One key piece of knowledge that I like to convey to any product marketing manager is that there is no task outside your job description when it comes to the success of your product. In reality, the role of a Product Marketing Manager (PMM) extends beyond traditional product or marketing boundaries. Your role requires you to get hands-on with practically everything that affects your product. As the glue that holds your go-to-market strategy and product success together, PMMs need to be on top of all product-related Key Performance Indicators (KPIs) and metrics, which include product performance KPIs, Marketing KPIs, Campaign KPIs, and Sales KPIs.
These figures are more than just numbers; they are the vital signs of your product’s health and the predictors of its future in a competitive landscape. Monitoring these KPIs closely enables PMMs to steer product strategies effectively, optimize go-to-market (GTM) plans, and ultimately drive successful outcomes. Whether it’s understanding customer acquisition costs, tracking monthly sales growth, or gauging customer lifetime value, each metric offers crucial insights that can spell the difference between a product’s triumph and its decline.
I’ll eventually cover the different KPIs and Metrics that all PMMs should monitor to ensure the health of their product in this blog, but today, I’d like to focus on the KPIs from one of the key pillars to your GTM strategy; sales.
Sales KPIs are typically the most critical for an organization. They are the metrics that executives and analysts focus on, the ones that showcase how successful your product is and reflect directly on your product’s bottom line. While other KPIs are significant, sales KPIs often headline most product reports and should be consistently monitored by the PMM team. Let’s explore the key sales KPIs that are essential for product marketers:
Sales KPIs and Metrics
- Monthly Sales Growth tracks the month-over-month increase in sales, indicating the product’s market acceptance and growth trajectory.
- How to Monitor: Calculate the percentage increase in sales revenue month-over-month.
- Insights Provided: Indicates the pace at which your product is gaining traction in the market. Rapid growth can signal strong market demand and effective GTM execution.
- Average Profit Margin helps PMMs to understand the profitability of the product, which is key to long-term sustainability.
- How to Monitor: Divide net profit by total sales revenue to get the profit margin percentage.
- Insights Provided: Helps assess the financial health of your product, showing how much profit you make for each dollar of sales after covering costs. This is important for long-term sustainability and pricing strategy.
- Monthly Sales Bookings measure the total sales booked within the month, reflecting the immediate market response to the product.
- How to Monitor: Track the total sales value booked over a specific month.
- Insights Provided: Reflects sales performance and effectiveness of sales tactics. A steady increase can validate your pricing and product positioning.
- Sales Opportunities indicate the potential sales pipeline and help in forecasting future sales.
- How to Monitor: Count the number of potential sales identified by the sales team.
- Insights Provided: Provides a view of the potential market size and sales pipeline health, helping forecast future sales and plan resource allocation.
- Quote-To-Close Ratio measures the effectiveness of the sales team in converting proposals to actual sales, reflecting the product’s market fit and appeal.
- How to Monitor: Divide the number of sales closed by the number of quotes given.
- Insights Provided: Measures sales efficiency and effectiveness of your sales pitch and pricing strategy. A low ratio may indicate issues with product-market fit or sales tactics.
- Average Purchase Value provides insights into the value of an average sale, which helps in understanding customer investment in the product.
- How to Monitor: Divide total revenue by the number of purchases over a specific period.
- Insights Provided: Helps understand how much customers are willing to spend on your product, influencing inventory and marketing strategies.
- Lead-to-Sale Percentage shows the conversion rate from leads to actual sales, a direct indicator of the effectiveness of the sales funnel.
- How to Monitor: Calculate the percentage of leads that convert into sales.
- Insights Provided: Directly measures the effectiveness of your lead generation and qualification processes, providing insights into the efficiency of your sales funnel.
- Customer Lifetime Value estimates the total revenue a business can reasonably expect from a single customer account, highlighting the long-term value of customer relationships.
- How to Monitor: Calculate the average purchase value multiplied by the number of times the customer will buy each year, multiplied by the average retention time in years.
- Insights Provided: Shows the long-term value of customers, helping you determine how much to invest in acquiring and retaining customers.
- Retention and Churn Rates are the percentage of users who continue or discontinue use of your product or service and are key to understanding customer satisfaction and loyalty, which impacts recurring revenue and product reputation.
- How to Monitor: Measure the percentage of customers retained and lost over a specific period.
- Insights Provided: Indicates customer satisfaction and loyalty. High churn can signal problems with the product or customer service.
- Customer Acquisition Cost is the cost of acquiring a new customer, which is essential for evaluating the efficiency of marketing campaigns and sales efforts.
- How to Monitor: Divide the total costs associated with acquiring new customers by the number of new customers acquired.
- Insights Provided: Helps evaluate the effectiveness and efficiency of your marketing efforts. High CAC may necessitate a review of your advertising strategies or sales processes.
- Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) are the predictable revenue your product generates monthly or annually. They are important for subscription-based models, this KPI tracks new sign-ups and expansions, indicating product uptake and growth.
- How to Monitor: Track monthly recurring revenue from new sign-ups and upsells.
- Insights Provided: Vital for subscription-based models, showing growth through new acquisitions and existing customer expansions.
- Average New Deal Size/Length offers insights into the scale and commitment level of new customers, which can help refine sales strategies.
- How to Monitor: Calculate the average size or duration of contracts signed with new customers.
- Insights Provided: Offers insights into the commitment level and trust customers have in your product, impacting revenue forecasting and strategic planning.
- Average Sales Cycle Length measures the time from initial contact to closing a deal, impacting sales strategies and forecasting.
- How to Monitor: Measure the average time from initial contact to closing a sale.
- Insights Provided: A long sales cycle might indicate a need for better sales enablement, while a shorter cycle suggests your GTM strategies effectively resonate with the market.
- The number of Monthly Onboarding and Demo Calls indicates customer interest and engagement levels, which are essential for understanding the effectiveness of customer onboarding processes.
- How to Monitor: Count the number of onboarding sessions and demos conducted each month.
- Insights Provided: Indicates the level of interest and engagement from potential customers. It also helps in assessing the effectiveness of these sessions in converting prospects to customers.
- Sales by Contact Method helps optimize the sales approach by identifying the most effective sales channels for engaging prospects.
- How to Monitor: Track sales volume using different contact methods, such as email, in-person, phone, or text.
- Insights Provided: Helps to identify the most effective sales channels, guiding where to focus marketing and sales efforts.
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