I am actively interviewing for PMM opportunities and in at least 4 out of 5 scenarios hiring managers went ahead with internal candidates. What can I do to improve my interview performance?

Ah, that's tough. When you're competing with an internal candidate, you're up against someone who has considerable product, market and organizational intel. They won't take a long time to ramp, and they have minimal cultural risk too. 

So - to counteract this, you have to come prepared - and I'm not just talking some Google research. I would develop a compelling outside-in perspective that is deeply informed. Prepare some provocative questions, have recommendations for positioning on the website and maybe flag some big market or competitive moves that inform your opinions. Bonus points if you can find a friendly inside the company to give you an inside scoop! As a hiring manager, I'd be looking for someone who surprises and/or impresses me, because it feels like they've been in our strategy meetings based on their unique perspective on an issue we're tackling.

Hang in there - there are a LOT of great PMM jobs out there.