Hindsight, Insight, and Foresight

Lately I’ve been thinking more about about going beyond merely looking at backward-looking data and metrics (e.g. The Definitive List of Weekly Operational Metrics for SaaS Startups) and learning how historical data can be used to inform what will happen (predictive analytics). Derek Kane has a Slideshare titled Building and Sustaining Predictive Analytics Capabilities. On slide 26 he defines hindsight, insight, and foresight.

  • Hindsight – What is happening?
  • Insight – Why is it happening?
  • Foresight – What will happen? What should happen?

As startups mature and improve their operational excellence, insight and foresight become logical additions to the weekly business review. Entrepreneurs would do well so start asking the questions “Why is it happening?” and “What will happen?”

What else? What are some more thoughts on hindsight, insight, and foresight?

Build a Sales Playbook

One of the first things a new sales leader (or entrepreneur running sales) should do is build a sales playbook. A sales playbook, put simply, is a central resource for tracking everything from the basics, like the elevator pitch, to the more advanced items, like differentiating from specific competitors. With more knowledge and training, sales reps speak more confidently and intelligently, helping win more deals.

To start, make a Google Doc sales playbook and include these items:

  • Corporate information
  • Sales pitch
  • Elevator pitch
  • Market space
  • Recent trends
  • Target customer
  • Types of buyers
  • Features and benefits
  • List of references
  • Sales process
  • CRM process
  • Competitors and differentiators
  • Objection handling
  • Glossary

Revisit the playbook on a weekly basis and ensure that the team contributes to it. With sales, the more you know, the more you sell.

What else? What are some more thoughts on building a sales playbook?

Analyzing Data Over Time

Every entrepreneur I know loves to analyze data and metrics about their business over time. How’s our revenue growing? How many daily active users are we averaging? Only, the data is often in summary form in a spreadsheet making it hard to analyze. Eventually, an analytics and reporting system is necessary to better analyze data over time and present it in an actionable manner.

Here are some common questions to ask when analyzing data over time:

  • How are we doing this month/quarter compared to this time last month/quarter (ideally with a chart showing both lines)?
  • What’s our trailing 30-day average as measured on a daily/weekly basis?
  • What’s the rate of change on a weekly/monthly/quarterly basis (are we accelerating or decelerating)?
  • What’s our expected results for the rest of this month/quarter based on the previous data and corresponding results (predictive analytics)?

Analyzing data over time is a critical part of every weekly leadership team. Use analytics and data platforms to automate the collection of data and generation of reports that show both the metrics and more detailed analysis.

What else? What are some other common questions to ask when analyzing data over time?

Build a Bottom-up Sales Forecast

When talking to entrepreneurs about their sales forecast, they love to talk about the market and say “if we only get 1% of XYZ we’ll do great.” Of course, the real world doesn’t work that way. Instead, it’s best to build a bottom-up sales forecast that takes into account the current sales performance and extrapolates it out based on growth rates.

Here are a few factors to keep in mind with a bottom-up sales forecast:

  • How does the corresponding volume of sales qualified leads need to grow? Do the current marketing campaigns have capacity for more volume (many campaigns get more expensive with more volume like pay per click ads)?
  • How many sales reps need to be hired for one to work out (it’s important to note when planning that all new hires don’t work out)?
  • How long does it take for a new sales rep to ramp up and be fully trained?
  • What’s the attrition rate of existing sales reps?

Often, if a startup wants to triple sales next year (see Triple, Triple, Double, Double, Double), they need to expand the sales and marketing team well in advance of the new year.

My recommendation: build a bottom-up sales forecast.

What else? What are some more thoughts on a bottom-up sales forecast?

Where are the Startup Goals?

One of the lessons I’ve learned recommending the Simplified One Page Strategic Plan to entrepreneurs is that they often don’t have goals. Crazy, right? When asking for the one pager before a meeting, most of the time I get a response that they don’t have any goals yet but will put some together and send it over. After enough of these conversations, I’ve realized there are a few factors at work:

  • Entrepreneurs are focused on the here-and-now. It’s hard to work on the business when the business isn’t working yet (it’s a startup!).
  • Goals are a form of commitment. If I make a goal, it means that I want to hit it. Without goals, I can keep ambling along.
  • With goals, there’s a scorecard. With a scorecard, it’s black-and-white as to how well things are going. Many entrepreneurs struggle with admitting they’re failing.

My recommendation is to at least track the weekly operational metrics. Start with metrics, then add goals as the business matures.

What else? What are some more thoughts on entrepreneurs not tracking progress against goals?

The Definitive List of Weekly Operational Metrics for SaaS Startups

Every SaaS startup should track their operational metrics on a weekly basis (not monthly). Now, in the early days it isn’t necessary to track a huge list of metrics as many aren’t meaningful. As the business grows and scales, the number of metrics to track scales as well.

Here’s the definitive list of weekly operational metrics for SaaS startups:

  • General
    • Total MRR
    • Total AOV (annualized MRR)
    • Total Clients
    • MRR / Client
    • AOV / Client
  • Sales
    • New MRR
    • New ACV
    • # New Clients
    • Professional Services Sales
    • Total # AEs
    • Total # Productive AEs
    • New MRR / Productive AEs
  • Implementation
    • Active Implementations
    • Implementations Started
    • Implementations Closed
    • Total # Implementation Employees
    • Total # Productive Implementation Employees
    • Implementations / # Productive Implementation Employees
  • Support
    • Cases Submitted
    • Cases Closed
    • Net Change in Cases
    • Average Initial Response Time
    • Average Resolution Time
    • Submitted Cases / Customers
    • Total # Support Employees
    • Total # Productive Support Employees
    • Customers / Productive Support Employees
    • Submitted Cases / Productive Support Employees
  • Customer Success
    • Upgrade $ (ACV)
    • # Upgrades
    • # Lost Clients
    • Lost ACV
    • Downgrades $ (ACV)
    • # Downgrades
    • Total # Customer Success Employees
    • Total # Productive Customer Success Employees
    • Net Upgrade / Downgrade ACV
    • Customers / Productive Employees
  • Engineering
    • Bugs Opened
    • Bugs Fixed
    • Support Escalations Created
    • Support Escalations Closed
    • Story Points Completed
  • Marketing
    • # Marketing Generated MQLs
    • # Marketing Generated Opportunities
    • # Marketing Generated Customers
    • New ACV from Marketing
    • % of New ACV from Marketing
  • Finance
    • Revenue (GAAP)
    • $ Billed
    • Cash Receipts $
    • Accounts Receivables
    • Percent of A/R Overdue
  • HR / People
    • Total Current Employees
    • # of Starts
    • # of Open Positions
    • Employees by Department
    • Open Positions by Department

The fastest growing SaaS startups are well instrumented businesses. Everyone in the company should know the goals/OKRs and the corresponding metrics. Use this definitive list of weekly operational metrics for SaaS startups.

What else? What are some more metrics you’d add to the definitive list of weekly operational metrics for SaaS startups?

Weekly Confidence Rating for OKRs

Another topic from the book Radical Focus: Achieving Your Most Important Goals with Objectives and Key Results that stood out to me is the idea of a weekly confidence rating for the OKRs. The idea is that every week whomever owns a key result reports on their confidence that they’ll achieve it on a scale of 1 to 10 with 10 being 100% confident (e.g. a value of 5 / 10 would mean 50% confident that the key result will be met).

Think about that for a minute: how often do you do a serious gut check as to whether or not you’re going to hit your current goals. Weekly? Monthly? Never? This idea of not only assessing the confidence that you’ll hit the key result but actually quantifying it on a weekly basis is great for team alignment and communication. How often have we heard someone give regular updates about their project or goal only to realize too late that they’re not going to hit it?

The next time you really want to drive accountability and clarity in your organization, ask for a confidence rating for each goal’s metric or objective’s key result and track it on a weekly basis. Watch as things improve and people are more focused.

What else? What are some more thoughts on weekly confidence ratings for OKRs?