What are the different ways to calculate Customer Acquisition Cost? How are metrics different for revenue planning and more short-term management?
BSMS 11: What OKRs should your marketing team use?
Objectives and Key Results are our favorite performance management tool. We discuss some examples of short-term and long-term objectives and what their respective Key Results can look like.
In this episode we explain what Objectives and Key Results are, how you can use them, and give examples of short-term immediate and long-term objectives.
OKRs help you stay on track with your larger company objectives while also keeping an eye on the day-to-day things and doing the right kind of projects that support the objectives. So it balances the short-term and the long-term. That means:
- The objective asks "why are you here? What's the reason you're doing marketing?"
- The key result is something that you can use to measure your progress against that objective during a quarter.
- Actions, or activities come below the key result. They answer "what are the things you're going to do to achieve that key result?"
- Objective: Drive demand for your product and services.
- Key Result: 50 new marketing qualified leads that are handed to the sales team.
- Execute ABM campaigns to two specific verticals with a clear ICP.
- Optimize prospect lead nurture campaigns.
- Improve channel attribution to drive optimization and accountability of the different owners of the different channels.
Hello and welcome to episode 11. We are back from a little bit of a hiatus, about a month now, I think, and for good reason. We've been working on some really cool projects in the background, and we appreciate you guys being patient and waiting for these episodes to come out. We've had a really great initial reaction to this content, which has been really affirming that we're on the right track with this, so appreciate you sticking with us. We continue to get more subscribers regardless of whether or not we post content. That said, we do plan to be more consistent with the posting, and it's definitely high on my priority list to get these out on a regular basis. So appreciate your patience as we get into the right cadence of things. I just wanted to talk about two quick things before I jump into the question for today.
One is in the last month, we actually launched our own HubSpot theme. So we've developed a theme that is specific for B2B SaaS companies that are building their first robust website on HubSpot. And for now, it's a free theme. It will not be that way forever. We plan on making it paid sometime in Q1 of 2021, but it is live, and if you are interested in checking it out, go to https://www.kalungi.com/theme and it will take you to our demo site for it. It's not currently live on HubSpot's asset marketplace, but it is in the approval process and should be in the next couple of weeks. In the meantime though, if you're interested in checking it out, go to that link, https://www.kalungi.com/theme, and take a look at some of the modules we built. And there's also a demo video on that site where I go through the methodology and how we came to one, build the theme in the first place, but it's based on our experience building dozens of B2B SaaS websites, and coming across these patterns that most companies need.
So it's built on top of HubSpot's drag and drop builder. It makes it very easy to create new websites from scratch if you're not a technical marketer or you have a marketing team, but you don't have someone that's super technical that can use HubSpot. So we plan on using it for our own engagements and building back into the code base, so it will not be static. It will continue to evolve and become larger than it is currently, which is one of the reasons we named it Atlas. So if you're interested in that, and you're interested in maybe taking it for a beta test, and you have a HubSpot instance, you want to install it and give it a whirl, and give some feedback to us, we would really love that too. So if you're interested in that, email me at email@example.com and we can have a conversation and go from there.
The other piece I wanted to call out really quickly, as we're coming to a close on 2020, it only feels appropriate to talk about planning for 2021. I know that's something that's on most people's, most founders', co-founders', marketing leaders', sales leaders' minds right now. Well, sales leaders are focused on Q4, but marketing leaders are all thinking about how do we build pipeline in the new year. And so we actually launched a three-part series where Stijn goes through some of the "big M" moves that you can make as a small B2B software company. The first session has already happened, but there are two left. They're free and they're hour long sessions where Stijn goes deep into the frameworks, and methodologies, and approaches that you can use to balance quick wins and sustainable growth, and then also set up an ABM function specifically for a B2B SaaS setting. So the next one is on December 15th and then the third and final one is on January 13th in the new year. But if you're interested in signing up for those, you can go to kalungi.com/growth, and that should take you to the registration page.
For what it's worth, these sessions are the material that we are trained on at Kalungi, and so this is Stijn's approach, and framework, and his methods for attack, so this is what is built into our playbook. It's extremely valuable content, I think. I mean I've gotten a ton of value and learnings from it. So if you are at all considering revamping your marketing efforts in 2021, I would highly recommend signing up for it and checking it out. If you go to the live sessions, you'll have access to Stijn in a Q&A format, so definitely take advantage of that if you're interested. And that's it for my short four-minute shameless plugs.
So on the topic of growth planning, it takes us to today's topic quite nicely, which is OKRs. And so if you're not familiar with OKRs, it stands for Objectives and Key Results, and it's a tool that is specifically designed to help you stay on track with your larger company objectives while also keeping an eye on the day-to-day things and doing the right kind of projects that support the objectives. So it balances the short-term and the long-term.
And we at Kalungi, we have every team member set them, we hold ourselves accountable to OKRs for our clients, and we use them as a kind of a performance management tool. So they originally were created by I think it was Andy Grove while he worked at Intel, and for the full backstory on why we use them and why we think they're really effective, as in why we like them more than any other objective management tool, Brian Graf, another associate CMO at Kalungi, has a really great article on our website about it. So if you go to kalungi.com onto the blog, and use our search function and type in OKR, you'll find his article. It's OKRs: how to drive transparency, accountability, and results in your B2B SaaS marketing team. It's pretty much a backstory guide and how to, and then he also has a template for tracking your OKRs.
So if you want more detail on it, definitely check that out, but for today I wanted to get really specific, and jump the basics on OKRs, and go into how do you actually create OKRs for a marketing team? That's definitely a question that we're asked often. So Stijn, I know you are pretty passionate about this topic. You are the OKR master at Kalungi, and I wanted to pose it to you and see if you could talk a little bit about how you set up OKRs specifically in the context of a marketing team, and maybe give a few examples of great OKRs that a marketing team could measure their performance against in a B2B SaaS setting.
When you think about OKRs, Mike, it's interesting to do this, by the way, when planning for the new year. You still have a half of Q4 left to go to maybe test some things, get a baseline of where you are, and then think of what are your objectives, and more importantly key results for Q1 to really start 2021 strong. We often work with marketing teams that like to use OKRs. Startups are a very good environment to work with the Objective and Key Results mechanism. What I like to do is to come up with three to four objectives that balance the immediate urgency of marketing and driving results, but also do it in a way that is sustainable, results that can grow over time. We always stick to the following format, the objective is really why are you here? What's the reason you're doing this, you're doing marketing?
So for example, an objective could be to drive demand for our products and services. And then the key result is something that you can use to measure your progress against that objective during a quarter. So for driving demand, it could be growing the demand gen funnel with 50 leads, so 50 MQLs, Marketing Qualified Leads. It's easy to count, so it's a good key result that you can measure. You can also always find out where you are in a given week or a given part of the quarter. So that's what we like to do, Objective Key Result. And then you often see also actions, or activities, or action steps below the key result. What are the things you're going to do to achieve that key result? So staying with this example, if your objective is to drive demand for your product and services, a key result would be to drive a certain number, let's say 50, new marketing qualified leads that are handed to the sales team.
Then the activities, the actions that you deploy during the quarter could be, for example, execute ABM campaigns to two specific verticals with a clear ICP, optimized prospect lead nurture campaigns, improve channel attribution to drive optimization and accountability of the different owners of the different channels. So it could be all these actions or activities that drive to that key result. What's important is that those actions are not the key result. What I often see happen when teams start with OKRs, that they describe activities and projects as key results. That's really not that helpful. In the end, the key result is the amount of MQLs that you drive. If you do that by doing A, or B, or C, it doesn't really matter. And those things should also be flexible. If you're trying A but it doesn't work, then you need to switch to B, if that helps you drive your goal to get to your key result. So that's really the way we think about Objective Key Result. And then if that's helpful for your team, you can also list the activities.
So what could a good set of OKRs for a marketing team look like? So this first objective, drive demand for your product and services, could be the number one objective. It's clear that most marketing organizations are held accountable for that. Key results could be drive a certain number of marketing qualified leads, maybe something earlier in the funnel, drive a certain number of new subscribers, contacts, if you want to have a metric that helps you measure how you're doing on the awareness side earlier in the funnel, top of funnel. Another great key result could be that is, in the end, going to drive the revenue down later in the funnel, how many of your MQLs actually became opportunities or deals in HubSpot? So number of net-new qualified deals, that could be a great key result.
So those are all under that first objective of driving demand for your products and services. Then the second objective could be to make sure that your demand gen is sustainable, that it's not just short-term. It could be something like building a growth flywheel. That could be the objective. So you're not just building demand for one day, or one week, or one month, but you're building demand that can be sustained. Key results for building that growth flywheel, if that's your objective, are a little bit different. They're also demand gen, but maybe they're a certain quality of demand gen. What I like to, for example, have as a key result when it comes to sustainable demand gen is how many leads, how many MQLs, or how many meetings happened, or how many opportunities came from organic search? So you're taking the specific part of the menu that is more sustainable and you make it a separate key result to drive real focus on that.
Another one could be you get one customer, or one lead, or one opportunity from an "always on" referral program, from a new referral program that you're implementing. So the referral program, the fact that you're doing, that's the activity, that's not the key result. The key result would be that you get one new customer from that referral program. But if that's your key result, it will also make sure that you actually execute on that activity in the next quarter. Another good example of a building a growth flywheel key result could be that you achieve a certain number of keyword phrases in the top 10 search rankings in Google. So if, for example, today you have 20 keywords or keyword combinations that rank in the top 20 or the top 10, and now maybe for next part, you say, "Hey, I want that to be 25." So five new keywords to rank in the top 20 that did not rank in the top 20 before. So that's objective number two, build a growth flywheel. So objective one is demand and the second objective is to do that in a way that is sustainable.
Then a third objective could be a little more strategic, because when you're just generating demand, you're not really building for the long-term. You may want the third objective to be something like building or getting to product market fit in a new market segment. If you're already successful in one part of the market, maybe your strategic priority is to, for example, go from SMB to enterprise, to a new segment. So your next objective could be to build a new go-to-market for a new market segment. So your third objective is to create this new go-to-market, and the key result could be hey, you need to have a certain amount of new customer testimonials approved for this new go-to-market, or you have found a certain number of leads, or list entries, or new targets that confirm that this go-to-market is viable, or you have completed defining your ICP, a somewhat binary key result. So that could be your third objective.
And then your fourth objective, if you want to have four, it could be something more around ROI of marketing, getting your acquisition cost, your customer acquisition cost from let's say $1,500 to $1,400, a very specific key result. And you can come up with other metrics or key results that are about saving costs as well. Maybe you have something like a cost-per-click number that you need to get under control or you need to get your conversion rate up of a certain type of marketing you're doing. So that's the way I think about OKRs for a marketing team, Mike. Always these four things, drive demand in general, just your absolute driving demands objective, because that's the first job of every marketer, then the second objective is all around doing that in a high quality sustainable way, building a growth flywheel, the third objective is all about maybe the strategic side of marketing, building the next go-to-market, could also be a product launch, something like that, and then the fourth one is to do all this at reasonable costs with a good ROI. That's some key results that really help you establish that.