The Consequences of Undefined MetricsRead time: 3 minutes
When some people see the acronym “ICP,” they think “Ideal Customer Profile.” For others, a certain Posse of the Insane Clown variety might come to mind.
A marketing campaign targeting the other ICP is going to look… very different.
While we highly doubt anyone on your team would make that large of a blunder, the principle remains: Definitions are important!
If you asked everyone in your revenue organization to define your company’s ICP, would they all give the same answer?
What about other metrics like ARR, ACV, leads, proposals, etc.?
Are these definitions clearly written down somewhere, and are they accessible to everyone in your organization?
If you answered a confident “yes!” to these questions, give yourself a high-five and feel free to carry on with your blissfully well-defined day.
If you answered “no” to any of them – or worse, you’re unsure – this week’s newsletter is for you.
The First Consequence of Undefined Metrics: Warring Teams
When metrics go undefined, two people (or two teams) end up pursuing a result with different interpretations of what that result means. The actual result ends up being confusion, frustration, and a lack of progress.
Think about it: If your marketing team defines a lead as anyone who has signed up for your newsletter, but your sales team considers a lead to be someone who has filled out a contact form, the next revenue meeting is going to be tense.
Especially when marketing reports that they hit their lead quota, but sales hasn’t been able to close a single “lead.”
The Second Consequence: Magic Morphing Metrics
Without well-defined definitions, your metrics become flexible over time, gradually expanding, loosening, or changing altogether.
This often happens when someone fails to meet the criteria for a metric… and allowing some flexibility allows them to hit quota.
The Third Consequence: Data Blindness
When people have different definitions for the metrics they’re measuring, data input becomes inconsistent and unreliable.
For example, you might ask for a report on how many bookings were made last quarter. But some team members have been reporting form fills as bookings. Others recorded bookings as meetings booked. A few others only counted meetings that followed through.
That report will tell you a whole lot of nothing.
Interpreting data is hard enough – interpreting inconsistent data is futile.
Defining your key metrics is a sneaky investment. The value isn’t immediately obvious and there’s no direct ROI. However, it’s a critical part of your entire revenue engine’s foundation. You might be able to ignore it for now… but you won’t be able to ignore the consequences later.
- Your key metrics need to be clearly defined, written down, and accessible
- If they aren’t, a few things will happen:
- Teams pursue two different definitions of success, which will cause confusion, frustration and accidentally undermine the other team’s efforts
- The criteria for your metrics becomes arbitrary, flexible, and easy to abuse
- The data you’re collecting is inconsistent, inaccurate, and unreliable
When you’re ready, here’s how we can help:
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