The mistake I see most often: Companies hit a million or two in revenue, and not every department has quantitative goals. Sales always has a goal – but does marketing? What are their quantitative goals in customer success? What are engineering’s quantitative goals it has to hit this quarter? Do you have a point system? Do you have a card system? Most marketers are like ‘I don’t have a lead commit, I just have a budget.’ We’re not in that world anymore. We all have to set measurable goals.
– Jason Lemkin, founder of SaaSTr, Metrics that Matter Webinar, April 26th 2016
Jason Lemkin, venture capitalist and founder of SaaSTr, says the biggest mistake he sees with companies in the start-up phase ($1mm – $2mm ARR) is not that they don’t track CAC or LTV or one single metric, but rather that each division, from sales to marketing to product to customer success, and even engineering, don’t have specific quantitative goals.
In short, each department needs to find their key metric to drive success in order to keep getting better.
And, while Lemkin doesn’t go into the specifics for each department, his rule of thumb is crystal clear:
Figure out a goal for every department. Most importantly, set a baseline based on what you know, then drive that up or down.
Sales has always been driven by metrics and quotas. Why not other departments? With the data gathering and tracking technology we have at our disposal, there’s no excuse not to try and optimize every process, every department and every team.
Here are some suggestions for success metrics — Key Performance Indicators (KPIs) — that make sense for the key players in your start-up phase company: Engineering, Product, Customer Service, and Marketing.