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We totally get it. Breakups are painful. More so, if it's with a Customer! Ouch!
You would recall spending hours prospecting, coupled with immense energy in wooing until the deal is sealed. Your friendly customer success team then steps in to give a stellar experience, and your Technology teams continue building a plethora of features to make customers feel like kids in a candy shop.
And again, you don’t know what hit you.
Churn is truly a dreadful state to be in. Companies globally, spend intense efforts in tracking dollar churn, customer churn, user churn, or even churn at different points of a user or customer journey. Also infamously known as The Watermelon Effect, where accounts that are green outside and everything seems ‘okay’, but in reality, are blinking Red inside and go unnoticed until it's too late.
The silver lining to this story is, if metrics are strategically selected, measured, and improved a lot sooner, churn can definitely be avoided.
While many define OKRs as a strategy execution framework, which it certainly is, OKRs is a critical thinking framework that gets teams to think about their most important business metrics. OKRs are cherry-picked as shared commitments by teams and not in silos.
So, it’s not surprising that companies are stepping forward to use OKRs to supercharge growth, drive change, innovate or excel in a manner in which every employee in the company knows how they contribute.
More than 80% of Silicon Valley startups have adopted OKRs and experienced a meteoric rise in their growth, by just being thoughtful about the metrics they measure. But while so much is written about OKRs everywhere, not to mention the success stories of Google, LinkedIn, and Twitter, many companies still don’t seem to get it right. This could be attributed to their lack of understanding of OKRs or could also be the inertia of stepping out of their comfort zones around traditional performance practices.
OKRs is an acronym for Objectives and Key Results.
Objectives tell you “What do we need to achieve?” They are qualitative statements that must call out a business value.
Key Results focus on the “How do we measure success?” You can think about Key Results like a Google Map, moving you from point A to B.
Key Results Start with a Verb + Metric to be measured and improved + movement from X to Y
Tasks/Initiatives which is “What do we need to do to get there? The Verbs in OKRs are important, as everything about OKRs is about moving the organization through actions!
When OKRs are written, it is important for leadership and next-level teams to write with consistency. This would help communicate OKRs in a unified language and enable teams to connect and align their metrics, to move the business forward.
Here’s an example :
Objective: Focus on Customer retention in order to seal renewals
KR 1: Increase Day 30 Product adoption from 15% to 35%
KR 2: Reduce page response time on key screens from 7 seconds to 1 second
KR 3: Reduce customer churn from 17% to 8%
KR 4: Increase renewals from 61% to 90%
The first step is getting teams to understand what ‘Connect and Align’ truly means. Connect And Align is not cascade. It’s a top-down and bottom-up approach to set up alignment. In this ritual, there are two types of Connect and Align that happen - Vertical and horizontal. By ‘alignment’ we specifically mean a KR-to-KR alignment.
Vertical alignment: Each team picks and aligns their KRs to the organization’s KRs which they will move directly and indirectly.
Horizontal alignment: Cross-functional teams align their KRs with each other to move the organization's KR.
If OKRs align to Organizational Structures, where each department writes up OKRs, and runs to make them happen, you could be certain that you would not get the most out of this seamless strategy execution framework.
OKRs are best written as Squads or Pods, where cross-functional teams come together to move a specific metric for a Company.
In large enterprises, we also see a fair share of Bi-Directionally aligned OKRs. Departments could step forward, and write OKRs. However, a critical step is connecting and aligning OKRs bi-directionally or cross-functionally.
User Pilot calls out the different types of churn that a company can experience. Churn can be calculated in multiple ways:
Let's take an example of a SaaS company that has one of its company Key Results as ‘Reducing Customer churn from 17% to 8%.’ The leadership team has already sharply called this Key Result out as one of the most important metrics that need a war cry.
The top-of-mind reaction would be to assign this Company Key Result to the Head of Customer Success, as it is a key KPI for the team. However, when it comes to OKRs, it moves the needle from organizational structures to helping the business move forward. Reducing Churn requires all hands on deck, and a Squad to be formed.
A SaaS company we worked with, formed a squad or pod comprising leaders and team members from Customer Success, Product & Engineering , Support, and Marketing would step forward to deeply reflect on the problem of churn.
In their diagnosis of the problem statement, they look at data, to make data-driven decisions. The team comes up with a cohort analysis, looks at Product adoption metrics, at different touch points over 90 days, the experience of new users who are being added during the year, and a log of calls made by customer support reps.
From here, they formed a ‘Let's tame Churn' team, and came up with a strategy on how to reduce customer churn over 90 days. They went on to zone in on the need to have a stellar Weekly Adoption Rate as a key lever to Reduce churn.
The Strategy is converted into Action, by calling out the Objective Statement.
Objective: ‘Focus on Weekly adoption in order to reduce customer churn’
How exactly we would accomplish this, is where Key Results step in.
Nestled within each Objective were powerful Key Results that helped this squad measure progress.
KR 1: Reduce page load time from 10 seconds to 1 second
KR 2: Reduce TAT for ‘weekly adoption’ feature releases from 50 days to 30 days
KR 3: Increase user sign-ups to our community from 2% to 60%
KR 4: Launch our ‘Insight’ delivery module
KR 5: Increase weekly adoption rates from 31% to 55%
The eye on the prize is clear, there is a focus on increasing weekly adoption rates. Product will own the delivery of the ‘Insight module’, Engineering focuses on improving the functional experience and prioritizes feature releases. Marketing aligns tasks to launch the new feature, to design marketing campaigns. Customer Support focuses on community building and sharing FAQs through high-quality videos.
Tasks are the daily to-do’s. They are the inputs that move an outcome forward.
Key Results are the outcome metrics, that are carefully selected, to move the business forward.
Let's take an example. If the ‘Let's tame churn’ team were to ‘Increase user sign-ups to the community from 2% to 60%’, this is a Key Result. It’s a metric we would like to measure and improve over the next 90 days.
To move the metric forward, we would need to do a bunch of activities.
Eg:
The eye on the prize is the Key Result, and the activities are the means to get there.
Fitbots is committed to enabling organizations to get OKRs rollout right the first time. Commitment by the organization, coupled with expertise in setting and implementing OKRs with the right tools and rituals, increases OKRs achievement by 10X. Our suite of OKRs software with on-demand coaching and OKRs certifications gives an integrated OKRs experience to teams. Take a Free Trial and get access to our repository of 100+ Templates.
Vidya Santhanam is the Co-Founder of Fitbots OKRs. Having coached 600+ teams, and conducted 1000+ check-in meetings, Vidya likes writing about Metrics, high performance, and leadership.
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