.
- Pinpoint Leading and Lagging Indicators: Lagging indicators are those historical data points that highlight key results - an example would be the number of inbound leads for the previous month. Leading indicators, on the other hand, are primarily about measuring activities and can help you with things like sales forecasting. A leading indicator could be the number of outbound emails sent the previous month. If you know that, for example, you have historically generated 10 sales opportunities for every 500 outbound emails sent, then you can use the number of emails sent per month as a leading indicator to help you predict the number of sales opportunities you will generate.
- Work Backwards: “I'm the backwards man, the backwards man, I can walk backwards as fast as you can, I can walk backwards as fast as you can.” The immortal words of eccentric comedian Tom Green have a certain relevance to product marketing metrics in that you need to work backwards from revenue to identify all the key data points - particularly leading indicators - and understand how these metrics influence revenue. Identify and review correlations on an ongoing basis. Working backwards will help you select which key metrics to highlight on your dashboard and where to focus.
- Separate out Metrics, KPIs (Key Performance Indicators), and OKRs (Objectives and Key Results): Metrics has become the all-encompassing term that covers all data points, but, in reality, there are differences between KPIs, OKRs, and metrics that are worth highlighting before finalizing your approach to measuring product marketing performance.
- Metrics are all those measurements used to track the performance of product, marketing, sales, and customer success.
- KPIs are a subset of metrics. They are the various metrics deemed by the organization to be the most critical to performance and success. KPIs are tracked over time to analyze progress.
- OKRs are used as part of a goal-setting framework and come in two parts. First the objective is the broader goal - in the case of the PMM, one objective could be to increase product awareness. The key results then are the metrics tied to the objective. In this example of increasing product awareness it could be a target metric of increasing monthly web visitors, organic search, and social media impressions by a target percentage.
Key Product Marketing Metrics
Given the diverse nature of product marketing, there are a variety of metrics across many different functions for the PMM to familiarize themselves with. Familiarization is one part, but, the second, more crucial part is to hone in on the key metrics to focus on. From our many years in the B2B environment, we would recommend that PMMs focus on metrics in the following categories:
- Sales Metrics
- Marketing Metrics
- Sales Enablement Metrics
- Product Metrics
- Customer Success Metrics
Sales Metrics
- Annual Recurring Revenue (ARR): Total product subscription revenue normalized over a year. ARR = MRR × 12
- Monthly Recurring Revenue (MRR): Product subscription revenue generated in a single month. MRR = Σ (Recurring revenue from all active product subscriptions in month)
- Customer Acquisition Cost (CAC): The average cost of acquiring a new customer. CAC = Total Product Sales & Product Marketing Costs ÷ New Customers Acquired
- Customer Lifetime Value (CLV): The total expected revenue from a customer over the entire relationship. CLV = Average Revenue per Customer × Average Customer Lifespan
- Win/Loss Ratio: The percentage of deals won versus deals lost. Win/Loss Ratio = Deals Won ÷ (Deals Won + Deals Lost)
- Revenue Growth Rate: The percentage increase (or decrease) in product revenue over a period. Revenue Growth Rate = ((Current Product Revenue – Previous Product Revenue) ÷ Previous Product Revenue) × 100
- Average Deal Size: The average revenue generated per closed deal for the product. Average Deal Size = Total Revenue from Closed Deals ÷ Number of Closed Deals
Marketing Metrics
- Lead Conversion Rate: The percentage of leads that convert into paying customers. Lead Conversion Rate = (Converted Leads ÷ Total Leads) × 100
- Website Visitors: The number of unique individuals visiting a website or relevant product pages within a website. Website Visitors = Count of Unique Visitors (via analytics tool)
- Website Visitor Conversion Rate: The percentage of website visitors who convert. Visitor Conversion Rate = (Conversions ÷ Website Visitors) × 100
- Campaign ROI: The return on investment from a campaign. Campaign ROI = ((Campaign Revenue – Campaign Cost) ÷ Campaign Cost) × 100
- Market Share: The percentage of industry sales captured by your company. Market Share = (Company Revenue ÷ Total Market Revenue) × 100
- Advertising Cost per Lead (CPL): The average ad spend per lead generated. CPL = Advertising Spend ÷ Leads Generated
- Cost per Acquisition (CPA, per source): The cost to acquire one customer per channel. CPA = Channel Spend ÷ Customers Acquired from Channel
Sales Enablement Metrics
- Content Adoption: The extent to which sales teams use product content. Content Adoption = (Content Used ÷ Total Content Available) × 100
- Content Association with Opportunities: The frequency of content influencing deals. This metric may rely on some qualitative analysis but can be hugely valuable for the PMM to get an insight into which pieces of content are being used in both closed won and closed lost opportunities. Content Association = Opportunities Influenced by Content ÷ Total Opportunities
Product Metrics
- Active Users: The number of unique users actively engaging with the product. Active Users = Count of Unique Users Performing Key Action
- Feature Adoption: The percentage of active users engaging with a feature. Feature Adoption = (Users of Feature ÷ Total Active Users) × 100
- Session Duration: The average time spent per session. Useful to track over time and will help alert the team to spikes or sharp declines that may indicate larger issues. Average Session Duration = Total Session Time ÷ Number of Sessions
Customer Success Metrics
- Net Promoter Score (NPS): A measure of customer loyalty and advocacy. This score is calculated from data collected during customer feedback surveys. NPS = (% Promoters – % Detractors)
- Customer Churn Rate: The percentage of customers lost in a period. Churn Rate = (Customers Lost ÷ Customers at Start of Period) × 100
- Customer Retention Rate: The percentage of customers retained. Retention Rate = ((Customers End – New Customers) ÷ Customers Start) × 100
- Customer Satisfaction Score (CSAT): The average customer satisfaction rating. CSAT = (Sum of Survey Scores ÷ Number of Responses) ÷ Maximum Score × 100
- Onboarding Completion Rate: The percentage of customers completing product onboarding. Onboarding Completion Rate = (Customers Completed ÷ Customers Started) × 100
One of the more qualitative metrics which we didn’t include but is of considerable significance is analyst reports and how your product is featured. The way your company or product is positioned in an analyst report can give you important visibility into how your product is being perceived in the market and how effective your positioning strategy is.
Overall, these metrics are not exhaustive by any means. Instead we have focused on the metrics we have, in our experience, seen to have the greatest impact on product marketing effectiveness. Indeed, there may be other metrics that are unique to your company’s product that you will need to add into your metrics mix. These metrics are however a really good starting point and will help you finalize the product marketing metrics you need to focus on.
Overall, these metrics are not exhaustive by any means. Instead we have focused on the metrics we have, in our experience, seen to have the greatest impact on product marketing effectiveness. Indeed, there may be other metrics that are unique to your company’s product that you will need to add into your metrics mix. These metrics are however a really good starting point and will help you finalize the product marketing metrics you need to focus on.
This post is an excerpt from our recently released MFS B2B Product Marketing Guide. If you would like to read more you can access the guide in full here. If you have a marketing challenge you are looking for support with, you are welcome to set up a no obligation initial strategy consultation with our team.