As typical, I was sitting with a leadership team reviewing their performance. The RevOps exec, displayed the organization’s performance dashboard.
We’ve all seen them, all sorts of graphics with dials, red lights, row after row of numbers. I counted, this dashboard was tracking over 30 items. There was lots of discussion about various numbers, usually the resolution was, “We have to do more….”
Finally, the CRO asked for my view. I think I disappointed everyone, they thought I was going to present some keen insights about how to improve performance. Instead, I posed a single question?
“What are the 5 KPI’s most important to you?”
The response from the RevOps leader, was, “They are all important, that’s why we track all of them!”
I responded, “I get it, but what are the 5 that are most important to you?” I got the same response, though the RevOps leader expressed his frustration by his tone in responding.
We went on to a long discussion, they were, at first, frustrated, but at the end they had a clear idea of the metrics most critical for the CRO to track. And, we saw the metrics most critical for the RevOps VP, Enablement VP, Product Specialist VP, Marketing, Field Managers, and so on.
Our technologies, now further amplified by AI give us enormous amounts of information that we can track. We have endless dashboards, showing what’s happening in every part of the organization, every customer interaction, over whatever time periods one wants.
It seems like the current fashion promoted by guru’s is, “We can measure everything, put it on our dashboards, and just sit back and turn the dials…..” But too often, they fail to identify the real issues and the real performance levers. And too often, the reliance on these dashboards, distances us from deeply understanding how our businesses work.
But just because we have the ability to report on all this data, should we be doing it, or does it distract or hide what’s most important to us?
What would happen if we took the time, for each key role in the organization to identify the 3-5 metrics most critical to understanding performance? (If you are a student of OKRs you would focus on 3, but since it’s Friday, I’ll be generous and give you a couple more.)
What’s it take to understand and develop these 5 KPIs?
Answering this gives you the “Aha” moment in this discussion. To develop these 5 KPIs, you have to have a deep understanding of the business. You have to have a systems view to understand how different functions, activities interrelate and impact performance. You have to sort through all the data and metrics to tell you, “What are the 5 that tell me whether we are on track or not?”
Too often, I think we use these vast dashboards as an excuse for not deeply understanding the key things that impact our performance. We start managing to the numbers and not managing performance. We get distracted from the things most critical to the business, focusing on turning every single dial to get the dashboards correct, and we fail!
We fail because we are distracted from knowing what’s most important to the performance of our team, we think everything is important—and it can’t be!
For example, the manager for one of the highest performing sales teams I know only tracks about 5 metrics, YTD performance against plan. Forecast performance against plan (his team has 92% forecast accuracy), Pipeline health, Completed committed tasks (as a %), New committed tasks to be completed.
Those 5 metrics are the basis for assessing each person on the team, how they are performing, and where he needs to coach them. Underneath those metrics, he has dozens of other metrics. They contribute to some or all of the 5 key metrics. But to know he and his team are on target, he tracks those 5. Once he starts seeing a problem area, then he drills down, looking at more data, coaching his people.
It took him sometime to build this management system. He had to first look at the data available to him, he looked at dozens of metrics. He and I had lots of conversations on how they interrelated and the metrics that had the highest leverage. Eventually, he realized if he just paid attention to those 5 key metrics, they were enough to help him understand the performance of his team. But to get there, it took a very deep understanding of the business and what drove the performance of his team.
He and I continue to look at those KPIs, we are looking at ways to simplify them further.
In our company, we have been on a similar journey. I track myself and each person on my team on three fundamental metrics: YTD performance against goal, number of high impact conversations each week (each person has a quota, mine is 6. We have a very specific definition of a high impact conversation). And pipeline health (basically a coverage model, given our win rates and deal sizes each person on our team needs to have somewhere around 1.2-1.5X coverage).
Again, while we have lots more information, with those three metrics, I have a very good of our ability to meet those goals based on those three metrics. For example, I don’t care about the activities (calls, emails, intros, etc) it takes to create a high impact conversation. I just care that people are meeting their goals on the high impact conversations. When they aren’t, we start drilling down. We look at why they aren’t happening, we look at emails, calls, other information that might be causing them not to meet their high impact conversation goal.
Everyone on our team and I have great confidence in those three metrics. As one starts going off course, we have the ability to drill down to understand what’s happening, putting in place corrective strategies.
When I meet with organizations overburdened with metrics and ask “What are your 5 most important,” they typically can’t answer the question. They say, “We need to track all of them!” But what they are really saying, without knowing it is they don’t understand what drives their business. They don’t understand the interconnection with between the different activities in their business. Until they do, they will always struggle to maximize and optimize performance.
This doesn’t mean everyone in the organization has the same “5 key metrics.” Customer service will have their 5, marketing theirs, rev op/enablement theirs, inside sales/BDRs theirs, field sales theirs, account managers theirs.
All of these roll up to the 5 key metrics the CRO cares about.
One of the most brilliant things I’ve discovered about the OKR process and the metrics we establish within these, is that at very level it forces a deep understanding of the business and how it contributes to the overall success of the organization.
And once we understand these key things, we free up so much time to focus on what’s important.
I believe that at whatever level, basically you can determine 3 key performance metrics. But since it’s Friday, I’m feeling generous:
What are your 5 most important KPIs?
Afterword: This is the AI generated conversation this post. As these usually are, the way they interpret this actually generates new ideas for me. They even have a hallucination about my metric, “High impact conversations.” We have a very specific set of criteria for what qualifies. They twist that, but still have interesting ideas about the approach. Enjoy!
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