AMA: Databricks Director - Sales Strategy & Operations, Ken Liu on Revenue Ops KPIs

Since what constitutes a good OKR is contextual by org, I'll share guiding principles I use to develop strong rev ops OKRs: 1. Align OKRS directly/indirectly to the company's top priorities 2. Vet OKRs with key stakeholders in the org 3. Define OKRs with key results that are easily understood and measurable Company Alignment - you define OKRs to ultimately help your org/team achieve your company's top priorities. If you can't easily articulate how your OKR helps achieve a top company goals, consider revisiting its definition so that it does. Otherwise you'll misdirect valuable resources that are focused on progressing the wrong priorities. Vet OKRs w/Stakeholders - you risk undermining OKR adoption and achievement of targets if you don't get buy in from the parties that will own the OKR. I've seen too many times where rev ops defines OKRs in isolation without obtaining feedback from the sellers that own it. Sellers then make little to no effort taking action against the OKR. Make sure you involve the parties responsible for owning the OKR early on in the definition process to maximize OKR success. Define Measurable and Straightforward OKRs- while this sounds pretty obvious, I've regularly seen key results - especially in teams with highly technical and analytical staff - that are too generic or difficult to measure (e.g. >X% of new opportunities use consistent software deployment configurations). If you find your audience struggling to understand the OKR definition or how to take action and/or have no idea how to actually measure the key result attainment, chances are you need to redefine the OKR. Remember, the simpler the OKR, the higher likelihood of its adoption.

Here are some red flags for KPis that you are asked to own: * There is not support for the KPI * The KPI definition is not clear and well defined * The levers for achieving the KPI are unclear 1. Lack of Support - adoption of KPIs and achieving their targets is extremely difficult if you don't have buy-in from the parties responsible for doing the work required to meet the KPI. Say you're tasked with a KPI to drive AE adoption of a new account planning SaaS software, but the AEs weren't consulted on the selection of the tool and largely prefer another tool. Without buy-in from the AEs on the tool itself, you're set-up for a large uphill battle. 2. Unclear KPI Definition - do not ever agree to owning a KPI which is ambiguously worded or does not have a clear way to measure. Doing so is like signing a contract for which the terms of agreement are like a black box. For example, if the KPI is defined as "Improving customer sentiment of feature X", obtain exact clarity on what customer sentiment means and what is used to measure it. How would you measure customer sentiment (e.g. customer survey, feature usage, feature purchase rate, etc). You need to fully understand the KPI definition and how it will be measured to understand how feasible it is, whether you have enough data points to measure the KPI, and whether it aligns to a company priority. 3. Unclear Levers for Success - if the parties responsible for driving attainment of the KPI don't know what are the mechanisms for achieving the KPI, you are not set-up for success. For example, say you're asked to own a KPI related to driving the inclusion of delivery partners on contracts (% of total closed contracts w/delivery partners). If your AEs don't know the rules of engaging delivery partners (e.g. which contracts are eligible for delivery partners, when and how delivery partners can be engaged and sold into the contract) then setting reasonable KPI targets and reaching them will be a challenge. If you take on KPIs that avoid the red flags above, you'll have KPIs that have greater impact on the business and a greater likelihood of achieving their targets.

Here are some pitfalls I've seen when defining rev ops KPIs: 1. Focusing on just lagging indicators 2. Missing KPIs that cover the entire GTM market team 3. Focusing on generic leading indicators Lagging Indicators - in rev ops its natural to think about the number of contracts sold and their dollar amount. However, more sophisticated rev ops teams build out a portfolio of leading indicators they regularly analyze to drive contract conversions. Hypothesize all the key activities of your pre-sales and sales teams that you believe are critical for moving along the opportunity. Regularly track and analyze these activities to determine * Which activities have strongest causal effect on winning the deal * What combinations and sequences of these activities maximize deal win GTM Coverage - ensure that you have KPis that cover all the GTM teams. For example, if your GTM ops team supports the professional services or enablement team. make sure you have top-level OKRs that are related to each of these teams. Doing so will help 1. Drive accountability from these teams by assigning OKRs 2. Ensure they have a plan to help progress against the company's top priorities 3. Help foster an inclusive culture across the broader team Generic Indicators - chances are you may have had a metric along the lines of 'have X meetings w/clients each week' or 'create x pitches per month'. The pitfall of such metrics are that they assume all meetings and pitches are equal and focus on quantity over quality. Use data to help refine your KPIs to become more targeted. Work with your analytics team to determine what specific types of leading activities (e.g. # of meetings w/ client data scientists, # cost-savings narrative pitches to CXOs) have the strongest attribution to closing deals. Then define more tailored OKRs using these insights, inspect progression against these KPIs, and use the data to expand upon and/or refine your KPIs.

When developing successful OKRs that maximize impact and have greatest impact, I recommend two rules: 1. Develop OKRs that directly or indirectly align with your company's topmost business priorities 2. Keep the same OKRs throughout the year and have quarterly targets rather Align OKRs to Company Prios - you set and track OKRs ultimately to help your company achieve its key priorities (e.g. grow revenue, increase margin, increase market share, etc.). If you aren't able to articulate how your OKRs directly or indirectly align to your company's top priorities for the year, then you're creating objectives that are taking valuable resources (people, time and money) from helping the company reach its priorities. Thus define your rev ops OKRs after your company top level priorities are developed. And as you define each OKR, pressure test that they each align to and can be categorized under a company OKR. Maintain the Same OKRs Year Round - it takes time to develop OKRs, educate the team on them, drive their adoption and make progress against them. Swapping out OKRs midway through the year will undermine your team's momentum and progress against OKRs and undercut your impact on the company's top priorities. Assuming you set reasonably aggressive targets for OKRs, you will need to give your team time to develop and execute against plans for reaching OKR targets as well as identify and surmount blockers/headwinds that arise. Thus spend more time up front defining and aligning against a shortlist of OKRs, commmit to tracking them for the whole year, and set quarterized targets that stretch your teams.

It's rare that you are the first company to set KPIs when entering a new market. Here are some best practices I've used to set realistic KPI goals when I helped advise clients at Google measure the efficacy of their marketing campaigns when they first entered a new market: 1. Benchmark - look at how your company performed with a similar product or campaign, make adjustments on assumptions for the new target market (e.g. competition, brand name recognition, product demand) and adjust the targets for the KPI accordingly. You should also benchmark against competitors as well, especially if you don't have a good internal benchmark, to setting realistic targets. 2. Set Conservative Targets - err on the side of caution and use assumptions that provide more headwinds on KPI performance when setting KPI targets. Often times there may be unknown headwinds to the KPI performance in the new market. You won't know actual performance until product launch. Model out different potential scenarios (e.g. sunny day vs rainy day models) for potential market performance and discuss the likelihood of each scenario (you can use % weightings) to determine what would be a 'reasonable' target for the KPI. 3. Test and Incorporate Rapid Feedback Loop - set up tests by launching the product in a small sub-section of the market, measure initial performance and compare against targets (also extrapolate out to compare against potential long-term performance.) If you are significantly under or over performing, conduct a root cause analysis and then adjust your targets accordingly in light of the finding. Continue this iterative process to always inspect if the targets are reasonable and/or you need to address issues with performance against the KPI target.