Product Marketing Metrics (KPIs) – How To Measure Success in SaaS

How To Use Product Marketing Metrics (KPIs) For SaaS

Are you tracking the right Product Marketing KPIs?

With so many product growth insights available to every product marketer, it’s sometimes hard to understand which metrics are relevant and which you should be tracking to measure the success of your product marketing.

In this article we’ll be going over a list of essential product marketing KPIs to track at each stage of the User Journey.

Go ahead and skip directly to the product marketing KPIs list or continue to read if you’re just starting out and looking to understand more about what product marketing is first.

Contents

TL;DR

  • Product marketing is the combination of tactics and activities that drive the success of a product or service
  • KPI stands for key performance indicator and is a term used to describe a metric used to track performance
  • OKR stands for Objectives and Key Results and is a strategic framework used to track the impact of specific tactics on a specific business objective
  • The main difference between KPIs and OKRs is that the KPIs focus on measuring the overall outcome of a strategy or tactic, whereas OKRs focus on specific business objectives and measuring the success of achieving them
  • Product Marketing’s goal is to drive product success through positioning and messaging, communicating product value, and increasing product adoption and retention
  • Product Marketing success is measured by tracking several KPIs at the same
  • Customer Journey KPIs to track: conversion rates and velocity metrics
  • Acquisition stage KPIs to track: CAC, Free Trial signups, or Demos booked
  • Activation stage KPIs to track: Activation Rate, Average Time to Value
  • Adoption stage KPIs to track: Active User, DAU to MAU ratio, Feature Adoption Rate
  • Retention stage KPIs to track: Customer Churn, Revenue Churn, LTV, LTV to CAC ratio, User Retention Rate
  • Revenue (Referral) stage KPIs to track: NPS

What is Product Marketing?

While commonly misunderstood, product marketing is not about marketing physical products.

Product marketing is the combination of tactics and activities that drive the success of a product or service.

what-is-product-marketing

What is Product Marketing

Product Marketing sits at the intersection of Marketing, Product, Sales, and Customer Success focusing on:

  • Who the product is for?
  • What value does the product provide for the customer?
  • Helping the customers get value from the product and achieve their jobs-to-be-done

What is a Product Marketing KPI metric?

KPI stands for key performance indicator and is a term used to describe a metric that tracks performance. A product marketing KPI is a metric used to measure the performance and impact of product marketing strategies and tactics.

KPI’s help you understand if you are meeting your business and department goals or how close or far off you are.

Product Marketing Metrics: Product Marketing KPIs vs Product Marketing OKRs

Let’s break down the difference between a KPI and an OKR:

  • KPI stands for key performance indicator and is a metric that measures performance
  • OKR stands for Objectives and Key Results and is a strategic framework used to track the impact of specific tactics on a specific business objective

As you can see from the definitions above, KPIs and one part of OKRs, specifically the Key Results pretty much overlap as they both are used to measure success.

The main difference between KPIs and OKRs is that the KPIs focus on measuring the overall outcomes of tactics, whereas OKRs focus on specific business objectives and measure whether they were achieved successfully.

Usually, businesses have 3 to 5 Objectives, each with 3 to 5 key results. When we talk about KPIs, apart from the revenue-related business ones, each department will track specific KPIs to measure the performance of their team and the impact they have on the overall business performance.

To make it a bit more clear here are some examples of KPIs vs OKRs:

KPI examples:

  • revenue-related KPIs: gross revenue, net revenue
  • Product marketing KPIs: activation rate, customer acquisition cost, retention rate
  • Product management KPIs: team velocity, day to deliver a feature, resource availability (hours or people)

OKR examples:

  • Objective: Increase revenue by 15% by the end of 2021.
    • Key result: increase customer retention by 25%
    • Key result: increase number of demo signups to 35 per month
    • Key result: increase activation rate by 30%

What is the goal of Product Marketing?

Product marketing goals cover 3 main directions that drive product success.

1. Positioning and messaging

    • positioning is all about setting the context on how the product should be viewed by the user
    • when developing your product positioning keep in mind how you want people to think and feel about your product.
    • messaging is about understanding the users’ job-to-be-done and building the right value propositions for each that showcases the use of the product

2. Communicating the value of the product and making sure users understand it

    • all the tactics in a go-to-market strategy used to bring the product in front of the target audience with the end goal of driving conversions

3. Increasing product adoption and retention

    • increasing adoption and retention rates for a product while keeping churn low
    • covers both existing features of a product and new ones

How to measure Product Marketing success?

Product marketing success is measured through a specific set of KPIs that together determine if the goals and objectives were achieved or not.

measure product marketing success

Before starting to implement tactics it’s important to set measurable targets that quantify what success means to you.

To measure if your product marketing is achieving those targets you can use the zoom-in, zoom-out approach:

  • Zoom-in: Measuring the performance of your strategy and tactics at each stage of the user journey
  • Zoom-out: Tracking the overall impact of your strategy and tactics on helping the customer progress through the customer lifecycle

In the next section of this article, I’ll go through some of the most important KPIs you should track in order to measure the success of your product marketing.

Product Marketing Metrics – Customer Journey Metrics (KPIs) to track

KPI #1: Conversion Rates for Product-Led Growth SaaS

Conversion rate is one of the most tracked metrics in SaaS as it tells you how users are progressing from one stage to the next in the customer journey. Here are some conversion rate metrics you may want to track:

  • Visitor-to-Signup Rate (%) = # of signups/ # of visitors on the signup page x 100
  • Signup-to-PQL Rate (%)= # of PQLs/# of signups x 100
  • PQL-to-customer Rate (%)= # of customers/ # of PQLs x 100
  • Signup-to-Customer Rate (%)= # of customer/ # of PQLs x 100

conversion rate metrics saas

Tracking conversion rates will tell you where people are dropping off helping you focus your attention on improving and optimizing the customer experience at specific touchpoints.

You can use a tool like Userpilot and set specific goals to measure your in-product conversion rates across the journey stages. With a clear user journey analytics view, you can identify where your users are dropping off in the journey and launch in-app experiences to drive growth.

setting goals using user journey analytics userpilot

Setting goals using user journey analytics in Userpilot

KPI #2: Velocity Metrics for Product-Led Growth SaaS

Velocity metrics describe how long it takes a customer to achieve a certain milestone in their journey, and also how long it takes a company to achieve a milestone (break-even for example). Here are some examples of velocity product marketing metrics:

  • Days from signup to PQL= the average number of days it takes a prospect to become a PQL
  • Days from PQL to customer= the average number of days it takes a PQL to become a customer
  • Days from signup to customers= the average number of days it takes a prospect to become a customer
  • Days to break-even = the average number of days it takes a customer to generate enough revenue to cover the CAC (customer acquisition cost)
  • Average customer life = the average number of days/months between the day a prospect becomes a customer and when that customer churns

velocity metrics saas

Understanding how long it takes customers to move from one stage to the other in the customer journey will help you shorten the path to value by identifying where customers might need help. It can also help you forecast revenue and determine what’s the ideal free trial length for your SaaS product.

Product Marketing Metrics – Acquisition stage metrics (KPIs) to track

KPI #1: Customer Acquisition Cost (CAC) = total sales and marketing expenses/ # of new customers acquired

Customer acquisition cost (CAC) is the average amount that a business spends to acquire a customer. In SaaS, this refers to the paying customers only.

calculating CAC

Do not mistake CAC with CPA (Cost Per Acquisition) which is the cost to acquire something that is not a customer (a registration, a lead, a trial user, etc).

Measuring CAC helps you keep your budget on track and understand which tactics produce the best results at the lowest cost.

KPI #2: Free Trial Signups or Demos Booked

The free trial/demos metric tracks the number of new trials or demos your product marketing department helped generate in a given period.

free trial signups demos booked

Acquisition stage metrics: free trial signups or demos booked

The number of trials of demos generated in a given period of time will have a direct impact on the end revenue. Knowing your conversion rates, you can estimate how many trials or demos you need to generate the revenue target.

Product Marketing Metrics – Activation stage metrics (KPIs) to track

KPI #1: Activation Rate

Before you can calculate the activation rate you first need to understand what’s the activation point for your product. To do that, list all in-app events that need to happen for a user persona to experience the value of the product. Users who get to these points and complete these key activation events will count as “activated users”.

activation rate calculation

Now you can calculate the (%) activation rate by dividing the number of users who reached the activation milestone by the number of users who signed up for your trial and multi it by 100.

User activation points will be different for each product, so be aware of that before trying to match your numbers with any user activation benchmarks available for your industry.

KPI #2: Average Time to Value

average time to value saas

The Average Time to Activate a User metric, also called Time to Value, represents the number of days it takes a user to reach the activation milestone in their journey.

It’s one of the velocity metrics discussed above, but I decided to include it here as it relates to the activation stage. Hence, it’s important to consider it together with other activation product marketing metrics.

Your goal is to minimize the time it takes to activate a user and by tracking the average time you will know which users to direct your attention to for help.

Product Marketing Metrics – Adoption stage metrics (KPIs) to track

KPI #1: Active User

An active user is a customer with a high Customer Engagement Score who actively uses your product.

what is an active user in saas

Active User in SaaS

For example, for a social media management tool, an active user may be someone who creates a content calendar monthly and shares posts on social media at least once per week.

You will have to define what an active user means for your SaaS as this will depend on your personas and use cases. One common mistake is to look at users who log into the app at least once a day (Daily Active Users, or DAUs). This is a vanity metric that will not tell you much about the user.

Take for example an invoicing software. Does the user need to log in every day?

Probably not. This doesn’t mean they are not actively using the product.

When the active users’ KPI is going down, it’s a sign of potential customers churning. By tracking this you can be proactive and identify potential problems that you need to address.

We covered how to define and measure user engagement in SaaS in another article, plus ways to improve it- check it out before reading further (hint-you can both measure and improve user engagement with Userpilot through contextual in-app experiences).

KPI #2: Daily Active Users to Monthly Active Users Ratio (DAU to MAU ratio)

DAU to MAU ratio

The Daily Active Users (DAU) to Monthly Active Users (MAU) ratio is a metric used to measure the stickiness of your product. In other words, how often users engage with your product.

Learn more about the DAU/MAU ratio and the importance of this user engagement metric here.

KPI #3: Feature Adoption Rate

feature adoption rate calculation

The Feature Adoption rate tells you the number of users using a specific feature.

Why is this relevant for you as a product marketer? Remember when I mentioned that increasing product adoption is one of the three main goals of product marketing.

The feature adoption rate will tell you if users are adopting your product or not and which feature helps bring the most value.

Tools like Userpilot let you track feature usage in your product without coding. You can use this data to identify power users and launch in-app experiences to increase feature engagement among relevant user segments.

feature usage tracking userpilot

Feature usage tracking in Userpilot

Product Marketing Metrics – Retention stage metrics (KPIs) to track

KPI #1: Churn

customer churn calculation

There are two types of churn relevant to measuring product marketing success. Customer Churn, which represents the percentage of customers lost in a period of time due to subscription cancelations, and Revenue churn, which shows the financial consequences of losing specific customers.

revenue churn calculation

How to calculate Revenue Churn

Why do you need to keep track of both?

While it’s important to understand how many customers you are losing, it’s equally relevant to understand the impact it has on the business revenue.

Think of it like this:

It’s one thing to lose 100 customers paying $100 each, compared to losing 100 customers paying $1000 each. If you only look at customer churn, you will get the same number in both scenarios but the overall impact is different.

KPI #2: Customer Lifetime Value (CLV or LTV)

customer lifetime value calculation

Customer Lifetime Value (CLV or LTV) is the amount of money a business earns from one customer over the duration they do business with you. It will help you understand how much is profitable to invest in acquiring a customer.

Calculating LTV can be simple or complicated. One way to calculate it is by dividing your Average Revenue per Account by your Churn rate. We cover (LTV)-Customer Lifetime Value metric more in-depth in a different article, so go and check that out too.

KPI #3: Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC) ratio

ltv to cac ratio

The Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC) ratio shows how efficient your product marketing is at acquiring customers.

An LTV to CAC ratio below 1 means you are spending more money to acquire customers than the revenue you get from them. This is unhealthy and no business can support this long term. A healthy LTV to CAC ratio in SaaS is when your customer lifetime value is 3 times or more than your cost of acquiring a customer.

KPI #4: User Retention Rate

calculate user retention rate

User Retention Rate will tell you the percentage of users you retained during a period of time.

In product marketing, it’s important to look at user retention rates at various times in a given month or in a time range. Here are some examples, but go ahead and read more about them in our retention calculation article:

  • day 0 retention rate
  • week 1 retention rate
  • 7 days range retention rate

Product Marketing Metrics – Revenue (Referral) stage metrics (KPIs) to track

Your job as a product marketer doesn’t stop after the user is retained. You need to be in constant communication with users, making sure they stay happy and refer your product to other people.

One important metric you should be tracking at this stage is NPS.

KPI #1: Net Promoter Score (NPS)

net promoter score

Net Promoter Score (NPS) is a great metric to give you more than just an idea of overall customer satisfaction. When you correlate it with your product usage analytics, it will give you more insight into what makes the users happy.

Use that insight to improve your user onboarding to increase product adoption. You can use Userpilot to launch NPS surveys and segment users based on their answers. This will allow you to respond and take action based on feedback.

NPS userpilot

Want to launch an NPS survey without having to code? Get a demo and see how Userpilot can help!

Wrapping up

If you’ve made it this far you are one step closer to measuring and driving growth.

Now it’s time to find an analytics tool like Userpilot to help you track those KPIs and then start implementing tactics to increase product adoption and retention. Sign up for a free demo and see how it can help you drive adoption and retention!

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