Step 1. From outcome to metric
- State the outcome: what exactly has to change in the business.
- Choose the metric that reflects that change most precisely.
- Set the horizon: one or two weeks demand a fast, sensitive metric, a month or a quarter allows a stable top-level one.
- Judge the response speed: how long before your action shows up in the metric. Slow metrics are dangerous as key ones.
Step 2. Validation
- Can you trust it: is it calculated the same way every time?
- Is there enough data to see changes?
- Can you cut it by segment?
- Do you understand what affects it?
- Does it break down into controllable parts?
- Can you move it inside the horizon you set?
- Are there actions you can take without long approvals?
- Are there trade-off metrics you will watch as well?
The commonest mistake in a sales team is taking revenue as the key metric. It is slow, and season, advertising and production all move it. For a quarter, conversion from enquiry to payment works better: fast, controllable, and it breaks down into drivers.
Trade-off metrics
Alongside the key metric you take two or three that show the price of growth. Lifting conversion, watch average deal size and the share of returns. Lifting response speed, watch conversation length and the share of conversations where price was quoted.
Who owns what
- the key metric: the owner, or whoever runs the area
- components: the head of sales
- drivers: individual reps