The right scorecard metrics can be very challenging for entrepreneurial businesses, especially in the sales and marketing space. The stakes are high! If you don’t do it right, you can create silos, and departments might be working against each other without even knowing it. Do it right, and you have an entire business pointed in the right direction to drive revenue growth.
You don’t need to throw out your scorecard to build the perfect scorecard. However, some of your metrics might just need to be tweaked or narrowed to build alignment between your teams and get them working toward your ultimate revenue goal. When you get specific with your metrics, your teams will have more clarity on what they are responsible for (accountability), how they and other teams are performing (alignment), and will be able to see the impact of their work on the company’s revenue goals (impact).
Now, let’s get into it.
No one has an unlimited budget for sales and marketing, so it is imperative to have a smart, responsible plan to grow revenue. Businesses typically start to develop scorecard metrics with revenue goals, then eventually land on departmental metrics that support the goal. There are a couple of challenges with this:
- Many times, the big revenue goal is unfounded, based on a “spaghetti-on-the-wall” approach to setting a financial goal.
- Metrics are connected vertically for each department, but the cross-functional (horizontal) alignment between departments is lacking, and silos are created.
So how do you align the business around the big revenue goals? The answer is the Ideal Client Experience.
Let’s explore how Ideal Client Experience metrics work as the basis for aligning the business to drive revenue by looking at:
- High-level metrics
- Ideal Client Experience (ICX) metrics
- Departmental metrics
I was on a call with a partner yesterday that is working with a business that generates over $100M in revenue.
Interestingly, they do not have any specific growth goals they are pursuing as a business (just one of many reasons we love working with companies that run on EOS!).
Smart growth is about measuring both revenue as well as profit. In addition to tracking revenue and profit, consider tracking metrics like these to avoid the spaghetti-on-the-wall scenario:
- Number of Clients: Measures how effective you are in bringing on net-new clients
- Revenue per Client: Measures your effectiveness of increasing the value you provide to clients and the associated revenue
If it is trackable, you might even consider measuring # of ideal clients and revenue per ideal client. Regardless, these metrics can also help you develop realistic revenue goals (instead of the spaghetti-on-the-wall metrics).
How does this promote alignment? First, marketing and sales agree on the ICP — the Ideal Client Profile — and then leads are filtered against this. Marketing then focuses on generating the right leads, and sales prioritize closing them instead of chasing their tails with clients that are not necessarily good for the business. By the way, it is much easier for marketing to have a more narrow focus, and it takes fewer sales reps to close ideal clients and filter out suboptimal ones.
– From a past blog, 4 Strategies for Aligning Sales and Marketing
Ideal Client Experience Metrics
The big idea here is to ensure that your ideal clients seamlessly navigate their experience with your business with as little friction as possible – from bringing on a client to upselling/cross-selling and delivering value to them. For most companies, departmental metrics are not related to measuring how seamlessly your clients move through their experience.
What do we mean when we talk about an “Ideal Client Experience”?
That experience begins when your ideal prospect has a problem that you might be able to help with and ends when they are enjoying all of your products and services. The documentation of each stage that your prospect/client goes through is what we call the Ideal Client Experience (or ICX)…Ensure you think about it from the lens of your client and not from your internal sales or delivery process. Thinking about how clients feel in each stage and the friction that they might experience is a great framework for improvement. This lens allows you to be more objective in considering a sales and marketing direction. It often brings operations into the equation as well as they obviously have a significant role in maximizing the client experience.
– From a past blog, The Lens of the Ideal Client Experience
So how are Ideal Client Experience Metrics different? These metrics:
- Connect directly to high-level metrics like revenue and profitability as well as departmental metrics (see below), and
- Enable cross-functional teams to have visibility to the experience that prospects and clients have with your business.
Examples of Ideal Client Experience Metrics are:
- Ideal Client Experience (ICX) Stage Conversion Rates: The % of clients that move from one ICX stage to the next.
- Time Spent in Each ICX Stage: The time that an Ideal Prospect or Ideal Client spends in each client experience stage.
Keeping an eye on these metrics will help you prioritize where the biggest opportunity is to streamline your prospect/client’s experience with your business and realize revenue growth faster.
Departmental metrics are normally siloed without the added context of the Ideal Client Experience. Departments absolutely need to have their own metrics, but they need to be tied to some aspect or stage of the Ideal Client Experience. The best way to illustrate this point is to look at a few examples of departmental metrics:
Siloed Metric: # of Leads
ICX Metric: # of Ideal Client-Qualified Leads
Siloed Metric: # of Qualify meetings
ICX Metric: # of Qualify Meetings with Ideal Client-Qualified Leads
These new ICX Metrics will help you to get focused on your specific goals. We’ve already established that Ideal Clients are the ones that are the most profitable to your business, are the most productive to serve, and that your team actually enjoy working with. With that in mind, these clients are obviously the ones you want to bring in more of as they’ll drive more revenue and profit, right? If that’s the case, then shouldn’t your goal metrics be designed to help ensure you are bringing on more Ideal Clients, meeting with Ideal Client-Qualified Prospects, and closing business with Ideal Clients.
These new departmental metrics will help you to stay focused on bringing in ideal clients and driving more revenue. Out with old, unfocused, unspecific metrics and in with the new.
It’s hard to argue with the fact that it would be easier to meet your revenue goals by bringing on Ideal Clients than those that might not fit your Ideal Client Profile.
What metrics are you tracking in your business to ensure your team is focused on bringing the right clients into your business?
To learn more about how other entrepreneurial companies are optimizing their revenue scorecards schedule your explore meeting.
Need help determining the impact of some of your pipeline metrics? Check out our Worksheet!