Are you trying to set OKRs for your SaaS company but failing to get the execution right?
Well, you are not alone. According to Harvard Business Review, 95% of employees needed help understanding company strategies. Now imagine, if 95% of employees find it hard to understand the strategies you build, there is a likelihood that you may end up failing in the execution phase as well.
This can be true for all the managers who are new to OKRs. However, you can set your OKRs correctly if you learn the right lessons. With the right OKRs, you can:
- Aligning individual goals with company goals
- Increase productivity by directing every action towards one goal
- Regularly track performance and progress
- Ensure accountability and transparency of goals throughout the organization
- Establish strategic priorities and execution of plans
- Analyze drawbacks and take corrective measures to get back on track
With such lucrative results, it becomes essential for you to set OKRs for your SaaS companies. To help you get started on that, we’ve described a few real-life lessons along with examples on how to set OKRs for your SaaS business. But first let’s understand why are they crucial for your SaaS business.
Why is OKR Important for SaaS Companies?
SaaS companies use metrics like MRR, ARR, CAC, etc., to achieve their goals. OKRs help SaaS companies set critical goals for improving qualitative and quantitative outcomes. Whether it is about increasing profits, market share, or customer satisfaction, OKRs help set goals, implement them, and monitor progress.
With the OKR framework for your business, you can ensure that all the tasks assigned to your employees progress toward achieving the company goals. You can track the progress made and hold accountability for the tasks. OKRs also enable you to find the gaps/red flags in the process. It helps assess the required tools and technologies for achieving the goals, and align everything.
5 Real-Life Lessons about OKRs for SaaS Companies
All frameworks come with their learning. These real-life lessons about OKRs in SaaS industry will help you avoid certain pitfalls and empower you to achieve rapid success in OKR implementation.
1. Build a plan to ensure OKR success
A lot of time is spent on setting the targets but to ensure the success of OKRs, you need a plan. Each department should understand the purpose and OKRs to deliver the highest value in a defined time. It is ultimately the plan and its execution that determines the success of OKRs
- Set and communicate your vision to help everyone in the company understand what you want to achieve and what is expected of them.
- Set clear targets and assign measurable key results to those targets. Focus on the KPIs and metrics
- Set 2-3 objectives for each department that are focused on the main company objectives
- Split the department OKRs into individual-level OKRs
- Sit down with the team and individuals to discuss activities you can do to achieve the targets and develop a plan.
- Review OKR progress regularly instead of only following up at the beginning and the end of every quarter or OKR cycle.
For example, if the company goal is to increase revenue, the OKR for the quarter should be to increase MRR. This can be further divided into individual OKRs for each department, like the Sales department’s objective could be set to improve the sales funnel. For the marketing department, it could be to optimize funnels of paid-marketing campaigns and so on.
2. Don’t set impractical OKRs, be as realistic as possible
Nearly 70% of companies fail to implement OKRs for the first time, which means that more than just coming up with OKRs is needed. OKR focuses on setting achievable goals with measurable results. Setting impractical goals can lead to overuse of resources over time. With unrealistic goals, you might spend time, effort, and money to the extent that the loss becomes irreversible. This ultimately leads you toward disappointment and frustration.
Be realistic with your goals. One cannot become Google by adopting OKR methodology immediately. Realistic goals help you maximize your resources and team efforts and produce results.
- Consider your current capabilities, resources, and individual capacity to set realistic goals.
- Set realistic time frames considering the team and resources available.
- Set realistic goals using the reference from your industry to set your goals.
For example, increasing customer acquisition by 100% in a month is unrealistic if you don’t have enough capabilities to pull it off. However, if your OKR is to increase customer acquisition by 20% and you know that your current resources can pull it off, you need to develop initiatives to drive them to achieve this goal.
3. Collaborate with your team, don’t just push them to hit the goals
For achieving goals, a cohesive team who works together is paramount. A lot of the time, the leadership team enforces goals upon their teams instead of motivating them. When setting OKRs, it is important to ensure:
- Everyone knows that their efforts are responsible for the failure or success of the group. This brings the focus on contributing to the project or tasks diligently.
- Encourage team members to help each other.
- Be warm and direct when setting goals. Set clear expectations with a people-oriented approach.
- Encourage low performers and communicate respectfully about the shortcomings.
- Recognize accomplishments of top performers and other team members.
4. Schedule regular sync-ups to review the progress
Monitoring and reviewing progress is highly crucial for successful OKR implementation. Monitor team and individual members to ensure that everyone is on the right track. This also helps in taking initiatives to boost performance, productivity, and morale. Regular sync-ups show the team members that you care about fostering a healthy work environment. It also ensures that everyone is driven towards achieving the goals.
- Schedule weekly check-ins and 1:1s to track progress and find out if they are facing any difficulties.
- Send a quick message like ‘ how’s the product coming up? Need any help from my side’ to check the progress, at the beginning of the workday.
- Use KPIs and OKRs to evaluate how they are performing and how they are contributing to the goals.
5. Streamline your OKRs with all key company metrics
SaaS companies use some metrics to achieve their goals which include monthly recurring revenue, annual recurring revenue, customer acquisition cost, Payback period, annual contract value, daily and monthly active users, etc. Your OKRs should be aligned with these important metrics and everyone should be working towards achieving the same goals. Create shared goals to align cross-functional teams, adjust initiatives and achieve the larger goal.
For example, your company objective could be to increase the MRR to $400k. Your key results will include objectives for your sales, product, marketing, operations, and customer service departments.
4 Detailed Examples to Help SaaS Companies Set Their OKRs
While the organizational goal is common for all, each team works differently to help achieve that goal. They all have different sets of goals to achieve. Every department in the SaaS company works on different key results to expedite the progress of OKRs. Let’s understand the importance of OKRs in Saas companies with examples of OKRs for different departments.
Customer success OKRs
Customer success comprises different stages
- Kick-off stage where the customer comes onboard
- Adoption of product/service and beginning to get familiar with it
- Expanding the relationship
- Closing or renewing the deal
Customer success OKRs are based on these four principles. They are customized based on the type of customer served, depending on the product or service and the stage they are in their customer journey.
Objective: Achieve 100% customer complaint resolution
Key Result 1: Increasing the development of a database of issues for product training by 50%
KR2: 25% increase in the troubleshooting chats
KR3: 60% increase in the rate of communication of issues to the relevant teams if first interaction troubleshooting did not resolve the issue
KR4: Increasing the follow-up to 60% to ensure problems are resolved
Sales OKRs should consist of a mix of input and output goals. Input goals are activities controlled by the sales department. Like the number of cold calls or documentation of the sales process, etc. Output goals are the results of input goals like revenue, sales numbers, etc.
Objective: Becoming the leading software in the market by capturing 60% of software sales in XYZ demography
Key Result 1: Generate 300 leads in a month
KR2: Reach 50% conversion rate on all generated leads
KR3: Follow up after a month with customers after closing sales
Marketing OKRs should always be measurable to clearly convey what the team has to achieve and how they can do so. For example, in the below-mentioned marketing OKR, the key result is to improve CTR. The marketing team might think of experimenting with CTA copies, offers, messaging, design, etc., to achieve this.
Objectives: Boost Social Media engagement by 30% to increase visibility
Key Result 1: Grow online audience on Linkedin from 10,000 to 15,000
KR2: Improve CTR from 7% to 10%
KR3: Get 300 likes and 150 comments on an average daily
Product Management OKRs
Product management involves identifying the adaptive problems of customers and delivering high-value products. Product management OKRs should align the daily activities towards maximizing product value to users and, ultimately, to business. Let us take a look at this example to understand this better.
Objective: Research expectations of early-stage customers to find actual areas of product improvement
Key result 1: Talk to 50 early-stage customers
KR2: Study 100+ early-stage products usage and summarize findings
KR3: Analyze both studies to decipher four main areas to work upon
OKRs not only bring everyone under a single vision umbrella but also brings everyone to focus on the broader goal with their efforts. With advancing technology, OKRs in SaaS companies have become more important than ever. It helps your team to not only get clarity of purpose but also the clarity of action. For succeeding in the highly competitive SaaS market, you must ensure setting specific, measurable, time-bound goals.
If you need help setting the right OKRs for your SaaS business, Peoplebox has the right set of expertise to ensure that you designate the right metrics to the right key results. It also helps you in strategy execution and regular tracking of goals ensuring that every goal is achieved.
To get a glimpse of how your company can achieve exceptional performance through OKRs, book a demo with Peoplebox.