Every year, the best startups set their sales strategy for achieving predictable revenue and/or hyper growth by translating their plans into metrics. These are typically represented in the form of a scorecard with objectives and key results (OKRs) that are translated into a management dashboard. For SaaS organizations, there are four levels of sales metrics:
- Business Results: wholly unmanageable ‘desired outcomes’ and associated metrics achieved through specific Sales Objectives.
- Sales Objectives: can be directly influenced and associated metrics can be driven by managing certain Sales Activities.
- Sales Activities: are highly manageable and associated metrics can be moved at will. In SaaS, these are sometimes called Volume Metrics and can include things like MQLs per campaign or SQLs per source.
- Conversion Ratios: measure the rate of conversion from one measurement point in your sales process to another. For example, the ratio of SQLs to SALs is a good indicator of lead quality.
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There is (or should be) a causal relationship between the first three levels. Sales Activities drive Sales Objectives, which in turn drive Business Results. Understanding how these relationships work is not as important as the ability to reverse engineer them. If your goal for the year is to increase Revenue, then you need to choose specific Sales Objectives that will most likely lead to that Business Result. If you determine Winning New Logos is the best available path, you know you must manage the Sales Activities that will strongly influence that metric — e.g. increase prospecting.
Reverse Engineer Your Scorecard
|To achieve this…||20% increase in revenue|
|Drive toward this…||15 new customers per quarter|
|By managing this…||200 more prospecting calls per quarter|
Get more free resources and read the next post in this series, Develop Your SaaS Growth Model, to learn about how to set your growth targets and build your resourcing plan for the coming year.
We created SalesSmyth because we knew there had to be a better way for growth stage companies to build their sales organizations. We’re sales leaders and consultants, so we’ve seen firsthand the effects of building a sales team by the seat of your pants: higher burn rates, lower valuations, and less control over the future of your company. So we ask ourselves the question that drives us, “What can we do to help entrepreneurs build high performing sales teams that lead to explosive growth?” We are on a mission to deliver torrents of revenue by designing, training and equipping sales organizations to do their very best work.