OKRs, KPIs, and your Northstar

Protocols for establishing metrics that will help propel your projects to success.

Intro

Successful businesses build a common framework to drive performance, alignment, and goal-setting within their organization. Intel is often regarded as the pioneer with the use of OKRs, or Objectives and Key Results, to track progress and drive innovation towards the company’s Northstar goal. Since then, the likes of Google, Amazon, AirBnb, Uber, Netflix, and more have all adopted this framework.

Both OKRs and KPIs play a crucial role in various aspects of business, from partner enablement strategy to sales, helping companies recognize patterns, measure expansion and retention strategies, and ultimately achieve success.

There’s no one playbook, and there will be different order of metrics for different businesses. However, the general idea is to align your Northstar goal with the broader OKRs and KPIs set by the company to ensure that all efforts are directed toward achieving profitability and impact.

Aligning to the Northstar

Northstar goals are designed to provide a clear, overarching focus and guide the company's strategic decision-making. While the specific Northstar goal can vary widely from one company to another, it generally comprises of both a volume goal, and an efficiency goal.

Keep in mind that it should be a paired metric, so the Northstar should not be limited to achieving high volumes but should also emphasize revenue and efficiency. For example, this means understanding specific profitability of your programs and tracking them early to ensure they stay on course.

Tracking is accomplished through OKRs and KPIs to align all teams towards the specific Northstar goal. These goals should be something that each team can directly impact, focusing on inputs rather than outputs. Key components of this framework, depending on the team and objective include volume goals (such as deal size or daily active users), efficiency goals (time-to-value or payback period), and ROI goals ($ value of SQL pipeline, LTV to CAC ratios).

These metrics can’t be viewed in vacuum. Each company has to take into consideration both the context and the environment, then adjust accordingly for what the signal is now so it’s a reflection of what is happening in the market now.

The Power of KPIs

KPIs provide the detailed measurements and insights necessary to track ongoing progress, make informed decisions, and ensure that the company is on the right path to achieve its quarterly OKRs and overarching Northstar goal. Done correctly, they are instrumental in giving teams insight, improve processes, and continue to grow in the right way. Let's take a closer look at how having some of these metrics at our fingertips can help inform decisions and improve performance.

Time-to-Value

Time-to-value is a critical KPI that measures how quickly customers derive value from your product or service. Here are two components that can be measured:

Activation Data: This metric tracks how swiftly customers get started with your offering after acquisition. A shorter time-to-activation indicates a more efficient onboarding process.

Adoption Data: Adoption data measures how effectively users integrate your product into their daily routines. A high adoption rate is indicative of a successful customer journey.

By understanding where the cause of any bottlenecks may be, companies can modify their onboarding process and content management strategy. This adjustment will reduce time, improve communication and make it easier for new customers and partners to use your platform.

Use relationship management software to monitor adoption and activation.

Revenue

ROI is the ultimate yardstick for measuring the effectiveness of your partner enablement strategy and sales efforts. The following KPIs can help you gauge your return on investment:

Monthly recurring revenue, or MRR: reveals how much recurring revenue you can expect based on subscriptions, and is a key metric with sales and customer service performance.

Partner-Sourced Revenue: Calculate the revenue generated through partner enablement. Analyze campaigns, sources, partners, and channels to measure.

Number of Deals: Keep track of the quantity of deals in your pipeline.

Deal Size: Determine the average value of your deals.

Time-to-Close: Measure the speed at which deals are finalized.

Deal Velocity: Analyze the momentum and pace of your sales process.

Win-Rate: Assess your success rate in converting leads into customers.

Gross $ Retention: This KPI helps you understand how effectively you're retaining existing customers and revenue.

Build the capabilities for deal tracking and monitoring the deal activities over a defined period.

Customer Satisfaction

A satisfied customer is a loyal customer, and measuring customer satisfaction is pivotal. Here are some KPIs to consider:

Satisfaction Surveys: Regularly conduct surveys to gather feedback from customers about their experiences.

Customer Journey Mapping: Visualize the customer journey to identify pain points and opportunities for improvement.

Portal Logs: Monitor changes in daily portal logins to gauge user engagement.

Customer Complaints: Keep an eye on the number of customer complaints and address them promptly.

NPS/NRR (Net Promoter Score/Net Revenue Retention): These metrics measure customer loyalty and revenue growth. A declining NPS or NRR may indicate renewal risk.

Satisfaction surveys can help you uncover where improvements are needed.

Leveraging KPIs for Success

Understanding these KPIs and how to effectively leveraging them is where the true power lies. Here's how to harness the potential of KPIs:

Regular Monitoring: Continuously track and analyze KPIs to spot trends and make timely adjustments.

Data-Driven Decision-Making: Base your decisions on data rather than intuition or guesswork.

Feedback Loops: Use KPIs to create feedback loops within your organization. Share insights across teams to foster collaboration and alignment. Explain how each KPI can help reach the Northstar goal across teams.

Early Warning Signals: KPIs can serve as early warning signals. For instance, a decrease in daily portal logs or an increase in customer complaints may indicate renewal risk that requires immediate attention.

Culture of growth

Beyond the metrics and goals, fostering a culture of continuous improvement and growth is essential. Here's how you can instill this culture within your organization:

Learning from Mistakes: Understand that missteps and failures are valuable learning opportunities. Encourage teams to openly discuss what went wrong and how to prevent it in the future.

Open Communication: Promote transparent communication among teams and partners. Ensure that everyone is informed with how their KPIs and OKRs outcomes are closely tied to and correlated with the desired Northstar goal. This helps to reduce asymetric information across teams.

Feedback Loop Integration: Create feedback loops that encourage regular sharing of insights and lessons learned. These loops should encompass not only successes but also challenges and obstacles that enables you to measure progress effectively.

Adaptability: Embrace change and adapt your strategies as needed. Remember that markets and customer needs evolve, and your approach should evolve with them.

Conclusion

It’s important to define what the key drivers of success are for your business. There is no one playbook and it is going to be different for different businesses. Improvement and iterations on these metrics form the bedrock of a resilient business. By pairing your Northstar Metrics with the right KPIs and OKRs, maintaining alignment across teams, and fostering a culture that thrives on learning to track the right signals, you can navigate business problems with more confidence on the path towards sustainable growth.