It’s well known that any successful product launch depends on whether or not your teams can come together and establish where there’s space to improve.
And the best way to gauge whether or not your teams are on track is by looking at the right metrics. This information offers insight into how effective your business strategy has been. Similarly, it can help when making decisions, giving your team a holistic view of all moving parts.
So, how exactly do we measure success in GTM? With so many teams tracking different performance indicators, it’s crucial to understand the data that will best inform your wider team on how to sustain your GTM strategy.
These are some of the most important GTM metrics, from overall revenue growth to customer churn rate.
Let’s look at them in more detail.
Why are Go-to-Market metrics important?
Success depends on having access to the right data.
And setting a foundation is key before diving into how you and your teams can track performance. This way, you can set intentional and clear goals and quickly spot where your GTM plans might be struggling or succeeding.
Before looking at performance indicators, though, consider your overall market research and some of the questions that form the basis of it:
- What is the business objective or launch goal?
- What is the competitive landscape like, and how is my product doing?
- What is the target audience, and is my product reaching them?
- Are the insights gathered from feedback loops or current metrics actionable?
- Do we have the necessary resources to track specific metrics?
Having even a vague idea of what the answers to these questions might look like can inform your pre and post-launch research or help you pivot your GTM strategy.
Essentially, quantifiable metrics help your teams to communicate clearly, which aids in problem-solving, decision-making, and long-term planning. And with the proper tracking, you can customize your plans through all stages of your GTM strategy.
Which Go-to-Market metrics should I track?
When you take a product, service, or feature to market, you’ll want to observe how effective your sales and marketing efforts have been. After all, it’s taken a lot of time and hard work to get to this point! So don’t let your efforts fall to the wayside; remember, stay on track.
To evaluate your current or upcoming campaigns, here are some of the most essential GTM metrics:
MRR and ARR (Monthly Recurring Revenue and Annual Recurring Revenue)
These two metrics are quite similar, except one is a monthly tracker instead of an annual one.
What is MRR and how to calculate it
We define MRR as the total sum of monthly recurring revenue from customers.
But, before we get into the specifics, you’ll need to bear in mind the following variables: contract length and total contract value. That’s because, for your MRR, you’ll want to calculate total monthly revenue by dividing total contract value by contract length (so, however many months that contract runs). Generally, the formula for calculating your MRR looks like this:
[# of customers] x [average monthly revenue per customer]
However, the above formula depends on your product or business model. Is it the case that you’ve got a subscription model in place? Or are you charging a one-time fee only? This can help you adjust your calculations for accuracy!
So let’s discuss in a bit more detail the key players in helping you calculate your MRR:
- Contract length is the average length of your customers’ expected contract duration. In other words, the period over which a customer agrees to pay for your product or service. These contracts can cover different customer commitments, like subscriptions or quarterly contract lengths. And, ultimately, understanding your customer contracts can also help you forecast critical metrics like customer churn and retention.
- Total contract value refers to the complete value of the contract in place. It’s what your customer pays throughout the contract, whether in subscription payments, service fees, or one-off charges.
What is ARR and how to calculate it
As stated before, ARR is quite similar to MRR, but it tracks annual revenue growth.
You can measure your business’ ARR by looking at all recurring revenues. The total sum can tell you overall how much your business earns based on customer contracts. However, for a more accurate measurement, consider the following factors:
- Duration of subscription or customer contract
- Churned revenue from existing customers at a specific period
- Revenue from add-ons
- Upgrades/downgrades to any existing subscriptions
Though there are more variables to consider when calculating your ARR this way, these indicators will help provide your teams with more accurate estimates and precise points of where to improve your strategy.
Essentially, you can utilize both these measurements to better track the performance of specific customer segments. Doing so lets you determine, for example, where you’d make bigger profits or where to focus your marketing efforts. More importantly, it gives you invaluable insight into how your customers think and how much they’re willing to pay for your unique product or service.
Customer Acquisition Cost (or CAC)
Your customer acquisition cost is your go-to metric for understanding how much money has gone into acquiring new customers.
Put simply, your CAC is a measurement to establish whether your business allocates the proper budget for paid advertising.
When calculating this total, you’ll want to look at:
- Money spent on paid advertising or on any push to gain prospective buyers,
- Your sales and marketing teams’ salaries,
- And any service or processing fees.
The formula for getting your CAC can be:
[total cost of sales and marketing] / [# of customers acquired]
Note: If you consider all or more of the expenses expressed above at the time of calculation, you can have a bird’s-eye view of how much money goes into getting customers. This insight will help you rethink your strategy if you notice overspending!
Customer Lifetime Value (LTV)
Your customer lifetime value, or LTV, is another indispensable metric that’ll shine a light on the expected revenue you’ll receive from your customers’ ‘lifetime.’ This refers to a specific time you expect your customer relationship to last, whether a year or longer. Bear in mind that this number is easier to calculate for businesses that have been around for more extended periods of time as there’s more data to work with!
To calculate your LTV, follow this formula:
[average revenue per user a year] x [gross margin] / churn rate
So, why should you track your customer lifetime value?
This metric is as crucial as CAC because they go hand in hand. By looking at your CAC and LTV side by side, you can spot where you could make better decisions and investments for your business that'll encourage you to look towards building a better service for your customer.
Customer Churn Rate
By now, it should be pretty clear that your customers are at the heart of much of what you do - in the short and long term. So, we’re looking at another indicator that revolves around your unique customer base: customer churn rate.
Customer churn refers to the point at which your customers terminate their relationship with your organization. As a company, it’s vital to know whether you can gain or retain customers, and your churn rate lets you know if you’re losing more than you’re gaining.
This can happen for various reasons, but you’ll want to understand why your customers opt out of your particular service. Once you do, you can strategize and reprioritize to keep up with your specific market and target audience. But ultimately, when making critical decisions in response to your churn rate, remember it's about ensuring your customers trust your product.
To get your churn rate:
Divide the customers you’ve lost by the total number of customers.
Marketing efforts are central to your business’ success.
Your organic performance tells you how valuable your content is to your customer base. And content-wise, it’s your best way to know how you compare to your competitors.
Organic is also an indicator of whether or not you’re bringing in prospective customers without paid ads. Though there is much value in your paid marketing efforts, organic search will likely account for much of your business or product’s exposure.
For example, by looking at your engagement, impressions, and click-through rates (CTR), you can navigate this ever-saturated content world and address your unique audience’s questions or needs. This will help you and your teams stay ahead.
Though there are certainly many ways to track success, these GTM metrics are crucial for your team and product success.
Let's go over some of the key points shared here:
- Access to the right information means you and your teams can adapt quicker, make informed decisions, and sustain long-term plans more effectively.
- Sharing key metrics amongst and with your peers promotes better, more transparent communication centered around finding the right solutions to your unique product and customer pain points.
- These metrics can guide you in crafting a GTM approach that resonates with your target audience, maximizes revenue growth, and fosters long-term customer relationships.
If there are any other points you think we should've included above, do not hesitate to reach out and provide feedback through our Slack channel! Join a community of GTM experts and share your thoughts and insights.