Jun 02, 2024 Digital BIAS

How to use KPIs and OKRs to drive business growth

How to use KPIs and OKRs

Many businesses link their success to their ability to measure performance. This isn’t solely tied to sales, marketing, and service performance but also to people and finances. Those prioritising all metrics drive rapid success, but understanding numbers is just the first piece of the puzzle.

Beyond numbers, you have to know what story the numbers tell you, how you can begin to predict revenue growth, the headcount you need to achieve that, and possible downsides if markets contract or rapidly expand.

They also help you determine the run or burn rates and allocate the budget for new features or services.

Collectively, you need two sets of metrics: OKRs, which are firm-wide, and KPIs, which break down what each team needs to do to achieve the OKRs.

Using KPIs and OKRs to Drive Business Growth

In sectors like SaaS and Fintech, where BIAS delivers most of its work, leveraging Key Performance Indicators (KPIs) and Objectives and Key Results (OKRs) can be a game-changer in driving growth. 

Using KPIs (Key Performance Indicators) and OKRs (Objectives and Key Results) in tandem can significantly drive business growth by providing a comprehensive framework for setting, tracking, and achieving strategic goals. These frameworks provide a structured approach to setting, tracking, and achieving business goals, ensuring that every action is aligned with the company's strategic objectives.

KPIs are quantifiable metrics that measure the performance of various business activities. They offer insights into revenue growth, customer acquisition costs, and customer satisfaction. They serve as benchmarks for evaluating the health of ongoing operations and ensuring that the business is on track to meet its targets. 

On the other hand, OKRs are a goal-setting methodology that defines ambitious objectives and the key results needed to achieve them, fostering alignment and focus across the organisation. 

By integrating KPIs into the OKR framework, businesses can ensure that their day-to-day activities (monitored by KPIs) align with their broader strategic goals (defined by OKRs), thus creating a synergy that promotes operational excellence and strategic growth. This combined approach helps maintain performance and drives continuous improvement and innovation, ultimately leading to sustained business growth.

The Role of KPIs

Key Performance Indicators (KPIs) are quantifiable metrics that reflect the performance of various aspects of a business. They provide a clear picture of how well the company is progressing towards its goals. 

For instance, in marketing, KPIs such as Cost Per Lead (CPL), Customer Lifetime Value (CLV), and Conversion Rate are crucial for understanding the effectiveness of campaigns and optimising marketing spending. 

In sales, metrics like Lead Quality, Sales Cycle Length, and Customer Acquisition Cost (CAC) help refine sales strategies and improve performance. By regularly monitoring these KPIs, companies can identify trends, spot inefficiencies, and make data-driven decisions to enhance their operations.

The Power of OKRs

Objectives and Key Results (OKRs) are a goal-setting framework that helps organisations define and track their objectives and the key results needed to achieve them. OKRs are typically set quarterly and are designed to be ambitious yet achievable. 

For example, a company might set an objective to "Increase brand visibility in the market," with key results such as "Increase website traffic by 30%" and "Generate 150 Marketing Qualified Leads (MQLs) from email marketing". This framework ensures that all team members are aligned and working towards the same high-level goals, fostering a culture of accountability and focus.

Integrating KPIs and OKRs

Integrating KPIs and OKRs creates a powerful synergy that drives business growth. While OKRs set the strategic direction and define what success looks like, KPIs provide measurable metrics that track progress towards these goals. 

For instance, if an OKR is to "Improve customer satisfaction," relevant KPIs might include Net Promoter Score (NPS), Customer Retention Rate, and Customer Satisfaction Score (CSAT). By aligning KPIs with OKRs, companies can ensure that their day-to-day activities are contributing to their broader strategic objectives.

Best Practices for Activation

To effectively activate data from these metrics, companies should follow several best practices:

1. Align Metrics with Business Goals: Ensure that both KPIs and OKRs are directly aligned with the company's strategic objectives. This alignment helps focus efforts on the most impactful areas.
2. Automate Data Collection and Reporting: Use tools like HubSpot CRM to automate data collection and reporting. This reduces manual effort, ensures accuracy, and provides real-time insights.

3. Create Custom Dashboards: Develop custom dashboards to visualise key metrics and track performance in real-time. This helps quickly identify trends, issues, and opportunities.

4. Regular Review and Analysis: Regularly review and analyse the data to uncover patterns, trends, and insights. Use these insights to inform strategic decisions and take corrective actions as needed.

5. Foster a Data-Driven Culture: Encourage a culture of data-driven decision-making within the organisation. Provide training and resources to help employees understand and utilise data effectively.

What are some unique KPIs specifically for tech companies?

Tech companies often operate in dynamic and fast-paced environments, requiring specific KPIs to measure their performance effectively. Here are some unique KPIs tailored for tech companies:

Financial KPIs

  1. Monthly Recurring Revenue (MRR): Measures the predictable revenue generated from recurring services, such as subscriptions, on a monthly basis.
  2. Customer Acquisition Cost (CAC): This calculates the total cost of acquiring a new customer, including marketing and sales expenses.
  3. Customer Lifetime Value (CLTV): Estimates the total revenue a company can expect from a single customer over their lifetime.
  4. Gross Merchandise Value (GMV): Represents the total sales value of goods sold via a platform, particularly relevant for e-commerce tech companies.

Customer and User Engagement KPIs

  1. Daily Active Users (DAU) and Monthly Active Users (MAU): Track the number of unique users engaging with a product daily and monthly, providing insights into user retention and product stickiness.
  2. Churn Rate: Measures the percentage of customers who stop using a product or service over a specific period, indicating customer satisfaction and product quality.
  3. Net Promoter Score (NPS): This measure gauges customer satisfaction and loyalty by measuring their willingness to recommend the product to others.

Product and Market Performance KPIs

  1. Product Usage: Tracks how frequently and extensively customers use specific product features, helping to identify popular features and areas needing improvement.
  2. Market Share: Measures the percentage of total sales or revenue a company holds in its target market, reflecting its competitive position.
  3. Win Rates: Calculates the percentage of qualified leads in the sales pipeline that are successfully converted into customers, useful for sales planning and market analysis.

Operational and Efficiency KPIs

  1. Lead Velocity Rate (LVR): Measures the growth rate of qualified leads month-over-month, indicating the effectiveness of lead generation efforts.
  2. Average Response Time: Tracks the average time taken to respond to customer inquiries or support tickets, reflecting the efficiency of customer support operations.
  3. Cybersecurity Incident Response Time: Monitors the time taken to detect, resolve, and prevent security breaches, crucial for maintaining data security and customer trust.

Emerging and Ethical KPIs

  1. Carbon Footprint: Measures the environmental impact of a company's operations, products, and services, reflecting its commitment to sustainability.
  2. Diversity and Inclusion: Tracks diversity metrics to ensure fair representation and equal opportunities within the company.
  3. Data Privacy Compliance: Assesses the company's adherence to data privacy regulations, ensuring the protection of user information.

These KPIs provide tech companies with a comprehensive view of their performance across various dimensions, enabling them to make informed decisions and drive continuous improvement.

By following these best practices, companies can harness the power of KPIs and OKRs to drive growth, optimise performance, and achieve their strategic objectives. This integrated approach ensures that every action taken is purposeful and contributes to the organisation's success.

Are you maximising your reporting metrics and using the data to drive your business' growth?

If not, why not talk to our team and understand how we can help you use your data more effectively to make smarter strategic decisions? Use the form below or the button in the menu to book time with our team.


Published by Digital BIAS June 2, 2024