Read on to get an introduction to OKRs as a method, what the heck a VP of Sales does and OKRs examples for VP of Sales that can be applied to your own company.
What is OKR?
OKR stands for Objectives & Key Results and is a goal-setting method with a set of best practices. It’s famous for being the method of choice of tech companies like Google and Twitter but its use has nowadays spread to a vast variety of industries, even non-profits like Bono’s ONE Campaign and The Bill & Melinda Gates Foundation.
How do you set an OKR?
The OKR consists of one Objective and a set of Key Results. The Objective can be seen as the small mission statement / the expectation of where you want to go, expressed in soft terms, whereas the Key Results are the factual results that needs to be accomplished to deem the Objective successful. In short, OKRs are a great way to clearly state “what success looks like“. Progress is then measured on each Key Result and is rolled up to an average profit of the Objective. It is recommended that you set between 2-4 key results per Objective.
In Node’s setup, OKRs are set everywhere in the organization where you want to drive and measure meaningful change and then aligned cross-functionally between roles, teams and departments using Focus Areas.
Who is the VP of Sales
Depending on the size of the organization, the VP of Sales role can look different. In smaller organisations (<100 people), this is often the most senior role within the sales team, reporting directly to the CEO and leading a team of 10-15 salespeople. In larger organizations, the VP of Sales sits one layer further out in the organization, so not reporting to the CEO, but instead to the Chief Revenue Officer or Head of Growth.
Main responsibilities of the VP of Sales
In its most senior example, the VP of Sales has the ultimate accountability for profitable revenue. This includes building the best team around analysing and managing the various revenue streams of the company, as well as putting a business development engine in place to invent new ones.
Aside from the business-as-usual responsibilities such as managing leads, budget and people, the VP of Sales tries to drive Meaningful change mainly within:
- Implementing & accelerating the Go To Market strategy (GTMs)
- Segmentation and clustering of potential customers in line with the GTMs.
- Improve existing and develop new revenue streams
- Build & Develop the Sales organization
- Develop Sales partner relationships
- Monitor and act on market & competitor development
Overall, the end metric for Sales is Revenue and Commitment /Bookings / Order value. But if we are looking for more leading indicators of what drives Revenue and Commitment, common metrics include:
- Pipeline Coverage (%)
- New Logos (#)
- Sales Ramp-Up (days)
- Revenue / FTE ($)
- Revenue of focus revenue stream / Total Revenue
- Profitable # customers / Total # customers (%)
- Customer acquisition cost
- Total revenue / Total market turnover
Of course, there are many other metrics for this role, but the above are some good examples of metrics that signal meaningful change and hence make out a good starting point for developing good OKRs.
How to think when developing OKRs for VP of Sales.
In one way, setting goals for Sales Roles is not a complex task. Always strive to keep it simple and measure fewer than more parameters. A good point of departure is to look at what happens from first contact with a potential customer until a deal is signed. What are the milestones in between there? Often you will see pipeline coverage and new logos coming up as examples.
When you set out to create a role-specific OKR, knowing what the role is responsible for driving for the company and how that meaningful change is important. And next after that – ask – what is the current state?
Thinking about the current state of things, from the perspective of your role + the company, lets you list the impact that you see you can achieve during the coming period, but also the blockers that are plausible and that you need to address. Sometimes, the impact is to remove a blocker. Check out our OKR Canvas to learn more.
Here follows a set of OKRs that we hope will give you some inspiration.
OKR Examples for VP of Sales
As stated above, OKRs should be used to drive meaningful change. Here comes a set of examples, with a corresponding background:
As part of the company’s strategic Focus Area “Smarter Sales” the company leadership has realized that it is underperforming in the time it takes for a deal to go from a Marketing Qualified Lead to a “Won” deal. They’ve given this measurement the internal name “MQL2W”. Research from a cross-functional team consisting of sales, product and marketing people suggests that the deal velocity can be improved through better documentation of the product and increased key account headcounts. Based on this analysis, the CRO sets the following OKR:
As part of the quarterly OKR Retro Reset, the CRO has analysed the last 2 quarters and come up with a couple of opportunities as well as challenges for the coming quarter. The company has experienced a period of very strong growth, but still – there are a lot of leads that seem to churn. After some discussion with the joint VPs of Sale, they work out a hypothesis that the reason for the churn is the time it takes for the sales rep to get back to first contact with a lead, called the Lead Response Time (LRT) is too long. ie the time it takes for the sales rep to get back to the lead after they’ve made an inquiry.
As one of three of the company’s Focus Areas “Build MRR” is one closest to home for the Growth team which is led by the CRO. A group of cross-functional leaders have joined the Focus Area team and together formed a hypothesis that the best way to grow the Monthly Recurring Revenue (MRR) is to shift focus more towards hi-tier packages and upsell customers that’s been generated from a newly acquired competitor. Part of the change is also making sure that the sales team understands the new product features that have been released.