What Are OKRs In SaaS And How To Implement Them Successfully [Examples Included]
Wondering how you can leverage SaaS OKRs to drive success in your business?
Much of product success depends on your marketing team but business decision-making and progress evaluation are crucial to keeping your company focused on the right path towards sustainable growth.
You need to prioritize and organize goals and assign them to projects to achieve them. So, let’s see how you can implement SaaS OKRs successfully to track progress towards these goals and drive product growth.
- OKRs, commonly known as Objectives and Key Results, is a framework used to set, implement, and monitor progress towards goals.
- OKRs are both team-focused and organization-focused. They allow you to develop clear goals and monitor progress towards objectives regularly.
- Objectives are measurable goals, and key results are the effect of the process used to meet these goals. On the other hand, KPIs highlight your success in achieving a key result, and metrics provide data you can track to identify bottlenecks in your business.
- To grade OKRs, use a scoring system on a scale of 0.0 and 1.0.
- To implement your OKR strategy, you should follow 5 steps: set vision, choose OKRs, review OKRs progress, create feedback loops, and make reports.
- Some OKR examples include customer success, marketing, sales, and product management OKRs.
What are OKRs in SaaS?
OKRs, commonly known as Objectives and Key Results, is a framework used to set, implement, and monitor progress towards goals.
You can track both your employees’ progress towards their tasks and your company’s progress towards its broad objectives. Thus, OKRs help you hold every team and employee accountable for company growth.
Businesses usually set OKRs across a defined time frame to monitor and maintain progress as well as execute contingency plans, if necessary.
Here are 2 examples of OKRs: real-world and business-based.
Why are OKRs important?
The SaaS OKR framework allows you to set critical goals for your business. The OKRs can be either qualitative (e.g., customer expectations) or quantitative (e.g., percentage of profits).
You can use OKRs to create a robust system of decision-making where every employee knows how to get things done and track their progress towards certain tasks. This helps to provide real value to both the customers and the organization.
OKRs also help to set transparency within teams and give a clear direction to everyone thus preventing individual goals and priorities from overlapping.
Should you use the same OKRs for different teams?
While your business should have an overall objective, different work teams should have separate goals. For example,
The first thing you need to do to set an OKR is defining an objective that is action-oriented and meaningful.
Next, you need to clearly design how you want to achieve the goal, and OKRs help you do just that. This is also known as taking the initiative to get to the key result.
You can note down 3–5 key results for a specific goal that will best reflect the process you are going to use to achieve it. The key results need to be measurable, time-bound, specific, and able to be graded once an OKR cycle is complete.
For instance, your goal could be to increase the number of visitors who convert to sign-ups. Thus, your OKR could be increasing the weekly visitor-to-signup ratio by 20% by the end of the quarter.
On the other hand, increasing the number of sign-ups is a vague objective for the individual teams. So, you can break down this goal into smaller ones to make it easier for the teams to grasp and meet their own OKR targets.
For the marketing team, the goal could be to attract a decided number of new subscribers. On the flip side, it could be adding new valuable features for the software development team.
Because the smaller goals cater to the requirements of particular departments, they are easier to track, and together, they all contribute to the broader goal of increasing the number of sign-ups.
You can also encourage your teams to hold weekly/monthly meetings to share updates and acknowledge achievements, making this a motivating aspect of your corporate culture.
OKR vs KPI vs Metrics
Now you might be confused among Objectives and Key Results (OKRs), key performance indicators (KPIs), and metrics. They all help you track things going on in your business in different ways.
To describe their functions in short:
- Objectives: They are measurable goals.
- Key results: They show the effect your activities have on reaching the goals.
- Key performance indicators: They tell you how successful you are in achieving the key result.
- Metrics: They provide data you can monitor and use to identify bottlenecks in any segment of your business.
Moreover, all KPIs are metrics, but not all metrics are KPIs.
OKRs and KPIs allow you to measure success, whereas metrics generally help you identify risky areas and take prevention measures.
Let’s look at customer satisfaction. Should it be a metric, a key performance indicator, or a key result?
There’s no right or wrong answer here. Instead, the answer depends on the context.
If your current goal is to solve an obvious performance issue you found out about and you want to improve user retention, you could want to achieve higher customer satisfaction.
Then, customer satisfaction would be a key result instead of a metric you want to track to discover problems or a KPI you need to measure success.
Simply put, if you haven’t found a clear issue yet, you can easily shift your focus to vanity metrics and set the wrong key results.
How to grade OKRs
You can use a scoring system to measure your OKRs.
Rick Klau, California’s Chief Innovation Officer, recommended scoring the key results on a scale of 0.0 to 1.0. This means that 0% and 100% grades are also completely acceptable.
Divide your target amount by the actual result to measure the score.
For instance, if your sales team’s goal is to call 1,200 leads but end up calling only 600, their score will be 0.5.
After getting the score, you can use the grading system given in the image below to grade your key result.
How to implement OKRs successfully
Selecting the OKRs won’t be enough unless you implement them successfully. Here’s an OKR framework you should follow.
There are 5 recommended steps to execute OKRs:
- Set vision
- Choose OKRs
- Review OKRs progress
- Create feedback loops
- Make reports
Your teams need to know what they are heading towards. Before you set the objectives and key results, establish the mission and vision of the teams.
Setting the vision is the first step in motivating employees.
It would help them understand what you want from them and how you want to achieve company growth. Thus, they would be able to align between their OKRs and business goals.
To choose the objective key results, you need to first determine their value. It would ultimately help you focus on the right KPIs and metrics.
Check whether your key results can address the ‘so what?’ question properly.
- You want to launch a new feature, so what? Do customers really need this feature? How many users would be willing to pay for it? Will this feature help you boost engagement?
- You want to introduce a blog to your website, so what? How would it benefit your audience and your business?
- You want to increase your monthly recurring revenue through account expansion. This sounds good.
- You want to reduce churn by 20%, so what? Look at how other factors like customer lifetime value fit into your goal and whether you should incorporate customer feedback.
If you are satisfied with the answers, you can move forward with the OKRs and find certain actionable methods to achieve the target.
Review OKRs progress
It’s not sufficient to review the progress towards OKRs only at the beginning and end of every cycle.
You need to regularly track how the organization is progressing towards the goals as a whole. Plus, you need to monitor your team and its individual members to see whether everyone is on the right path and pace to achieve the targets by the deadline.
Ideally, it should be done on a weekly basis. But you can also appoint bi-weekly one-on-one meetings with the team leads. Offer any help or guidance they may need to meet their goals.
This makes sure everything is on track so that your time and other resources are not wasted down the line.
You can use SaaS OKR software that has been particularly designed to track the performance of each key result in terms of its relation to the objectives.
However, simple tools like Google Sheet should suffice for small businesses.
Create feedback loops
Establish feedback loops.
You and your team will take time to get used to the process of implementing OKRs. You may not even have the proper KPIs and metrics to begin with.
For instance, it’s easy to overestimate customers’ perception of a new feature or underestimate the time your team may take to complete a task. However, after going through a few OKR cycles, you will be able to set more realistic timelines.
After you have observed how certain strategies help you achieve goals such as conversions, retention, or revenue, you can feed those metrics into your grading scale and leave out the rest.
Once you have determined your OKRs and have obtained quantifiable results, record and report them to the stakeholders.
The following image shows the OKR report for Product Marketing Alliance. It shows two metrics they chose to meet their objectives for the 3rd and 4th quarters. For each metric, there are measurable objectives and key results for each quarter.
There are certain places where you can make mistakes while establishing OKRs.
You may consider all the individual projects as OKRs. Or, you may take the key results as a to-do list or simply select them based on intuition.
However, you must always have a clear business objective and define it by a few specific key results. It’s better to not have greater than 4 key results since it makes the goal overwhelming and demotivates employees.
If you are unable to reduce the number of key results, you should see whether you can break the objective down into smaller ones.
Remember that your objective is your overarching goal. Every key result depicts how you will reach it. To this end, let’s look at some OKR examples.
Customer success OKR example
Customer success is crucial for sustainable growth. It involves aligning your business objectives with your customer success efforts. With greater customer success, you are more likely to retain loyal, long-term customers.
Increase our Net Promoter Score (NPS).
- Get customer feedback from a minimum of X of our top-performing users.
- Surpass NPS score of more than Y.
- Obtain at least Z responses to an NPS survey.
Marketing OKR example
Marketing teams ensure that people become aware of your product and sign-up for free trials to test its benefits.
If your SaaS marketing goals involve increasing efficiency, your marketing team should get access to the required technology or some other solutions. For example, to reduce delays in scheduling, you can introduce a chatbot to interact with users regarding repetitive issues.
Launch a new feature.
- Encourage X more users to upgrade to the new feature.
- Reach Y people on social media with the new feature announcements.
- Get a customer satisfaction score of Z for the feature.
Sales OKR example
The right sales OKRs motivate sales representatives to build strong customer relationships and ensure they become loyal advocates.
Increase monthly recurring revenue.
- Find X upsell opportunities.
- Close Y upsell deals.
- Earn $Z in upsell revenue.
Product management OKR example
Product management involves identifying customer problems and defining product success. A product manager defines a product’s vision and the strategies needed to achieve it.
Define a new product vision.
- Get initial feedback from X potential customers.
- Get a product usability score of Y on UI mockup design from Z% of the potential customers.
- Get a 100% feedback score from the company’s sales team.
Summing it up
Objectives and key results are crucial for tracking the success of your company. They not only bring a team under a singular focus but also help the organization define its broad objectives.
To implement OKRs successfully: set vision, choose OKRs, review OKRs progress, create feedback loops, and make reports.
Want to get started with choosing the right OKRs and achieving them? Get a Userpilot demo and see how you can improve your product growth.