Ask yourself this question: how often do you look at the numbers as a business owner/exec?
If the answer is not too much, it’s time to adjust that mindset.
When I first joined Single Grain, there were a lot of problems. KPIs were not set for teams and things were being done at an ad hoc level. Without looking at the numbers, we were essentially shooting in the dark.
Fortunately, my peers at Treehouse taught me the importance of looking at numbers judiciously – it’s something I did almost every day to a fault. We had dashboards created where we could see the health of each team and what action steps needed to be taken to move the company forward.
Here’s an example of how a simple dashboard might look like in Google Docs:
Surprisingly enough, investors told us dashboards like this were extremely rare for startups and we were ahead of the curve because we had one.
Key takeaway: if it’s important enough for a fast moving tech startup to stop for a second and create a dashboard with KPIs, your business should be doing it too.
The impact is huge because it helps people hone in on important things. As an example, the team from Tint reported a 3x revenue increase after they spent 1.5 days working on their dashboard.
1. The top KPIs We Use For Sales
Though we have all these numbers in place there are only a few key ones we look at for each team. Pick a few key metrics that work for you and focus on those. Overloading yourself with too many numbers make it difficult to make sound decisions on what really matters to your business.
- Conversion rate – the ratio of people who convert from total number of proposals we sent out.
- New leads per month – how are our lead generation efforts going? Do we need to diversify our lead sources? Are we getting too many unqualified leads? Are our lead prospectors doing a good job? This will help give some insight to questions like that.
- Total bookings or revenue (broken out by “New Business,” “Add-On Business,” or “Renewal Business.”)– sales cures all. How is your sales team doing in terms of meeting quota? How is your upsell process looking? Is your product so good that customers are consistently renewing?
- Number of qualified sales opportunities per month – generating leads is nice, but you need to have qualified leads that fit your ideal customer profile.
- Total dollar amount of new qualified pipeline generated – is your prospecting team generating enough revenue potential in the pipeline?
2. The Top KPIs We Use For Operations
- Net promoter score – though there is a lot of debate on the viability of this metric, it’s a good feeler on whether customers are overall satisfied/dissatisfied with our services. Of course, you need to be surveying and talk to your past/current customers to get feedback as well.
- Revenue churn – what % of revenue we lost for the month. Click here to find out what an ‘acceptable ‘churn rate is (keep in mind that each industry varies so this is very general).
- Client churn – what % of clients we lost for the month
- Gross Margins (broken out by “Team” and “Overall”) – what’s our overall margin? what are the margins per team?
- Compound Revenue Growth Rate – calculating revenue growth rate is helpful for any business but it’s not that helpful when you look at things on a month to month/week to week basis because things can be highly variable in such a short amount of time. Instead, we calculate a growth rate over a 6 month period. To do this, we use a formula for calculating compound growth rate.
3. Marketing KPIs
- LTV – the lifetime value of a customer. You’ll want to look at this numbers for all of your marketing channels.
- CPA/CAC – the cost to acquire a typical customer (cost per acquisition or customer acquisition cost). Same thing here – look at this number for all of your marketing channels.
4. Individual Teams KPIs
- Do/say ratio – this is simply the number of things done versus the things we said we would do. So if we said we would do 10 things and actually completed 8 of them for a client, it would be 80%.
Bear in mind that this is only for our team and your KPIs will likely vary. It’s up to you to figure out what’s important to look at.
Bonus: I highly recommend reading the following:
- David Skok’s Guide On SaaS Metrics 2.0 – Measuring and Improving What Matters
- The One Best Metric for Your Startup to Maximize
- Your Startup’s 10 Most Important Metrics
- The 75 KPIs Every Manager Needs To Know – Good list to know but bear in mind that you should only pick a few that really matter to your business.
- If you come from a culture of not measuring, your team will hate adding these because it leads to accountability. But at the end of the day, accountability is a good thing.
- You must know your numbers. Don’t complain about not being good at math or not having an accounting background. if you want to see your business grow you better know them.
Spend some time to figure out what metrics matter the most to your business and start measuring. Have someone (maybe you?) accountable for making sure you consistently have accurate numbers. Make sure people on your team are helping you deliver numbers they are responsible for in a timely manner. It’s important that these aren’t delayed or else you delay taking action on mission critical things.
Image credit: garryknight
Disclaimer: As with any digital marketing campaign, your individual results may vary.