Measure everything. It’s likely that this is the first mantra you heard, and the one that’s most often repeated. That’s because, in the world of building, marketing, and selling a product, no one piece of advice is more important. Making decisions without data is business suicide. But who own’s company data?
It’s far too easy for the departments within a company to get caught up in their own metrics. In order to find real success, everyone on your team needs to understand your company’s data. For example, your Marketing team might not spend much time focusing on a Net Promoter Score, but it’s critical that they understand what NPS means and how they can impact it.
We’re going to dive into metrics and explain why they matter. And then we’re going to take things a step further and discuss why Marketing, Product, Customer Success and Sales teams should all have a vested interest in learning metrics that they don’t own.
We’re not going to dive too deep into each of these critical metrics, as that’s better left for another article. Rather, we’re going to give a quick definition of each, then we’ll spend the bulk of our time explaining which department owns them. Beyond that, we’ll talk about why different departments should care about them and give examples of how the metrics can influence them.
Customer Acquisition Cost is arguably the most important metric that we’ll cover. If you spend more to acquire a customer than what the customer pays you, that’s obviously not sustainable. CAC is the metric that can bring your business to a grinding halt, and it often doesn’t get the attention that it deserves.
Marketing is the primary owner of the CAC metric, and as such, they need to keep a careful watch on ROI. Every email, ad campaign, or blog post takes resources. If the return for those investments isn’t paying off well enough, then all we’re doing is spending more money and raising our CAC.
Marketing may own CAC, but everyone plays a part in keeping it in check. If you have one metric on your dashboard, make it this one.
Monthly Recurring Revenue is the core metric that everyone from the CEO to the VC will want to know. Your MRR number is critical because it helps you understand whether you are making or burning money each month. So who owns MRR? In most companies, it will fall to the Sales team.
Constant communication between the Sales and Marketing team is paramount to winning new customers and increasing your monthly revenue. They’ll also need to work directly with Product and Customer Success to make sure that users stay happy. As such, even though Sales owns the metric, they’re the most reliant on other departments for making it climb.
Whether it’s the CEO or the the Sales team, someone must take personal responsibility for owning MRR. Everything you do with your product and pricing can impact it, but nothing impacts it as much as selling more.
There are several ways to calculate the lifetime value of a customer, but that’s too deep for us to get into here. What matters is that your teams understand the factors that go into LTV, and how they can impact them. In short, LTV is a measurement of how much a customer will pay you until they are no longer a customer. This helps the company predict how beneficial a customer will be on a longer timeline.
The Sales team is likely the group most directly responsible for LTV. They could choose to shoot for the moon and only go after big deals, or they could instead aim only at deals that close quickly. Understanding LTV helps them balance those two extremes while finding customers that are ideal for the business.
It may seem like Sales has a lot on their shoulders, and that is true. But when it comes to building long-term relationships with customers, there’s nobody better suited to the task.
Churn is the direct enemy of growth. It is a measure of how many customers stopped using your product over a given period of time. The higher your churn rate, the more new customers you’ll need to gain in order to make a profit (or break even). Churn is a number that every major department in the company needs to understand because, behind CAC, it’s the biggest threat to your survival.
While every section of your company has a direct link to churn, the Customer Success team is going to be the likely owner. More often than not, people will ask for help before they just give up and leave. This is where the CS team plays a critical role. They need to have a razor-sharp understanding of your product, and they need to have empathy for the customer. Every complaint is an opportunity to amaze a customer and keep them happily paying for years to come.
The Customer Success team is the unsung hero of every organization. The more that you can involve them and interest them in different metrics, the better off you’ll be.
It’s not enough for you alone to have metrics knowledge. It needs to be shared with your entire team, and the message that everyone can make a difference needs to come from the top. Dedicate some time in your team meetings to talk about these metrics and others that are critical to your company’s success.
To make the message easy to digest, think in terms of dashboards. Build a dashboard that highlights the critical parts of each metric, and share them with the teams. For example, a revenue dashboard like the one below will be owned by Marketing, but everyone can benefit from its use.
When people know how they can make a difference, they’ll often go the extra mile to make sure that they are making a difference. This list is not exhaustive. There are many more metrics that can be important for your particular business, but the point is clear — everyone in your organization needs to care about the numbers because everyone in your organization can impact them.
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