Data A Metric-driven Growth

Data A Metric-driven Growth

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  • Over 120 metrics used by SaaS companies, defined and ready to use
  • Set owners, update manually, in batches and through integrations
  • Use metrics that matter and drive performance via your OKRs
  • See who and what is influencing each metric and OKR
Objectives

OKR vs KPI

You Need & Get Both With ZOKRI

To most people they do the same job. But honestly, seeing them this way is a mistake. The key to understanding the difference between an OKR and a KPI is to look firstly at what they are.

A Key Performance Indicator (KPI) is a Quantitative Metric that is selected on the basis of its ability to inform how well a company, team, or individual is doing at any point in time.

For a SaaS company, typical Key Performance Indicators are:
  • Bookings
  • Annual Contract Value
  • Monthly Recurring Revenue (MRR)
  • Churned Monthly Recurring Revenue (CMRR)
  • Expansion Monthly Recurring Revenue (EMRR)
  • Net New Monthly Recurring Revenue (NNMRR)
  • MRR Growth Rate
  • Average Revenue Per Account (ARPA)
  • Number Of Customers / Accounts
  • Customer Engagement Score
  • Net Promoter Score (NPS)
  • Lifetime Value Of Customer (LTV)
  • Cost Of Acquiring Customer (CAC)
  • LTV to CAC Ratio
  • Months to Recover CAC
  • Billings
  • Revenue
  • Annual Recurring Revenue (ARR)​
  • Cost of Goods Sold (COGS)
  • Gross Margin / Gross Profit
  • Gross Margin %
  • Total Operating Expenses
  • EBITDA
  • EBITDA %
  • Rule of 40
  • SaaS Quick Ratio
  • Revenue Per Employee

If you were to then set KPIs for specific teams, these would be more specific to their area. For example, Sales KPIs are very Sales Pipeline centric and would include:

  • Leads
  • Marketing Qualified Leads (MQL)
  • Sales Qualified Lead (SQL)
  • Demo Requests
  • Demos Booked
  • Demo Complete
  • Opportunity
  • Closed Won
  • Closed Lost
  • Lead : Opportunity Conversion %
  • MQL : SQL Conversion %
  • SQL : Demo Booked Conversion %
  • SQL : Demo Complete Conversion %
  • Demo : Closed Won Conversion %
  • Trial Sign-ups : ClosedWon Conversion%
  • Opportunity : Closed/Won Conversion%
  • Ramped Rep Count
  • Sales Velocity
If you are in Marketing or Customer Success you’ll have your own sets of the KPIs.

 

KPIs, Diagnostics And Strategy

If you look at the above sets of metric that form the basis of the KPI, you can immediately see how they’d be great at helping create better dashboard, do business diagnostics and strategy creation, as they would help direct areas of focus.

For example: If Churn is too high and is bringing down the SaaS Quick ratio, and CAC : LTV, you’ll know the biggest threat to your SaaS business is Retention.

If MQLs are not converting to SQLs very well, you know there’s a lead quality issue and Marketing and Sales need to align around your Ideal Customer Profile.

If your CAC is too high and Lead Volume low, you’ve an issue with Acquisition and Marketing.

This is why in we allow users to define and own metrics that can be added to Dashboards, but these are not Goals.

What Are Goals And Why Do You Need Them?

KPIs are metric that are statements of fact – for this metric you are here. This could be for a single point in time or through-time with change being highlighted.

Goals have a different job to so. You want Goals and a Goal Setting Framework to support achieve a number of business requirements:

Ambition

Define a target metric with built in ambition – no low-balling, just the right amount of stretch

Focus

Define areas of focus – which metrics / KPIs are most critical and relevant right now

Agility

Create agendas for weekly check-ins and execution optimization

Nurturing

Develop and retain talent – your most valuable and mission critical assets

Alignment

Create alignment and parent child relationships between Company, Team and Individual goals.

Transparency

Encourage and develop inter-team transparency and dependencies – develop amazing team-working

Control

Provide management toolkits where you are in control but don’t feel the need to micro-manage

Investor Confidence

Show investors that you’re managing the business like professionals so they can invest with confidence

Moving from KPIs to OKRs

Which means we need to select a Goal Setting Framework and roll it out. Which one? SMART, OKRs,
Balanced Scorecard, 4DX (The 4 Disciplines of Execution)?

The truth is all are better than not having Goals. But we see OKRs as a mature and proven goal setting framework, especially for SaaS, but its effectiveness is all verticals is unquestionable.

 

Here’s a quick reminder of how you construct and OKR. An OKR consist of a Goal Statement e.g. Become the Market Leader or Optimize your Sales Pipeline, and a set of 1 – 5 Goal Metrics that would allow you judge the success or failure of your goal. You can see more OKR examples here.

 

Here are a few more important things you need to know about OKRs:
  1. Ownership: OKRs have owners
  2. Collaborators: OKRs can have collaborators that work on the same OKR
  3. Hierarchy: OKRs have Hierarchy which allows owners to ensure alignment with higher-up OKRs, all the way to Corporate OKRs
  4. Metrics: OKRs have a quantifiable metrics
  5. Time-span: OKRs have a start and end date and can roll-over from Period to Period e.g. Quarters with target metrics varying, or be tactical and used for a limited amount of time.

You can see from that how that means they are different to KPIs but often share the Metric component.

You Need To Use KPIs and OKRs Together

So the reality is that you don’t choose whether you use KPIs or OKRs. You use both.

You use KPIs for Dashboards, when doing diagnostics and strategy creation, and when telling the story of your company to 3rd Parties e.g. fund raising, and in internal meetings.

 

You use OKRs as a framework to improve KPIs, to allow people to focus on the highest priority KPIs for your company, team, or personal goals. You also use OKRs as they have all of the other required performance boosting aspects outlined above and will have a greater impact of company performance.

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