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Imhotep might be scary but pricing doesn't have to be. The beautiful and mysterious pyramids from all around the world in deserts, under the ocean, and everywhere in between inspire many of the effective thinking tools we use on a daily basis. Let's explore a pyramid you must have in your pricing toolkit: the Product Metrics Pyramid (PMP).
Aligned With the Stars
Many researchers are convinced that the Giza pyramids in Egypt are perfectly in line with specific celestial events and constellations. In the same way, the structure of your PMP must align flawlessly with your North Star. What is the company purpose? What is the product vision? The answers to these questions will help develop your North Star, the goal every effort is working toward. All paths must lead to the North Star or you risk mismanaging your products/services thus providing little value for your customer base. Relevant KPIs (key performance indicators) are measurable initiatives that will signal whether or not you're following the North Star.
All paths must lead to the North Star or you risk mismanaging your products/services
In the movie The Mummy, a set of strategically placed mirrors are used to illuminate a corridor full of treasures. The measured alignment of each mirror with the sun was crucial for the darkness to be lifted. These mirrors are your KPIs. For a KPI to be useful, it must be quantifiable. If it can't be measured by a number, think deeper about your KPI. Ok, you want to increase MRR by 25% and you've decided reducing churn will directly impact that goal. Imagine your churn goes from 17% to 16.4%. Is this the success you're looking for? Maybe, maybe not. However, I can guess that a specific range of churn reduction would be an unmistakeable indicator that you're following your North Star (increasing MRR by 25%). This is what I mean by producing a quantifiable KPI. With all your KPIs in line with the North Star, you can see your treasures illuminated.
Think back to that scene when Richard O'Connell and his comrades enter the Mummy's tomb. It was dark until a single mirror was creatively adjusted. This adjustment is the lever that influences the alignment of your KPIs. We are now at the most granular level of performance indicators that, if chosen meticulously, will govern the achievability of your North Star. What types of customer activity will signal that your KPI measurements are approaching the optimal value, are aligning with your North Star? Perhaps you're seeing more accounts adopt new features. If more customers are adding features to their plans, this indicates they aren't churning. That lack of churn reduces your churn KPI score which increases your MRR.
Pyramid Expeditions Are a Team Effort
The numbers shared in this blog are strictly arbitrary and were used to help paint the picture of building your Product Metrics Pyramid. And just like O'Connell didn't go it alone, neither should you. Get people from sales, product, and even marketing to help define each level of your PMP. Every point of view matters, even the librarian's.