Once you’ve closed a round of funding you now have investors who will want to see the return—and quickly. You might be tired from the constant pitch meetings, late nights updating the deck, and long days on the road, but now that you have your money in hand the “real work” is about to begin. This means not only growing and building your business but also keeping investors updated on the metrics that matter to them.
To help you start off on the right foot, we look at the metrics that will put you on the right track to leverage your funding and continue to grow sustainably for years to come.
Why establish metrics so early?
Your metrics will help you organize and track data that will help you make better decisions as you grow. The strategy of "building the plane while it's flying," works great for a lot of things in a startup but data collection isn’t one of them. You may need to add to what you are measuring or make changes as you grow, but having the data to drive those decisions is critical.
Having a good infrastructure is essential to scalability. So while you might be excited about building and launching and "growing", you need some baseline criteria against which you can measure success. And not to throw another cliche at you but your data is only as good as how you organize it, so messy and incomplete data won’t help drive action or scale.
Establish CRM Hygiene
Before you turn your team loose to start collecting and tracking data, you will need to set up a system and process to do so. This is where your CRM is going to become important. You want a tool that is easy to use and can be updated in real-time.
As the leader of the organization, you should be regularly looking at the data in your CRM. This is not only important for you to understand the data, but also to show your team that their work in keeping it updated matters to you and to the success of your company.
While you want your sales team to be spending most of their time prospecting and selling, making sure they have the time and space to keep the CRM up to date is critical. Remember to factor in time for these tasks when setting goals and benchmarks for them. Provide sales support where you can to ensure your sales team is spending the most time with prospects and customers.
What are some good metrics to start with?
YCombinator has put together an incredible list of metrics you might want to track based on the type of business you have. You can review those and discuss them with the rest of your leadership team. We pulled out a few of our favorite metrics to look at and share more about why they are important.
You will want to be tracking how quickly leads are coming in and where they are coming from. Is it from participation in industry events, your website, word of mouth, or even a platform like LinkedIn? If leads are not coming in quickly or drop off sharply, that is definitely something you want to make sure you understand.
Getting a lot of leads is only part of the equation. If your leads aren’t turning into booked business you still have a lot of work to do. Tracking lead quality is essential. In addition, asking reps to try to get potential customers to tell them why they are saying no is going to help you get more quality leads in the future (or at least point you in the right direction). For example, if you are selling software to HR reps and 75% are telling you they aren’t purchasing it because they cannot implement it—you know you need to spend time figuring out how to help them implement it.
Cost of Acquisition
Your sales and marketing teams may use various methods to get new customers in the door. Some of these like word of mouth and referral cost you nothing. Others like events, paid search ads, and special offers can be pricier—especially if you are in a competitive market. Your team should be tracking the cost of acquisition with an aim to keep this number as low as possible—and if you ever discover that the cost of acquisition is higher than what you are charging for your product or service, you might need to re-evaluate either your methods or your pricing structure.
Having a sales team who can close deals is only half the battle. You want to track how long your customers stay with your product or service. If you find that many of your clients terminate their contracts at the 90-day mark or within the first year, that is important to investigate. Why is this happening and what might make your customers stick around longer? It could be that they need more support or that the product isn’t solving the problems they have as intended so they are canceling their contracts to look elsewhere. Having the data to see the patterns and then exploring the why behind it will help you get out of the churn faster than just trying to guess.
How Product and Marketing fit into your growth engine
“The best sales folks ‘fill in the gaps’ in the org to make things happen — they collaborate effectively across all functions and bring them together. What they bring to the table is the mindset, energy, and specific mandate to close business — along with the skills and the functional expertise to do that.” Explains Meka Asonye, an experienced GTM leader turned investor.
It is important to create ways for teams to work together and share information. If your sales team is talking to customers every single day, have them put the insights they are gaining somewhere for marketing and product teams to leverage. If the marketing and product teams have insight into what worked well, they will design better products and campaigns to get you more of those conversations.
Your teams should be collecting data about where people are coming from, what their perceptions are, how they found you (if it’s not a directly attributable source), and what problems they are trying to solve. It is a bit more work on sales to collect this data, but when you realize 8/10 people using your product as a solution to a problem you didn't know about, it’s time to consider a pivot. And if your sales teams aren’t tracking some of that, you might not know that just from watching how your customers interact with your product or service.
You don’t want your teams to be working in silos. In an interview with First Round Capital, Kevin Fishner, the Chief of Staff at HashiCorp shares a specific example. “When I first stepped into the role 18 months ago, we had a discrepancy between the way that sales, marketing, and customer success were segmenting our users. They all had a slightly different model. I approached it with a ‘doer’ mindset. I thought if I just define a customer segmentation model, they'll all use it. And while we were able to get to a model that we all agreed on, because I wasn't in those seats, running those meetings and building the rituals, it was never adopted.”
If Kevin had pulled his teams together and shared with them his vision of a unified way of segmenting customers, he may have been able to get his teams to align—and then more easily adopt what they had aligned on instead of asking them to just do what he told them.
Using consistent metrics
As Kevin’s example above illustrates, you want all of your teams to be using the same metrics and the same language to talk about them. This helps build a shared understanding of the data and puts it into the culture of your organization.
Asking all of your teams to use data to drive their decision-making will help accelerate the pace of creating a data-driven culture and the kind of feedback loops you need to continue to grow and scale into the future.
Want to learn more about the metrics you can focus on? Check out our webinar Avoid Running out of Runway with Bill Carmody to learn more about the basics of building a rapidly scaling business.