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Avoid getting lost in hundreds of metrics by using a two-tiered system. L1 metrics are high-level, lagging indicators showing business health (e.g., qualified pipeline, win rate). When an L1 metric is off, use its underlying L2 metrics (e.g., connect rate, stage conversion) to diagnose the root cause without analyzing the entire business.
When growth stalls, blaming a broad area like 'sales' is ineffective. A simple weekly scorecard forces founders to drill down into specific metrics like lead volume vs. conversion rate. This pinpoints the actual operational drag, turning a large, unsolvable problem into a focused, actionable one.
Focusing on monthly revenue is like looking in the rearview mirror, as it reflects past activities. Instead, track leading indicators—the upstream metrics like webinar show-up rates or call conversion rates—that predict what your revenue will be weeks or months from now.
In a high-growth company, strong overall revenue and net retention can hide a weakening top-of-funnel. Leaders should obsess over leading indicators like new logo pipeline generation and close rates, as a decline in these metrics is an early warning of future growth deceleration.
The test for a valuable KPI is its connection to action. If a metric like 'follower count' drops, there's no clear, immediate action that directly ties back to revenue. A useful metric, like 'webinar show-up rate,' immediately tells you which system to investigate.
Companies waste resources on "orphaned activities" that don't contribute to core goals. To fix this, ensure every metric on your scorecard corresponds directly to a step in your business process map (e.g., acquisition). If an activity isn't on the map, it shouldn't have a metric and should probably be cut.
Once you identify a problem metric, determine its root cause. Conversion rates (e.g., conversation-to-meeting) typically point to a skill issue that requires coaching and training. Counting stats (e.g., leads to call) often indicate an operational or process problem (e.g., lead routing) that RevOps must fix. This prevents misallocating resources, like training a rep for a system failure.
Revenue is a lagging indicator and is too slow for validating major strategic shifts. To get an early signal, establish checkpoints using leading indicators. For a decision aimed at acquiring more customers, track metrics like sales team win rates on a monthly basis to see if the hypothesis is proving correct before revenue numbers reflect the change.
Metrics like ARR or Sean Ellis's 40% PMF score are lagging indicators. Focusing on them is like watching the scoreboard. Instead, concentrate on the input metrics of your "case study factory"—pipeline velocity, pull rate, and close rate—which actually drive the final outcome.
Use L1 metrics (lagging indicators like pipeline generated) to identify problems. Then, review a prioritized list of L2 metrics (leading indicators like sequence reply rates) to find the cause. Crucially, stop and fix the *first* L2 metric that is off-target, rather than analyzing all of them, to apply the most effective fix.
There are no universal metrics that work for every business. To find your key numbers, map the literal path a customer takes from discovery to purchase. Your most important metrics are the conversion points between those steps where the biggest drop-offs occur.