What is OKR in sales, how we use it, and the difference between OKR and KPI?
If a sales team follows the OKR structure for determining its goals, it will set a core target, which is split into smaller measurable objectives, known as key results. These findings should be obtained within a certain period. It would be best if you got feedback from the whole team to describe the objective and key results. Instead of that, you achieve goals from top to bottom.
According to the Harvard Business Review, an essential component of employee engagement is the alignment of priorities at each enterprise level. Using this approach, every person on the team is interested in setting organizational priorities and precisely understands what each person wants to do to support its broader goals.
What is an OKR and structure of OKR:
Objective: This determines the qualitative consequence of the goal and what we want to achieve. For anyone in your business, your aim should be concise and easy to understand.
Time: A fixed deadline to calculate the productivity of steps taken to achieve your goal. A three-month cycle for OKRs is specified by many teams to fit their business calendars every quarter.
Key results: Measurable outcomes, divided into three main results, which are difficult to raise. Consider any primary outcome as a “milestone” to make your team closer to your goal.
Main result 1: we can achieve a quantifiable target with 80% certainty.
Main result 2: We can reach a quantifiable target with 50% certainty.
Main result 3: We can reach a quantifiable target with 20% certainty.
At the end of each week, we suggest that you have a dedicated location to track your team’s progress. This holds your OKRs strong on your team members and makes them accountable for their role in helping your company achieve its objectives.
Examples of OKR:
The most famous story about OKRs is that of Doerr introducing the philosophy to Google’s founders in 1999. Gathered around a ping-pong table which doubled as a boardroom table, Doerr presented a PowerPoint to the young founding team. Objective and Key Results of Doerr for the presentation were as follows:
Objective: Create a business planning model for Google assessed by three key results:
Key Result 1: My presentation will be delivered on time.
Key Result 2: A sample collection of Google OKRs will be set up quarterly.
Key Result 3: For a three months OKR trial, I will obtain a management agreement.
Here is another example of Company Level OKR in sales:
Objective: Every quarter in 2017–18 to increase profitability by 42%
Key results:
· Monthly sales increased by 20% per quarter at a CAGR
· Customer numbers increased every quarter by 35%
· 55% of the nation is protected by Q4
Explanation:
Most businesses will have this goal among their top three priorities, irrespective of their industry segment. The numbers can differ depending on the individual figures. The first KR estimates revenue for a specific time and offers an estimated turnover that the company is supposed to reach per year. It is a question of the profitability measure.
On the other hand, the second and third KR are the reasons why the profits of the business are bound to rise. Briefly, the first KR can only be calculated after these 2 KRs are reached.
To conclude, different teams work together at the organization level to contribute according to their roles. Thus, though the KRs seem to be unconnected at first glance, they may affect each other.
How to use OKRs?
When the OKRs are formed in sales teams, search for inspiration at the company’s top levels of OKRs. We still wonder, “What our department can do to help us get there if this is where the organization wants to go? What’s it like, then?
In 2016 we had two business targets, both of which have powered this year’s Revenue Goals:
· Speed up our revenue growth massively.
· Make our business very scalable.
We have extracted various goals from these per quarter for the Sales team, including
· Make new corporate sales to a new stage (to boost our growth in revenues massively)
· Develop a Sales Team (make our company highly scalable) that is extremely adaptable.
These are two targets that the sales team still has carried throughout the year and copied from one quarter to the next. Simultaneously, we had targets consistent with those two company levels, which varied from quarter to quarter.
We also focused on building partnerships in Q2, for example. We, therefore, had a supplementary goal:
· Build an extensive service provider network (aligned to speed up revenues massively)
In Q3, we have been using and configuring our CRM for quite a while, so our target was
· Develop our Salesforce (aligned with making our business highly scalable) substantially
It should be remembered that both of these were quarterly targets. Our sales team has moved from quarter to quarter while aligning itself with its annual targets at the company level to reflect our changing priorities throughout the year.
Both of these goals have key outcomes that made them measurable and strategies we used to classify the projects to be accomplished in order to attempt to turn the needle towards these key outcomes. For instance:
Objective: create a strong service provider network
Key result: 30 partnership agreements with consultants have been signed
Key result: 50 referral agreements with organizations have been signed
Initiative: Market search for relevant service providers
Initiative: Application of our referral agreement
How huge companies use OKR?
Google implemented a goal-setting strategy soon after its first year of operation, which they are still doing today. Not only did Google communicate with the OKRs, but it remains dedicated to them today. They are deploying OKRs at the agency, individual and corporate levels.
Google does the OKR process to correct major year-round milestones, which can be changed according to what happens during the year. Four to six OKRs per quarter are also created. Google helps the team to meet the highest possible four-monthly expectations. One of the advantages of the OKR method is that the organization works everything on the same targets.
At the end of each quarter, members of the Google team will score their main findings 0–1. Since OKRs should be ambitious, you won’t be given one on each main result, but it actually means that your OKRs are sufficiently ambitious. It should take just minutes to grade.
To create automated opportunities for sales teams, Google has leveraged machine learning. However, in order to drive faith in the sales teams to “trust” machine-generated opportunities, a strong degree of behaviour change was required.
The marketing and the HR departments are the most apparent in Facebook KPIs and OKR’s, while communications and design division’s employees think their priorities are not so straightforward. Of the 124 Facebook workers who responded: “You are clear and you are investing in the objectives of your company? “Ninety-four said yes.
Difference between KPI and OKR
Key performance indicators (KPIs) are described as performance measures that analyze an organization’s success or specific activity. In contrast, The objectives and key results(OKRs) are defined as a metric that determines the organization’s objectives and team and the observable “key results.”
Both are management methods designed to define targets and ensure that growth is observable, but are performed in very different ways. KPIs mainly focus on performance or outcome, while OKRs concentrate on the process. OKRs talk of a more comprehensive vision, the summary of what the organization tries to do, whereas an individual project is targeted at KPIs.
KPIs also have a more particular task, which may be anything like ‘increasing the market share by 10%’ or ‘improving user retention by 15%.’ At the same time, an OKR is more general.
OKR is a goal-setting system. For each OKR, a goal and a series of steps to assess this aim’s achievement, called key results, are to be achieved. KPIs decide factors required in order to achieve success in business,
The purpose behind the goal setting is one of the main differences between the OKR and KPIs. KPI objectives may usually be accomplished and reflect an already developed process or initiative’s performance, while OKR objectives are a little more aggressive and optimistic.
OKRs ergo describe a performance target that can be manipulated while KPIs instead verify the outcome.
