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Lessons Learned: 8 Tips for Using OKRs to Focus a SaaS Marketing Team

When joining Geckoboard to lead the marketing team just under a year ago, I wanted to provide a focus for the team. I’m a big believer that a team aligned and focused on common goals delivers a multiplier effect.

In a team where you’re small and targeting aggressive growth, any advantage you can gain is meaningful. The framework I chose to rally and focus the team around was Objectives and Key Results (OKRs). It’s not the only framework available, but it’s one I have found effective for marketing teams in SaaS. With that, I wanted to share some tips on using it based on our experience so far.

I don’t want this to be an introduction to OKRs and how to get started. If you’re looking for a primer, our Content Marketer Laura did a great job of that in her post on using OKRs to keep your team goal-oriented. Rather, I want to give you the run-down on the mistakes I’ve made using them for focusing a SaaS marketing team in the last couple of quarters. More importantly, how you can avoid accumulating the same scars that I have. Here are the eight big lessons we’ve learned so far.

1. Get your CEO to define a focus

The idea behind OKRs is to build a common focus within a business. That alignment needs to come from the top. One way to get this focus is working with your CEO to define the One Metric That Matters (OMTM). Taken from the Lean Analytics book, this is a single number that you care the most about at the current stage of your growing company. It will change as you evolve, but at any given time, there’s one metric you should care about above all else. Communicating this focus to your team members and investors helps concentrate your efforts.

Luckily for me, our CEO Paul is a big believer in OMTM and the Lean Analytics movement, so I had this out of the gate. However, I know not every marketer in a SaaS business will (I haven’t in the past), so I think it’s worth flagging as it will shape everything that comes afterwards.

Our OMTM is to grow Monthly Recurring Revenue (MRR) by a certain percentage in a given timeframe. In truth, I think most SaaS businesses going through growth will have a similar MRR focused metric.

Top tip: If it’s a struggle, a framework that can help shape thinking for this is the Important, Potential improvement and Authority (IPA) model for identifying key metrics.

2. Reverse engineer your pipeline

Now that you have a focus - which likely involves growing MRR - you’ll need to shape your objectives and key results around hitting that number. To do this, it’s important to reverse engineer your pipeline from MRR back to the number of website sessions you need every month.

Doing this requires setting some base metrics as a starting place. The metrics you will need numbers for are:

  • Current MRR - As of the end of the previous period, what was total MRR?
  • Target MRR growth - How much do you want to grow MRR by each month?
  • Conversion rate from lead to paying customer - This gets a bit blurry based on your sales and marketing model, but generally in SaaS a lead (sometimes known as a Marketing Qualified Lead (MQL)) will be a trial sign-up or capturing somebody’s contact details via a piece of content or an event.
  • Average Monthly Sale Price (ASP) - The current MRR generated from each new customer. Take the total MRR from all customers who subscribed in the previous period and divide it by the number of customers signed.
  • Net MRR Churn Rate - Your Net MRR Churn Rate is the calculation of what percentage of MRR you lost in a given period, including Contraction of accounts, Expansion of accounts and Reactivation of accounts.
  • Sales Cycle Length - How long does it take on average for someone to move from lead to paying subscriber?

I’ve put together a quick Google Sheet SaaS pipeline calculator template that includes more detail on each metric. It’s basic, but with it, you should gain a basic understanding of these metrics and how to reverse calculate your lead pipeline by inputting these metrics for your SaaS business.

SaaS Sales and Marketing Pipeline Calculator

Make a copy of the template and start playing with your metrics and calculating how many leads you need to generate to hit MRR targets. From here, you’ll need to calculate how many sessions you need to generate on your marketing site to deliver those lead volumes, but we’ll come to that in a second.

Top tip: If you’re using conversion rate benchmarks to create pipeline targets, always use a low estimate to ensure you over, not under-deliver on lead volume. I’ve gone the other way in the past and it’s painful. We have some benchmarks for conversion metrics in our sales metric and KPI examples if you need help getting started.

3. Plan how you’re going to hit those targets

When I’ve gone through the planning process based on lead targets by month, I tend to follow these steps:

  1. Take your lead target and split it into a lead target by channel based on the percentage of your leads currently coming from each channel in your Google Analytics acquisition reports.
  2. Divide that lead target by your conversion rate from site session to lead for each channel. Now you know how many sessions you will need to generate from each channel to hit your lead target. It’s best to use the average conversion rate from the previous three months to ensure you have a reasonable sample of data that’s recent.
  3. At this point, I suggest looking at how realistic it will be over the next three months to grow each channel at the rate you need in terms of traffic acquisition. Organic channels (including SEO, content, social outreach, etc.) will generally grow slower or less predictably than paid channels (PPC, paid social, retargeting etc.). I’ve made the mistake of over forecasting organic channels in the past, so just be realistic when doing the same! Re-balance the targets by channel based on how quickly you think you can accelerate each channel while still hitting your lead target. There’s an element of guesswork here, but that’s ok and you’ll learn and optimize this over time.
  4. From there, sit down with the team to discuss what activity you can do to hit each target by channel and formulate a plan together.

4. Review if your targets are realistic based on people and budget

There will be some fun back and forth with your CEO at this point. However, your CEO would likely rather know at the start of the quarter if they need to invest more to hit revenue goals. It’s better than realizing at the end of the quarter you didn’t invest enough to get there. If it needs to be addressed, have the conversation!

That said, there’s a leap of faith involved here. I’ve thrown a few tantrums in these discussions in the past and then gone on to hit the targets I threw a tantrum over without increasing budget or team members. It will surprise you how your team can perform when they have focus and a structured framework like this. My team has certainly surprised me along the way.

Top tip: Don’t throw a tantrum (it’s not a good look). Dream BIG and don’t limit your thinking by what’s been achieved in the past.

5. Tips on setting OKRs with your team

At last, we get to the actual OKR part. I’ve put together a template for SaaS Marketing team OKRs here, which is based off our experience of setting OKRs in the team here. You can make a copy of the Google Doc and edit for yourself.

Marketing OKR Template Examples

However, in no particular order, I’ve also put together my top tips for setting OKRs with your team based on what we found:

  1. Pipeline key results should be percentage growth not actual numbers: When it comes to defining key results for pipeline targets don’t set actual numbers, it’s best to define percentage uplifts. You score key results on a scale of 0 to 1 - with 0.6 to 0.7 being par. As an example, let’s say you need to generate 1,000 leads in a particular quarter. You set that as a key result, but get 600 leads. The score would be a 0.6. Looks good on the face of it, but actually you may have got 650 leads the quarter before, so you’re not actually growing but OKR scores suggest you’re doing just fine. However, if your key result was “increase leads by 25% vs. the previous quarter” then any score over 0 will still mean growth for your business.
  2. Do it quarterly: There’s lots of research suggesting that objective setting in high growth businesses should be quarterly as things change quickly. I agree, but favor quarterly because anything more regular than that will create a huge administrative overhead for you to the point where you will never do anything but set and score objectives and key results.
  3. Setting more than 4 objectives dilutes focus: I’ve found 3-4 objectives to be optimum. Any less than that, and you’re not quite pushed hard enough. Any more creates a loss of focus.
  4. Around 3-5 key results per an objective is about right: Less than three key results or metrics per an objective tends to ignore that each key metric has supporting metrics (you can read a bit more about KPIs and supporting metrics here) that ensure you achieve that key metric in a sensible way. Too many and you counteract the focus that OKRs are meant to bring.
  5. Set aggressive goals: If you want to drive growth, you need to set aggressive goals. I often say to my team when we’re defining key results that we’ll be equally disappointed if you get a 0 or a 1 when it comes to scoring. Getting a 1 suggests you aren’t thinking big enough when setting goals, and that’s not the mindset needed for growth.
  6. Create buy-in through collaboration: If you set targets and then tell your team what they are then they won’t have as much accountability or buy-in for them. Working together on defining aggressive but realistic targets based on pipeline goals creates far greater accountability and buy-in.

6. Make the OKRs visible to encourage collaboration and accountability

Part of the OKR culture is to make them open and visible to everybody in a business. This does three key things. First, it encourages the wider team to chip in where they can offer some knowledge to help with other team members’ OKRs.

Second, team members who have the same or overlapping OKRs know to collaborate and coordinate on hitting them. Finally, it makes owners accountable for what they’re committing to in the wider organization.

Top tip: We display goals and progress on live TV dashboards in the office so that they’re always there as a reminder of what we’re working towards, but obviously, we would. :)

7. Review metrics / progress in regular meetings to drive action

I’ll readily admit this isn’t something we’ve done enough of, but if you’re going to commit to OKRs then really every 1:1 or team meeting should start with progress against goals.

Reviewing OKRs can then shape the discussion around what activity should be prioritized based on where you’re behind and ahead of target. This is where the focus that OKRs brings will really start to shine.

Top tip: Don’t use key results as a stick to beat people with, use them for framing priorities and then ask “what activity shall we prioritize to get on track?”

8. Detach OKR scoring from compensation reviews

It’s important to detach compensation or performance reviews from OKRs. OKRs are simply a framework for focusing your business. If compensation is connected to OKRs then it encourages people to fudge figures and set easily attainable key results. This completely defeats the purpose of OKRs.

Top tip: When it comes to scoring and you’ve missed key results, you need to work with your team to understand:

  • Was it because we set unrealistic goals? If so, well done for thinking big! However, let’s moderate expectations next time.
  • Was it because we can’t grow this acquisition channel as quickly as we thought? If so, what can we do to accelerate it? Nothing? Ok, let’s put less of a focus on it next quarter.
  • Did we not have enough budget? If not, why not? E.g. did acquisition costs increase? Did conversion rates drop? What’s the best way to counteract that? Increase budget or optimize the funnel?
  • Did you run out of time? If so, do we need another person to support on this? Are there opportunities for improvement in efficiency or organization?
  • Did we have the wrong key results or metrics for the objective?

When you understand the cause of missed key results, you can quickly adjust and identify gaps for the next quarter.

It’s a learning process

In my experience, you won’t set OKRs right the first time. Don’t try. Setting goals is a learning process and every quarter you’ll get closer to knowing what’s attainable and what activity is needed to achieve goals. Set the expectation for learning at the outset, to ensure it doesn’t destroy motivation.

Make sure you adjust every quarter and learn what is and isn’t working using your OKRs. As you do this the growth of your SaaS business will become more predictable, which creates a healthier business and means you sleep better at night!

Have you used OKRs to focus a marketing team? I’m always looking to improve, and would love to hear your advice/experience in the comments!

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