OKRs, MBOs, KPIs & IDGAF

Esoteric metrics that confuse technical founders when evaluating sales goals & performance

This is part 1 of a 4-part series focused on revenue metrics that technical founders can use to achieve sales goals + hold sales leaders accountable.

Here’s what the “OKRs, MBOs, KPIs & IDGAF” 4-part series will help you understand:

1. How to use small doses of aspirational goals, aka OKRs, to form your revenue north stars

2. How to use qualitative & achievable goals, aka MBOs, to hold revenue leaders accountable beyond just sales numbers

3. How to measure the success of a sales leader through their team’s performance with KPIs

4. How to build these various metrics into a sales leader comp plan to align incentives across the board

Technical founders, the methods in which you define engineering success does not easily translate to sales. Sure, the code you wrote works and you can QA it into oblivion. Yet, sales is majority art, some science. Sure, the sales leader won the deal but… was it a good deal? Sure, the sales leader is working 80 hours a week, but are they achieving the right outcomes? Only time will tell — unless you use the right frameworks & metrics.

Let’s make this dead simple:

OKRs are ASPIRATIONAL goals, where reaching 60-70% attainment is considered successful

MBOs are somewhat REALISTIC goals, where reaching 80-100% is considered successful

KPIs are MUST ACHIEVE goals, where anything under 100% needs to be put under a microscope

Confused? Let’s break it down.

What is an OKR and how can I apply it to sales?

You can read a billion marketing-y blog posts about OKRs. It’s a pretty frustrating experience and too easy to get lost. I’ll teach them to you in under 30 seconds:

The O stands for Objective, what you ultimately want to get done in a perfect world (again, aspirational). The KR stands for Key Result, typically 3-5 things that need to be accomplished to actually achieve the Objective.

The KRs range in their ability to be achieved, some are easier than others. But when combined, they are a lot of work. That’s why the master Objective is aspirational.

Here’s a classic Sales OKR that you could use:

Objective: Convert a high velocity of leads to grow our pipeline by 50x this year

1. KR: Convert >$1M of new inbound leads to qualified opportunities/month

2. KR: Convert >60% of new inbound leads to qualified opportunities/month

3. KR: Generate 100+ new outbound leads each month

4. KR: Convert >$1M of new outbound leads each month

The Objective above is — you, dear founder — shouting out your intentions to the universe. Own it. Tattoo it in your brain. Let every single person in the company know this is what you want.

The KRs associated with that objective are what your sales leader (and marketing leader) need to focus on. They might sound ridiculously high. Good.

More importantly, if your growth leaders tell you these are impossible, it allows you to easily diagnose the core issues:

• Are we even spending enough on AdWords to generate this kind of inbound flow?

• Are we generating enough content to drive traffic to our website?

• Do the dollar amounts associated with inbound leads allow us to even reach $1M?

• Do we have enough sales reps to generate 100 new outbound leads?

• Are sales reps targeting the right high-profile outbound leads? (this is called whale hunting in sales speak)

You might see the value of an OKR just from asking these questions and figuring out how to diagnose the underlying problems. Or, you might see the value of an OKR in getting your reports to dream bigger, accelerating a tool purchase or a key hire.

An Objective cannot be solved in one stroke, that’s why multiple Key Results need to be put into action. Accelerating all of the disparate channels that could lead to success in one crucial area is the exact point of an OKR.

That being said, when you put an OKR into practice, you need to prepare for achieving less than 50% in your first year. This is totally acceptable and should ultimately drive how aspirational you want to get when designing the Objective. In the case that you achieve >50% attainment using OKRs, you should still be in a good place as a company. One side note: don’t make an OKR outrageously unachievable (like $1B of sales or bust).

Here is one last example:

Objective: Win Three Fortune 500s as Signed Customers this year

1. KR: Leverage our investor network to get 5+ intros to VPs/C-Levels in the Fortune 500

2. KR: Use outbound cold emailing, conferences & intros from our existing customer base to get a single meeting with 25+ Fortune 500 prospects

3. KR: Run a full sales process (and do a Demo) with 15+ Fortune 500 prospects

4. KR: Create an enterprise pricing strategy for 500+ seats

5. KR: Secure 1 Fortune 500 as a flagship (referenceable) case study

Starting to make sense? Good. Now, how could you apply the OKR framework to a current sales problem you’re facing? More importantly, how could use this OKR framework to align your growth leaders towards achieving something great for the company?

Remember, an OKR is just a tool, a mental model applied to a specific business problem that you want to solve. Use them to your advantage. Don’t create 50 of them, select the most important parts of your business and create 1-2 for each group.

Try it for one year and if you see the benefits, great. Most startup founders only have company milestones that are geared towards fundraising. That’s totally fine, take those fundraising milestones and back them into what sales, engineering, and product need to achieve so you can raise your Series A, etc.

Last but not least, revisit these OKRs quarterly to measure how the team is performing. Put these OKRs at the top of your leadership documents or 1:1 documents with your reports. Make sure they are seen/talked about/referred to on a weekly basis.

In part 2 of this 4-part series, I will go into MBOs and how to use qualitative (and somewhat more realistic) goals to hold revenue leaders accountable beyond just sales numbers.