Listen to the episode
About the podcast
The Digital Utopia Podcast is for SMB Marketers and Business Leaders looking to align their Marketing, Sales, and Service departments so they’re part of one powerhouse growth team.
Each episode will dive into the strategies, philosophies, and tools that will change your approach to organizational growth, give you renewed focus and clarity, and allow you to build a brand that not only helps you stand out—but win.
The Digital Utopia Podcast is produced by Digitopia and hosted by Frank Cowell and Joseph Freeman.
If you're a supervisor, manager, executive, and you're holding your team accountable to numbers, hold them accountable to KPIs, do not bust their chops about metrics. Metrics are simply just tools to help you predict what's going to happen so you don't get blindsided.
You are listening to The Digital Utopia Podcast, a resource dedicated to helping B2B leadership and executives gain clarity and focus in a chaotic marketplace.
Hey gang, welcome to episode 23 of The Digital Utopia Podcast. I'm your host Frank Cowell. And I'm joined by my cohost:
Joe. We have an episode today where we're going to focus on one question and I think that's going to be a theme you'll notice for our listeners going forward. We're going to focus in and laser in on one question, we're going to attempt to answer that one question.
So I'm super excited about this shift in this adjustment. Hopefully make it easier to, for people to find the episodes that they might be most interested in. And that means we'll keep it shorter. I think we'll see how it goes. I tend to talk a lot, but what do we have on, what do we have on deck today, Joe?
I'm biting my tongue. Okay. Today, we're going to talk about what KPIs does rev ops look at. And we actually just finished up a series where we went through our growth matrix and we went lifecycle by lifecycle and talked about the different KPIs at each life cycle. So this is a little bit of a recap of that, but it's going to be very focused specifically on the KPIs, because this is one of the most actionable parts of that growth matrix that you can put into place right away. You can start measuring whether or not, you know, your teams are delivering on these KPIs and if they're not, you have found your bottleneck your bottom.
Absolutely. So let's recap a couple of things that I think are critical and important. So one is this idea of top-down optimization. So when we go through these various stages in your growth matrix, we're going to start with. Customer to fan creation, which is kind of like the final point in that customer life cycle.
We're going to start there and the reason being as the top-down optimization principle says that if we optimize from there and work backward, we'll get more output with the same amount of input. In, in our case, in business growth terms, input is always. New eyeballs, new visitors, new audiences. Those are the most expensive, right?
It costs a lot to generate awareness. It costs a lot to bring new people to your site and to your, to your web properties and what have you, to your events. So we always go backwards. Top-down optimization and so fans being the top because why that's the highest relationship level. So that's one thing to keep in mind.
The other key thing to keep in mind is the difference between KPIs and metrics, right? So KPIs are kind of the single most important one or two numbers for that particular stage, that particular relationship level. And then the metrics are all the other things that you measure that are indicators of the KPI.
They could either tell you, ideally, what they do is they tell you what the KPI is likely to become. Right. So ideally they're leading indicators, right? So that way, you know, what the KPIs going to be before it even happens. So that's the difference.
You can also think about it in terms of the KPI is kind of like the bankable currency.
So if you're trying to turn someone into an opportunity, let's say what's the bankable currency there. W what's the one thing you're measuring that lets you know yep. That's an opportunity. We've achieved the opportunity. What is it that we're measuring, same with customer or fan what's the bankable currency to your organization?
Sometimes that's literal dollars and sometimes that's other, some other milestone and then everything else is a metric.
Yeah. And I think if you combine the KPIs and the metrics, you've come up with a lot of numbers that can go on a dashboard. Right. And what we're talking about today is going to be just the KPIs, which is more just like a scorecard, right?
You could, you could track this in a spreadsheet. You wouldn't necessarily need to have an entire dashboard with all of the widgets, which is really cool to have, but if you just want to get started quickly, just get a spreadsheet out and start tracking these, what are we gonna do? One, two, three, four, five, six areas with one or two of these numbers and you're going to be.
You know, far ahead of your competition here?
You will, in fact, when I consult with people, this is kind of where I start just get hit in a spreadsheet. Ultimately I want to work towards a dashboard and have this thing automated and all these things are coming in, but you're right, Joe, like the first thing you have to do is just, if you're not used to doing this, just get it in a spreadsheet.
Right. And then get people used to looking at the numbers weekly. And updating the monthly number, that KPI numbers a month number by the way, get them used to looking at that every week and updating it as they have more information about that KPI projecting it as they get good at like predicting what they think it's going to be next month and the month after get people well in the habit of that because when you start to bring awareness to these numbers, amazing things will just start to naturally happen with your team. They'll start paying attention to the things that drive this KPI.
Yeah. So we're going to go over six different relationship levels. We are going to talk about one or two KPIs in each level.
So let's start at the top work top-down, like you said, and let's start with fans. So what is the number one KPI that we should be monitoring in the fans column?
Okay. Final disclaimer, here. We're going to talk about these KPIs, but know that based on your business, it might be different. So I'm going to give you an example, KPI, but you might have a different one based on your business model. So the one we have here, for example, a fans would be retention. What is your retention rate? Typically we can measure that month over month, quarter over quarter here, over here. Whatever's most appropriate for your business, but how good are you at keeping customers?
Because if you keep them a long time, chances are, you can say that, yes, they've become a fan because fans will stick with you. People who aren't fans, they eventually leave. And so measuring retention is good, but what if you're in a business where it's not a repeatable monthly service, it's not a repeat buy every month thing, retention might not be the number.
You might have a number of repeat sales per client average. That might be your number. That tells you. Okay. We're a transactional company and people are coming back.
Yeah. That's a really good point.
You might be in a business where you make one sale every five to 10 years. So that's not a good number to look at.
So you might put as your. A fan number there. You might put referrals.
Which we have as a metric.
Correct. But in your business it might be referrals because like take a realtor. For example, I know this show is B2B, but let's take a business to consumer example where a realtor sells you a home and helps you with your transaction maybe once every five to 10 years.
So that person can't really use repeat buys or retention as a good number to look at because it's so infrequent. But what they can measure are referrals, because if. You're creating fans, they're going to refer you business. And so that might be your best KPI. That might be your best number, that qualifies as the KPI there.
Joe: [00:07:03] Absolutely. Okay. So fans, we are recommending, maybe start with retention. You've got to find out what works for you.
Frank: [00:07:10] Are you keeping for you customers or if you're not a recurring business, then it's, it's repeat buys. It's one of those two in most B2B businesses.
Joe: [00:07:19] Now one step below fans on this journey up, is customers, right?
So before you can become a fan, you are first a customer.
Frank: [00:07:27] Yeah. You have to, you know, yeah. It could be converted to a customer right at that step. The goal of this. Stage here. And so the obvious, thing, things to measure here, you might have two KPIs here, right? In your business. You, you might have one, you might have two.
It really depends on your, our model. Again, you might have things like just number of customers. How many new customers did we create this month? Okay. You might have a new contract dollars added each month. You might have both, depending on your business model, what's important to you. You might be in a business model where you have a monthly, a monthly cost it's $99 a month, no matter what you sign up for. And that's kind of just your one product. So maybe the dollar amount is kind of irrelevant because you just need a quantity number. So you might just have a question number is your KPI, but you might be in a business where maybe you have different, you know, clients come in at 2000 a month in some are $50,000 a month.
And so you might have, you know, the MRR number, new MRR added new monthly recurring revenue. So whatever your business model is, what, what is the one bankable number that represents, you know, you achieving that customer goal there?
Yeah. And I think that that is really important to understand when you are choosing these KPIs, it's got to be indicative of whether or not this person is successfully landing in this life cycle stage.
Yes. The, the other thing, and you just made me think of something else. And I think we talked about this on a previous episode, but if we haven't, it's worth noting again, even if we have, and that is what you choose here, dictates behavior of your organization. That's really important. For example, if you were to say quantity, it's number of customers, that's important.
Well, then what that does is it drives the sales team to land business at any cost. Right. We're just going to go get customers, right.
They just want the number of the count, correct?
Correct. But if you said no, it's MRR, it's monthly recurring revenue, then that's going to drive that team to go get bigger clients.
Because if they can land four clients at X per month, they're better off. If they land four clients at Z per month and Z's higher, right? That's going to drive that kind of behavior. Rright. So you could say it's contracted, expected, gross profitability. Ah, that drives a different behavior. And that's actually an okay number to put there in your business model.
If you want, where now you force the sales team to think about the gross profitability of what they're selling. So now if you put gross profitability as the number, then your sales team behavior changes and they start to say, Hmm, now I should probably ask my service team, where do we get our best gross profitability?
What products do we have a high perceived value that outweighs what we actually charged, because now I can charge more for that and increase gross profitability. Right? So remember whatever you decide drives behavior side note. Maybe we should have gross profitability as our sales team. Target MRR.
Here you go. Blown everything up again.
So it's important to note what you choose drives the behavior. So remember that, I have one client, for example, what he does is he's got a number. Hey, I want a, he's got a, a contract number. I want this much value-driven every month, it's something like, $50,000 or a hundred thousand.
It's some number of countries value created every month, but then he's got another, another KPI. That's like a supporting KPI of average contract size. You know, greater than $20,000. So he does that to ensure that the. The behavior is correct. There's checks and balances. Correct. So he doesn't have just a, check number and then they go land 50 clients at $2,000.
Like that would just overwhelm their team. There's not a lot of profit to be made in $2,000 projects. So he has a secondary KPI. That kind of helps qualify the first. And that's a scenario where you, when you have two KPIs, it's okay. But I don't recommend more than two because everyone needs to understand what's the primary thing I'm driving for.
And then your secondary, if you have it qualifies.
Joe: [00:11:43] I mean, couldn't, you then just make one KPI that says it's this quantity at this amount.
Frank: [00:11:49] Well, that's technically two measurements.
Joe: [00:11:51] Is it though, because if I close a specific, you know, deal at lower than the amount that I did not hit the KPI, because it didn't match both criteria.
Frank: [00:11:59] Well, but you do have two counts. You have a number quantity, and then you have an average, so you can do one or the other. But if you want to do both, they're, they're technically two counts. Okay. Because you might have like, again, you would want, I want to see independently and you would want to see independently.
We landed six this month, over the four target. But your average came in at this that tells you a different story. Whereas if you merge it together, you're not gonna necessarily see that. Yeah. Cool.
Joe: [00:12:27] All right. Great. So let's go on to opportunities, which is the life cycle stage just before customers. So if we are measuring new opportunities and again, opportunities, quick definition of this is anything that is put in front of the sales team that actually has banned, right.
Budget, authority, need timing, somebody that they can actually sell to not just a lead in the database, but this is a real, yeah.
Frank: [00:12:50] And probably a difference between SQL too, right? Like you might have a sales qualified lead, but they don't have the. The timing just yet that turns it into an opportunity.
So it's man, this is a, this is a lead we want to sell to, but, they don't have that, which is like you said, it's the band thing. So I think that really is important. that's the distinction between SQL and opportunity. Yeah. So at this stage, you know, you might have things like number of opportunities added and same with what we just discussed about the customer level.
You might have the value of opportunities added, right? Like what's the total contractual value. You might also measure something like that average value per opportunity at it. So again, whatever's most important to your organization. You're going to have one, maybe two here, and this is an area where you can have a qualify.
Hey, we need, we need 10 opportunities added every month. The average of which, which is our secondary measurement is $5,000. Right. Because again, you don't, you want to emphasize, we're not trying to drive $1,000 ops because that won't get us there. It has to be. so when we say average is oftentimes it's that number or greater, right?
So you might call it like a minimum number is best, maybe a better way to look at it, because if you just say average, then that tells people, Oh, make sure they average out to this number.
Joe: [00:14:12] Right. You can have one for a hundred thousand. You can have for one, for 2000.
Frank: [00:14:16] Right. So you might want to say minimum.
You know, minimum of this, or the average is this it at minimum. So you want to be clear about that. So that way you can, you're driving the right behavior, but here it's just quantity of opportunities, total contractual value of opportunities, and or average value of each opportunity. And, I know for me, what I like to look at is I like to look at quantitative and then the average value per deal.
Joe: [00:14:48] Yeah, you do both.
Frank: [00:14:50] Yeah. that would be your one and two, because the quantity is really important. The quantity, the quantity tells you about momentum, which is something that doesn't get talked about often enough in business is this importance of momentum. It doesn't do you a whole lot of good. Let's say your goal is $100,000 and you, you land a hundred thousand dollar opportunity.
That's great. You'll make your nut. But, but it's actually better if you maybe had 3, $30,000 or two $50,000, because the more clients you have, the more momentum you're going to create, that's more people where you can have case studies. That's more people where you can have referrals and testimony, meals, and whatnot.
Now there is, there is a bottom to that, right? Which is going to be more efficient, serving fewer clients and whatnot. And you might have too many and that where they don't give you enough gross profitability. So there's a balance to that. But, the quantity is important because of momentum.
Well, so as long as it fits your business model,
Joe: [00:15:46] I think what you said is important. You know, you made a comment that that's great. You'll hit your nut. And the problem with that is that it's so siloed that is hitting the sales person's nuts, right? But the reality is this has to then pass on to the service team.
And so when we talk about rev ops as a whole revenue operations, we need alignment from marketing to sales, to service. So everybody out to win for themselves is not going to do the next department any good. You know, just hitting your sales nut is not the goal. Correct? We do need that to happen, but we need it to happen in alignment with what can be handed off.
To a service team where they can actually deliver well for them. Right. So that we can create those fans so important.
Frank: [00:16:25] That alignment is so critical. And that's why having RevOps monthly meetings is critical. We've talked about that. And we'll probably talk about the format of that in another episode, and we'll go deep into what does that look like?
Right. But that's why it's so important because, you know, I think that the operations team really has to drive a lot of. What is sold and who it's sold to. I know in a lot of organizations that's driven by marketing because marketing is supposed to do the research and the positioning and whatnot. But I think the operations team has in many organizations, long been neglected.
And I think the operations team needs to speak up. I think the operations team needs to tell the rest of the organization, by the way, if you give us these kinds of clients and sell them, these kinds of things, we're going to win all day long and we're going to excel, we're going to kick ass. Yeah. The marketing and sales should want to hear that so they can go get more of those scenarios.
We'll get, if you look at our RevOps Implementation Matrix here at the fans level, you've got head of service and head of marketing, working together to figure that out. Right. They both own that column because, well, because of what you said exactly, exactly. For the reason you said you need that alignment.
If you're actually going to. Sell to the right people that become fans.
So lets step back, so we were at opportunities. Let's go back to qualified. So we just talked about how an opportunity has budget authority, need and timing, a crucial component to actually being able to sell to them. In qualifieds it might be more budget, authority need, or some mix of those, but they're going to hit your demographic, you know, criteria.
Uh, they're going to be displayed behaviors, whether it's on the website or on phone calls or in person that make them sound and feel like they're the right person to sell to, but they may or may not have an opportunity ready right now. Right. Right, right. So what are we measuring in the qualifieds?
Well, qualified design is a bucket right in your qualifieds have.
Varying degrees of qualifieds. And you mentioned that, and so you have marketing qualified leads and you have SQL sales qualified leads. And so it's good. It's a good idea to measure both of those at this stage. So you have two KPIs, you have a sales qualified lead, a KPI that you have to figure out, and then you have a marketing qualified lead KPI that you have to figure out.
And that's why, again, to your point a moment ago, that's why this column is jointly owned by marketing and sales. We're emphasizing that, "Hey guys", you both have to work together and be responsible for the qualifieds that eventually can become our opportunity is this is no longer just a "you do your thing", "I do my thing" approach. So SQLs, you ultimately, you're looking at both of these as a, uh, a quantity, right? You just, how many, how many SQLs do we have this month? How many MQL? So we have this month, simple quantity, another KPI you might want to add the mix, which tells you about the bridge between MQL and SQL, and that might be your MQL to SQL conversion ratio.
Yes. However, I would say that's more of a metric would be more of a metric, but it just depends on your organization.
You might elevate that up as a KPI. Something that here's the difference. KPIs have to be met metrics. It doesn't matter if you meet them or not, but they're used as a tool to tell you whether or not you're going to meet your KPIs.
Does that make sense? Hopefully that makes sense for everyone. If you're a supervisor manager executive, and you're holding your team accountable to numbers, hold them accountable. KPIs do not bust their chops about metrics. Do not. Metrics are simply just tools to help you predict what's going to happen so you don't get blindsided.
Okay. And then it starts to help you peel back the onion and uncover where the problem might be. And that's where you can become a coach to your team and point them in the right direction, help them look the metrics and start to understand. Hmm. Probably not going to hit your KPI. And here's why let's look at let's dig into this, but ultimately they're accountable to the KPI.
Right. So if they hit their KPI and they didn't hit any of their metrics, who cares, right,
Right. Look no further.
Give them clear accountability. All right. So let's move onto lead. So qualifieds, uh, we just talked about MQL and SQL is the stage before that is leads and this would be. Really anybody who comes into the database anyway.
Right. And you might, they might come in and you might decide that they are not a good fit because they're either a competitor or they are a student and you don't sell the students or whatever the case may be. However, we are going to look at them as leads in this column. Yeah. They might have a general fit.
Right. They might be in the industry that you serve and maybe the job title, but, but you can't, maybe the company sizes wrong directly to them probably. Right. Yeah. So just all leads in including those that become MQL and SQL. And so here's, you just have a, a quantity target, right? How many new contacts, new leads in the database per month?
And it's important because even though some are going to get filtered out, we do to your point before we do need to have the metric of conversion rate, right. We need to know how many are coming into the database and how many of those turn into qualifieds. And if, if that, if that conversion number is too big there, you have some optimization to do potentially in one or both of those areas, but thats the only way, you know, that is by hitting that KPI, right.
That KPI of mber of leads. Yeah, exactly. And then finally working backwards, right? Visitors. Yeah. Right. This is people who just become aware and you can kind of apply this. We use visitors and we use like a website metric here, but you know, if you wanted to expand this thinking, it's not necessarily just always a website visit, let's say you're running a trade show that becomes a point of entry for people.
So you might go, Hey, number of interactions we had who came, how many people came by our booth. Like that's important. Cause they, they start that journey in a very similar way. So we're using website visits and landing page visits as an example here. So your KPI that you would measure here would be just simply website visits.
And you might, as an example on this sheet here, you might put organic visits as a KPI as well because that's an indicator of how much your brand authority is growing online.
Yeah, again, I would put that in metrics. I know we talk about it sort of as a KPI, but I feel like that's a metric because it's one of many things channels.
But it depends on the business objectives.
So let's say the theme for the year is we need to, we need to dominate this particular conversation online. Like we need to be the authority for this. And that's our three to five-year plan is to be the player in that space. I would suggest KP that organic visits might elevate to a KPI because that's indicating how well you're doing towards achieving that, that objective. But again, it depends on your business model and what you're trying to achieve. I would agree with you in many cases, organic it's might be a very well just a metric.
I think so, just because so often that's tied to specific campaigns or specific timeliness of a certain push you're trying to do at the end of the day. You just want visits wherever they come from so we can agree to disagree on that.
I think it's both right. I think it just depends. It really depends because the reason organic is a long-term view too. Right. So like, You don't necessarily easily affect that with our campaign and 30 days you see the difference, right?
You just, you see it. It's more about like we're elevating a pie. So we see the trend, right. That would be there. But again, your business model, you need to apply that to what we just talked about today.
I think the last thing we need to talk about here is the cadence for checking in on these, you mentioned monthly, you mentioned quarterly, some of it's weekly.
What would you recommend in terms of, if you put this on a spreadsheet and at that point we would have, what, one, two, three, four, five, six, we'd have like, you know, six to 10 KPIs. How often are you looking at these and how often are you revising them?
Okay. So from an executive standpoint, I would want to see a weekly dashboard, right?
I would want to see numbers at least updated weekly, even though it's a monthly number. Like those projections, those changes on that number throughout the month, the month to date. I would want to look weekly, like, where's it going? Where's it going? We can get into in another episode, like the metrics conversation, cause I would also be looking at that maybe. Right. I would just get a quick view of my dashboard because the last thing you want as an executive is to be blindsided. You don't want to get to the end of the month and find out you didn't hit your KPIs. You should know whether you're going to hit them or not.
So at an executive level of management level, you're looking weekly. And then if you're in the mix and like, let's say you're an area owner, you might be looking at this daily, just get a snapshot. What's happening. What's going on? What are the metrics look like? Do we think we're going to hit our KPIs? In terms of reviewing as a total RevOps team, where all 3 areas get together with the executive team, you would want to do that monthly.
Awesome. I think that covers it for today.
Cool. Hopefully you folks enjoyed this episode. We have a singular focus today to talk about what KPIs does rev ops look at? If you liked this episode, like it, share it, subscribe. We're going to be back at you next week with another episode, digital utopia podcasts.
Thanks for joining!