AMA: Iterable VP, Growth Sales, B2B2C Sales & LATAM, George Cerny on Sales KPIs

Since nearly everything is quantified in sales, OKR's can sometimes come across as redundant and inconvenient to manage to the uninitiated. But OKR's are an amazing vehicle to drive focus on the core strategic initiatives that will generate greater success, and gain cross-functional alignment, visibility and support in achieving these goals. There are two major benefits IMO opinion in defining Sales OKR's: 1. Clarity - the process of defining Objectives and Key Results, if applied with rigor and assistance from someone truly knowledgeable in the process, can provide immense clarity into what you're looking to achieve and how to achieve it. The question was about the output, but let's not overlook how valuable the process can be to get really crystal clear on the Objectives that will have an outsized impact on team results. 2. Cross-functional alignment - OKR's are a company initiative, not a Sales initiative. This means it's a common language across departments, that can be used to unite teams in a shared mission, and increase visibility in what other departments can do to help each other out in achieving their objectives. There are few other tools that are as impactful as a supporting team attached to one of your KR's having to read out progress each week to their leadership. Every sales person wants more support from the company to sell. If it's possible to define exactly what that support is, who it's from , and tie it to a KR... drumroll please... you just got the support you needed via OKR's! So what defines good Sales OKR's? First step is in accurately defining the highest priority Objectives, that if achieved, would have a greater impact on Sales than anything else this quarter. A couple nuances to address: 1. Typically there are top line company objectives that are rolled out first, and then all departments (including Sales) localize their objectives to support some or all of the overall company objective. This is important to call out, as this exercise of connecting Sales goals to Company goals helps define the focus of OKR's. 2. The localizing of company objectives should generally just change the wording of the Objectives to ensure they align, but the big rocks that sales should focus on are typically in the following categories * Building a High Performance Sales Culture (hiring, ramping, setting a high bar for execution, focus on improvement of the culture) * Building Pipeline * Deal Execution - win rate, competitive win rate, utilizing resources more effectively to improve results, closing bigger deals/more deals * Executing new strategies to increase deal size, improve velocity, or open up new markets to increase TAM. Under those big rocks, you'll need to define the KR's that get you there. They need to be measurable, a stretch but achievable, and simple to track. This is harder than it sounds - but the process of refining these helps you gain that clarity. This is where you can really lean into intentionally setting up cross-functional goals, and align the support of the company to help Sales achieve their Objectives. A few examples: * If the goal is getting more customers in an industry - one KR could be to sign up 3 current referenceable customers for case studies. This aligns sales and marketing to build assets so you have more stories and social proof to help you sell into this industry. You could then have an additional KR on how many net new customers you are closing that quarter in that industry. * If you're looking to increase ACV as part of a Deal Execution objective, often there is a KR related to selling add-on products. You could align with the Product & Solutions Engineering teams to produce more assets, custom demo environments, or a new Guru card to improve sales' ability to sell this feature. Paired with an attach rate goal, this can be a powerful combo. * If there is a Culture objective, and you have a Culture survey in your org, addressing one of the key items that has been flagged by the team is a great way to show commitment towards improving the environment. For example there could be a new tool that addresses a major gap or point of friction for AE's. Setting roll out dates with RevOps that map to improved productivity is motivating to the team. While every company is different, sales Objectives are going to generally fall into one of 4 major categories outlined above. These need to be mapped to the company Objectives, and then it's important to lean into the benefits that the OKR process provides when defining KR's. Clarity in how to hit your Objectives. Visibility across the org of the key strategies you're leaning into the hit your Objectives. Cross-Functional alignment to get all teams rowing in the same direction to achieve shared Objectives.

To effectively define the metrics for which you should hold sales accountable, I look at a few things: 1. Understand the "Sales Math" of the business across some core universally applicable SaaS Sales metrics 2. Compare the performance of the top 1/3 AE's against the bottom 1/3 AE's and look for which metrics contribute the most to high performance. 3. Go deep in those categories and correlate the activities top performers do differently to achieve these results. Quantify these activities to define supporting metrics which will lead to success. To break this down, let's understand the foundational "Sales Math." This is the equation to hit quota. The equation is fairly simple, but everyone's vernacular is different. It is actually extremely important to have very well defined steps in the equation to get consistency across your entire team. For example, we use opportunity stages with clear exit criteria for the buyer & seller to provide consistent insight into our Sales Math. So I would actually use a Stage 1 Opp Created - instead of Discovery Call, and Stage 3 Opp instead of Demo. For the purposes of this article, I'll use general sales terms that each business should be able to use as a starting point and customize from there. Here are the metrics that go into the Sales Math equation: * Activities to create a Discovery Call * # Discovery Calls per quarter * # Demos per quarter * Discovery Call to Demo conversion ratio * # Closed Won Deals per quarter * Demo to Closed Won conversion ratio * Average Deal Size * Average Deal Cycle These metrics will allow you to create the math to hit quota. If the current team's metrics do not consistently lead to the results you're looking for, then the Sales Math may be aspirational. If your team is executing against plan, then this may be your actual current metrics. Regardless, this is what you should feel confident telling AE's is the realistic, attainable and surpassable way to hit quota. For example, it could look like: $250k Quarterly Quota Average Deal Size of $84k 3 Deals to hit quota Close ratio of 33% 9 Demos needed per quarter 60% conversion ratio of Disco to Demo 15 Discovery Calls needed per quarter 50 Activities to create a Disco 750 Activities needed per quarter* *one note on activity. It's a metric I'll always track to understand a baseline level of effort, but I will often leave this out of the Sales Math when dealing with higher complexity sales and more senior AE's. Up to you if this should be in your Sales Math equation. Now take your Sales Math, and map your high performers against your low performers to look for which metrics have a high correlation with success. This exercise can be extremely surprising, so be open to what the data shows you, and hold your strong opinions loosely. Let's extrapolate this exercise across two different scenarios: Scenario 1 - Enterprise Here's how the exercise played out when running it against a more enterprise business (numbers are directional): 1. Activity, Discovery Calls and Demos were almost identical across high & low performers. This told me that pushing "more activity" was only going to have so much impact on performance. 2. The Closed Won conversion of top performers was 46% vs. 25% for the low performers. This was a huge gap, and had major implications on the Sales Math. 3. The Average Deal Size of top performers was $160k vs. $70k for low performers. This is also a huge gap compounded the success or struggles of each group when combined with the stat above. So the key metrics to optimize were Average Deal Size and Demo to Close Ratio. We wanted to maintain our activity levels, but really lean into increasing ADS and strategies to help with Deal Execution. Based on this knowledge of what would have the biggest impact in high performance vs. low performance, we added in some metrics & activities that would contribute to these results: * Updated our account prioritization to ensure a focus on the top deals & tracked activity against Priority 1 accounts * We blocked off time each week to prospect into our top accounts & scheduled strategy sessions to help get more meetings with these accounts * We tracked # of Discos with P1 accounts * # of Demo's with $100k+ Opportunities For Deal Execution * We tracked multi-threading in each account * Have we made an executive connection? * We created a cross-functional meeting to lean into competitive differentiation strategy * We set a threshold for accounts that needed a key deal review & updated our process to improve efficiency and make room for more accounts reviewed each week. Scenario 2 - Transactional Here's how the exercise played out when running it against a more transactional business (numbers are directional): 1. There were two camps of high performers. Those with extremely high activity, and those with higher disco to demo efficiency. Our most consistent top performer was a combination of both. Low performers fell into a similar pattern of either low activity or low conversion of discos to demos. 2. Deal size and win rate didn't have dramatic differences outside of 1 AE who closed the largest deal in segment history. This wasn't repeatable so we eliminated that result instead of putting too much time in hunting whales. 3. Average Deal Cycle for top performers was 39 days vs. 52 days for lower performers. Top AE's were closing deals faster, which allowed for more time to close more deals. From this data we defined additional metrics and activities to drive better results: * Upped the baseline activity volume expectations - there is a diminishing point of returns, but higher volume was almost always a component of success. We raised the bar, but also coached our highest volume AE's to lean more into their efficiency metrics instead of pushing to just do more. * Managers went deep on quality of discovery calls coming into the funnel * Title & Seniority level of Prospects - lower conversion was correlated with lower titles. * Was the company in our Ideal Customer Profile? Quality of company greatly impacted conversion * Why now? Did we offer someone a gift card or just bug them until their defense was worn down? Or was this call predicated on funding, a new hire, an inflection point in the business, intent or some other business catalyst? * Managers inspected quality of prospecting messages * Managers inspected quality of discovery calls * We rallied around creative promos to help the team close deals faster * We replicated decks top AE's were using to build value and establish trust faster In both Scenario 1 and 2 - we started with the baseline Sales Math, and through comparison of top performers vs. low performers we were able to lean into the 2 key metrics that had an outsized impact on performance. We then defined key activities and additional metrics which we could hold the team accountable to, that we knew would correlate towards greater success across the team. How easy was that? :)

"You can't improve what you don't measure" - Peter Drucker. When starting out in a new market, there can be lots of uncertainty. This uncertainty is the starting point, however, for a fun and exciting journey to figuring this new market out. But uncertainty can be the enemy of action, so you want to remove as much uncertainty as possible, as quickly as possible, so you can get out there and start driving results. A few places to look for data in the planning and early implementation phase to eliminate uncertainty: 1. Your network - while you may not have a network of people in this new market already, you should be able to define a couple people who would be willing to speak with you who can help get the ball rolling. One or two quality conversations with your network can lead to a number of intros, and increase your network size overnight. If these people already know you, they'll also be kind if you fumble through your first conversations or have some misconceptions going in. 2. Interviews - when I was opening the Latam team, I learned so much from the interview process. I spoke with dozens of the top leaders in the industry and the vision became more and more clear each conversation I had. They helped me calibrate the resources needed for success, nuanced buying characteristics in each country that I was unaware of, partners and strategies that I wouldn't have learned about without their expertise, and more. I approached the process humble, and was honest about where I was at in my journey of learning the landscape, and so many people were happy to help fill in the blanks. 3. Online research - there's no shortage of information online. This is an obvious step and a great place to get a baseline before you test it out in the wild. This can get you past the initial uncertainty phase pretty quickly, and put you in a position to take action. That action COULD be to hire someone who IS certain and can go build out the appropriate KPI's based on their vast expertise in the the new market you're looking to enter. If this is an option and makes sense for your business - then this is a short answer. Go hire a superstar and let them do what they're great at. Get them what they need and get out of the way. If that's not the appropriate action, then you need to establish a baseline to measure against - so you can improve and re-calibrate along the way. A few things I would consider in going through this exercise: 1. Prioritize winning early, over winning BIG early. You want to prove concept, validate the mission and get people fired up for the cause early. You want positive visibility across the org, and an infectious enthusiasm in this new market. If you shoot too high, do a good job, but don't quite hit your big lofty goals, you'll move slower, dampen the enthusiasm of the team, and may even get skeptics on if it's the right bet. Set very attainable goals, crush them, and ramp the goals up quickly from there. 2. Think long-term revenue, short term activity. The short term revenue will come as a natural output from intense focus on activity. As stated there will be some uncertainty early on - especially around when/where/how that first deal will come in. So instead of overanalyzing it - go out and get data. Lots of data. Set intense activity goals and talk to as many prospective customers as possible. Don't overqualify when you still aren't positive what you're qualifying for. Every conversation is valuable early on. If you hit your lofty activity goals, and have a solid product market fit, you should naturally hit reasonable revenue goals in the first year. Year 2 is really where you want to ramp up expectations after validating assumptions in year 1. 3. Re-calibrate, re-calibrate, re-calibrate. Every week you should review what we learned week over week. Trends, competitors, partners, what's resonating, what's not, resource needs, etc. Your ICP will likely fluctuate during this time, which will inform the types of prospects you'll want to go after. You may adjust this as often as weekly early on. This is also where you review your achievement against your baseline metrics, and may adjust these KPI's if they're not the right ones. But you need a starting point. TL;DR When entering a new market you want to eliminate uncertainty as quickly as possible so you can take action. Hire or network with top talent in this new market to improve your ability to define starting KPI's that make sense. Prioritize high activity and achieveable revenue targets early to collect more data and build momentum. Re-calibrate often based on your initial KPI's and adjust as you continue to get real data about your product in this new market.

By far the most over-hyped KPI is total pipeline created. This is certainly a key metric to track week over week as a health check, but it provides little insight into what's actually going on. The problem with total pipeline created, is at no point should the conversation end with that KPI. If it's low - why? If it's high - why? Was it one large opp? Was it a bunch of baby opps? Was it quality pipeline? Was it from one AE/Segment/Business Unit - or is everything firing on all cylinders? At best it provides directional guidance to tune into major variances and inspect. At worst it provides false confidence in a pipeline that won't get you to goal. Typically addressing total pipeline creation falls into one of two camps: 1. Mention & move on. These are meetings where the metric is called out, compared to last week and it's either * Good - "great job, let's see if we can stretch this 10% higher next week" * Bad - "we really need to prioritize pipe gen this week. Get on it." 2. Paralysis by analysis. These meetings show the metric, and then dive into 40 slides with individual permutations of how everything performed over the past week; leading to information overload and very little insight into what actually needs to change. This is why instead of just tracking total pipe creation - we want to take a three-pronged approach: 1. How are we tracking towards our pipeline generation goal (which is a leading metric against future bookings)? 2. Identify the factors that are contributing to the current results. 3. Define strategies to optimize the path to goal The standard discussion described above hits the first objective, skips number 2, and the only strategy is often "do more." We could write an entire post on steps 2 and 3, but here are a few variables that can take your basic "total pipeline creation" reporting to the next level * # of opportunities created & average opportunity value. This controls for the one big opp skewing results. You generally want more big deals, but don't want to have to rely on only one big deal to hit the goal. This helps monitor quality & quantity. * Split by region/segment/AE's - this allows you to identify people and parts of the business that are doing well and understand why (do more of it, share learnings, double down). It also ensures that those who aren't doing well don't hide behind overall success of the business and get neglected. We want to identify why they're struggling, and ideally get them unstuck to improve performance. * Pipeline by opportunity source - attribution can lead to some sticky conversations, but tracking where the pipeline is coming from is necessary to improve the overall output. This isn't meant to start a blame game, but you can't optimize something you don't measure. So if AE's, SDR's, Marketing, Partnerships, or PLG is slacking - what can we do about it? If something is working incredibly well - how can we do more? * Pipeline conversion metrics - how is the pipeline that's coming in converting through the funnel to closure? Are disco to demo conversion rates improving, declining or staying the same? What about win rate? Any new trends where we should ride the wave? Anything that's not working which we should stop doing? These metrics will give you a much deeper understanding of the factors that contribute to current results and lay a strong foundation so you can define strategies to help optimize results. With a strong team and partners in marketing, partnerships, SDR and RevOps leadership - you're a brainstorming session away from having your best pipeline generation quarter yet.