In the early days of Pardot, the idea of sales or business development reps for SaaS companies started to gain popularity. While not a new concept, the idea of cold calling and cold emailing potential prospects was thought to be old fashioned and not effective. It was wildly effective. As part of building the process around outbound sales activities, we also learned an important lesson in output vs. outcomes.
Initially, we focused on output. Every rep had to make 40 calls and send 40 emails per day with a quota of one scheduled demo a week. Reps received a base salary plus $100 per demo. Eighty calls and emails per day, when done diligently with high quality talking points and content, should result in scheduled demos. The output of the calls and emails was scheduled demos.
Only, after a number of scheduled demos, and paying out the commissions, we realized output and outcome are two different things. The reps were scheduling product demos with anyone that would take a demo, regardless of fit. If someone on the other end of the line said ‘yes’ to a meeting, the rep scheduled that meeting.
Our desired outcome was a completed demo with a potential prospect that was a good fit. So, instead of $100 per demo scheduled, we changed it to $200 per demo completed (not just scheduled) where an account executive accepted the meeting and the potential prospect showed up for the call. Now, not only did the meeting have to be scheduled, the potential prospect be the right type, but the meeting had to take place (lots of no-shows in sales prospecting). We moved the outcome from being worthwhile on occasion, to a well-defined outcome that was useful most of the time.
Output is what happens as a result of effort.
Outcome is the value from the output.
As an entrepreneur, it’s easy to get too focused on output and not provide enough attention to outcome. Both are needed and both are critical to growing a startup. The next time you’re thinking through activities and effort, breakout the output and outcome elements and ensure they’re aligned properly.
One thought on “Output vs. Outcomes for Startups”
That’s such a great point, David. We recently added self-serve product and free-trial-offer to our platform and business. We’re learning a lot as we started focusing energy and resources on growing our website traffic, through SEO and paid media, to build the top of our funnel (site traffic). The desired output for the marketing spend is free trial signups. However, our desired outcome is paid customer activation after trial. So now our big challenge is figuring out how to get people engaged enough with our platform during trial to convert to paid customers that we then can help grow organically. The output doesn’t really matter if we can’t get the desired outcome.