What are the must have KPIs and what are some useful KPIs teams may not think of?

I like to think about KPIs for any revenue organization in a 3 P's framework :

1. Performance

2. Predictability

3. Productivity

Performance:

It's important to understand the performance trends of the company and the most common KPS in this category include:  

- ARR

- Retention

- Number of Customers (Existing + New Logos - Churned Logos)

- Gross Margin.  

For each of these KPIs, I like to look at the numbers vs. goal, vs. last year (YoY) and vs last quarter (QoQ). These are the basic health markers of any company and ones that all revenue ops leaders should know by heart for their companies/business units.

Predictability:

For any company, it's important for a revenue org to be able to deliver a forecast. And Revenue Ops plays a big role in this process, working with sales leadership. Typically, I like to see:

- Week 1 and Week 7 Currrent Qtr Fcs Accuracy - this is usually measured in % terms and is calculated using the final bookings or retention results divided by the forecast at the start and halfway points in the quarter. I am for at least 90% accuracy in Week 1 and 97% accuracy in Week 7.

- Starting Qtr Pipeline Coverage - how much pipeline (signing in the same quarter) is needed at the start of each quarter to hit the bookings/revenue goals, usually represented in X.X coverage ratio form. This one is good becaause it combines your win/converstion rate with your team's ability to predict accurate close dates. For volume and velocity-based businesses, it's important to also note how much pipe gets generated and closed within the quarter and incorporate that component as a KPI.

- Push Counter - how often are opportunities pushing from their original close dates in your CRM? If you see this number start to creep up over time, you're likely going to start to see some forecast accuracy challenges down the road. It means your team's pipeline hygeine is getting sloppy or deals in your market are becoming tougher to predict close timing,

Productiviity (or Effiency):

Over the course of 2022, many companies have made productivity and efficiency metrics a much bigger part of their corporate narrative. And I think a lot of companies will come out of this year in a stronger position because of it. To me, there's not just one or two metrics that can tell you how well a revenue engine is working. I think it takes a variety of productivity-related KPIs including:

- % of AEs hitting quota (Attainment) - I like to use the rule of thumb that when 75% or more of your AEs are hitting 75%+ quota attainment, then you should hire more AEs. If you're not quite performing at those levels, there is more to do before you start hiring rapidly.

- % of AEs winning a new opportunity (Participation) - It's important to look at what % of your sales team is getting a deal across the finish line each quarter (or every month for shorter sales cycles).   

- Win Rate / Close Rate - I prefer the $-based metric (win rate), especially if you're tweaking your ICP and trying to sell larger ASP deals.

- Contacts per Qualified Opp - a good metric to dermine if you're single-threaded in your opportunities. More contacts on each opp almost always equals a higher conversion rate.

Growth Efficiency - this metrics looks at how much incremental recurring revenue was generated from new investment in sales and marketing $

- Activity - I'm and old school guy in that I still llke to look at seller and SDR activity levels. You can't sell when you're not in front of customers and I think it's a good idea to hold revenue team members accountable to a set of activity metrics, including meetings held, pipeline generated, new accounts touched to name a few.

The must-have KPIs will depend on your business but I think they should cover the customer journey from awareness of your product (think brand marketing) through the renewal and upsell/cross-sell process. One great way to go about this is to draw out your entire customer journey, overlay which teams touch the various parts of that, and then define the KPIs along the entire journey they each care about. You can then add other metrics that aggregate performance (e.g., quota attainment, revenue) across this journey if they aren't already captured. Here's a list I provided elsewhere in the AMA with some additions. It is by no means comprehensive or right for every company to use.

• New business pipeline metrics: web visits, marketing attribution, MQLs, qualified pipeline (volume and value), conversion rates between stages, deal cycle times, ACVs, ARR, self-serve account volumes and revenue, etc.

• Existing business performance: churn and contraction amounts and rates, expansion pipeline and rates, NRR, GRR, etc.

• Customer success performance: product usage, customer health, etc.

• Profitability metrics (probably with Finance help) like LTV:CAC, SaaS Magic Number, payback periods, etc.

• Productivity and rep performance metrics like attainment distributions, revenue and pipeline per rep, win rates, etc.

I find it much harder to measure RevOps performance with metrics than I do the business we support (demand gen marketing and quota carrying sales are probably the two most quantifiable roles for performance assessment in a company). That said, there are KPIs that RevOps can usefully be evaluated against because we have direct or at least strong influence over the performance. Here are a few ideas:

• Quality outcomes such as forecast accuracy, quota setting accuracy (e.g., if you have a target of getting 80% of reps to 80%+ attainment, did you do it?), lead and account routing accuracy, and others that assess if you are running a clean process around these things

• Responsiveness outcomes around SLA attainment on deal approvals if you run deal desk, ticket resolution rates and times for other issues from sales people

• Maybe more OKRs than KPIs, but project completion outcomes can also be useful. For example, did we get quotas delivered on time, were new territories assigned within the targeted week at the start of the fiscal year, did we launch a new sales tool on time, etc.?

● Must-have: Pipeline coverage, quota attainment, sales cycle. 

● Overlooked: Customer acquisition cost (CAC) vs. lifetime value (LTV), and customer retention metrics.