Measure What Matters: An Update on What We All Know
The Uncomfortable Truth
Most revenue teams measure what's easy to track, not what actually drives results. Sales activity reports are full. Dashboards are colorful. Yet nobody can explain why revenue missed forecast by 20%. The problem isn't lack of data-it's measuring the wrong things.
Why Measurement Systems Fail
We've all heard "what gets measured gets managed." It's become cliché precisely because it's true. But here's what we don't talk about: what gets measured wrong gets managed poorly.
The challenge isn't convincing leaders that measurement matters. They already know. The challenge is building measurement systems that actually change behavior and drive outcomes.
Common Measurement Failures
Activity Metrics Without Outcome Connection
Sales reps hit 100 calls per week. Marketing generates 10,000 leads. Customer success completes 50 check-ins. None of these metrics answer: "Did revenue grow?" Without outcome connection, activity becomes theater.
Lagging Indicators Without Leading Signals
Revenue, bookings, and closed deals tell you what happened last quarter. By the time these metrics move, it's too late to fix anything. You need leading indicators that predict future performance.
Too Many Metrics, No Clear Priorities
Dashboards with 47 KPIs create paralysis, not action. When everything is important, nothing is. Teams need 3-5 critical metrics that actually drive decisions.
Metrics That Incentivize Wrong Behavior
Measure sales on meetings booked, and they'll book meetings with anyone. Measure marketing on MQLs, and they'll game the scoring model. Poor metrics create perverse incentives.
The Framework: What Actually Matters
After working with hundreds of revenue organizations, we've identified a consistent pattern. High-performing teams measure three layers:
Layer 1: Outcome Metrics (What You're Trying to Achieve)
These are your non-negotiable results. Revenue growth, logo acquisition, expansion revenue, retention rate. If these don't move, nothing else matters.
Examples:
- • Annual Recurring Revenue (ARR) growth
- • Net Revenue Retention (NRR)
- • New logo acquisition
- • Gross margin
Layer 2: Leading Indicators (What Predicts Outcomes)
These metrics move before outcome metrics change. They're your early warning system and your opportunity radar. Track these weekly or daily.
Examples:
- • Pipeline coverage (3-4x target)
- • Qualified pipeline velocity
- • Win rate by segment
- • Average deal size trend
- • Sales cycle length
Layer 3: Activity Metrics (What You Can Control Today)
Activity metrics only matter if they're proven to influence leading indicators. Don't track activities because they're easy to measure. Track them because they work.
Examples:
- • Discovery calls with qualified prospects
- • Proposals delivered to decision-makers
- • Multi-threaded engagements
- • Customer business reviews completed
The Critical Connection
The magic happens when you connect all three layers. Your activity metrics should predictably influence your leading indicators. Your leading indicators should reliably predict your outcomes.
Example: Increasing discovery calls (activity) by 30% should increase qualified pipeline (leading indicator) by 20%, which should increase closed revenue (outcome) by 15%. If those connections don't exist, you're tracking the wrong activities.
How to Build Metrics That Matter
Building an effective measurement system isn't complicated, but it requires discipline. Here's the process:
Start With Business Outcomes
What revenue results must you achieve? Be specific. "Grow revenue" is not specific. "Increase ARR from $50M to $65M with 95%+ NRR" is specific.
Identify Leading Indicators
What moves before outcomes change? Look at historical data. When you've hit targets in the past, what metrics moved 30-60 days earlier? Those are your leading indicators.
Validate Activity-to-Outcome Connections
Don't assume activities drive results. Prove it with data. Run correlation analysis. Which activities actually predict success? Stop tracking activities that don't.
"We discovered that 'calls per week' had zero correlation with closed deals, but 'multi-threaded engagements' had 0.78 correlation. We stopped measuring calls entirely."
- VP Sales, SaaS Company
Ruthlessly Simplify
Each team should have 3-5 primary metrics they review daily/weekly. That's it. Everything else is noise. If a metric doesn't drive a decision, stop tracking it.
Build Accountability Cadences
Metrics without review are useless. Establish weekly metric reviews with clear ownership. When metrics are off-track, what actions will you take? Define this upfront.
Real-World Example: SaaS Company Transformation
A $40M ARR SaaS company came to us missing targets consistently. Their dashboard had 63 metrics. Nobody knew which ones mattered.
The Problem
- • Sales tracked 23 activity metrics (calls, emails, meetings)
- • Marketing tracked 19 campaign metrics (impressions, clicks, MQLs)
- • Customer success tracked 21 engagement metrics (CSATs, NPS, QBRs)
- • Nobody tracked pipeline coverage, win rates, or expansion pipeline
The Solution
We rebuilt their measurement system around three outcome metrics:
- • New ARR: $15M (from $10M)
- • Net Revenue Retention: 110% (from 95%)
- • Sales Efficiency: 1.2x (revenue per sales headcount)
Five leading indicators:
- • Pipeline coverage: 4x target (from 2.5x)
- • Qualified pipeline velocity: 60 days (from 85 days)
- • Enterprise win rate: 35% (from 25%)
- • Expansion pipeline: $8M (new metric)
- • Multi-product adoption: 40% (from 18%)
Six activity metrics (validated correlation to outcomes):
- • Discovery calls with economic buyers
- • Multi-threaded engagements (3+ stakeholders)
- • Expansion conversations in QBRs
- • Product usage milestones achieved
- • Executive business reviews conducted
- • Champion development programs completed
The Results (12 Months)
- • Hit revenue target for first time in 3 years
- • Increased win rate from 25% to 38%
- • Improved NRR from 95% to 112%
- • Reduced forecast variance from 25% to 8%
- • Sales team velocity increased 40%
The Hard Truth About Metrics
Most organizations know what they should measure. The challenge isn't knowledge-it's execution. Here's what gets in the way:
Political Metrics
Metrics chosen to make departments look good rather than drive business outcomes. Marketing measures leads because it's favorable. Sales measures activity because it's controllable. Nobody measures what actually matters because it reveals uncomfortable truths.
Data Theater
Beautiful dashboards that nobody uses to make decisions. Metrics reviewed in meetings where no actions are taken. The appearance of data-driven management without actual data-driven management.
Metric Fatigue
When you track too many metrics, you track nothing effectively. Teams become numb to numbers. The signal gets lost in noise. Simplicity beats comprehensiveness.
What Actually Drives Change
Measurement systems succeed when three conditions exist:
- 1. Executive commitment: Leaders must review metrics consistently and take action when they're off-track. If the CEO doesn't care about your dashboard, neither will anyone else.
- 2. Clear accountability: Every metric needs an owner who can actually move it. Shared accountability is no accountability.
- 3. Consequence and reward: Metrics that don't influence compensation, promotion, or resource allocation don't drive behavior change.
Your Action Plan
Stop adding more metrics to your dashboard. Instead, do this:
30-Day Metric Transformation
Week 1: Audit Current State
- • List every metric your revenue teams currently track
- • Identify which metrics actually influence decisions
- • Eliminate metrics that don't drive action
Week 2: Define Outcomes & Leading Indicators
- • Establish 2-3 non-negotiable outcome metrics
- • Identify 5-7 leading indicators that predict outcomes
- • Validate with historical data
Week 3: Validate Activity Metrics
- • Run correlation analysis on activity metrics
- • Keep only activities proven to influence outcomes
- • Stop tracking everything else
Week 4: Implement Review Cadence
- • Weekly metric reviews with clear owners
- • Define actions for off-track metrics
- • Link metrics to compensation and resources
The Bottom Line
We all know measurement matters. We all know what gets measured gets managed. The question isn't whether to measure-it's what to measure and how to make those measurements drive actual business results.
Stop tracking what's easy. Start measuring what matters. Build the connection between activity, leading indicators, and outcomes. Ruthlessly simplify. Hold people accountable.
The companies that win aren't those with the most metrics. They're the ones measuring the right things and actually doing something about it.
Ready to Fix Your Metrics?
We help revenue organizations build measurement systems that actually drive results. Let's audit your current metrics and build a framework that connects activity to outcomes.