New Market Entry & Metrics
When everything is unknown, how can you productively use metrics
Before “lean startup” was a term, there were many of us preaching agile market development
entry into a series of phases. As with agile software development, iterative does not mean uncontrolled. I break a new product launch or a new market. The early phases focus on activity while the later phases focus on results.
At the very beginning, it is all about engaging with potential customers. Who, what, and how are far less important– how many and how complete is the key. Also, this is relative to the previous day/week/or month. We need momentum. We don’t need targets here. How many calls, emails, meetings…. keep it simple, but focus on acceleration.
Soon, however, it is important to focus on the qualitative indicators of activity. To build these, start with an assumptions about annual revenue, average deal size, win rates, meetings to opportunity rates, responsive customer to meeting rates. You can also consider number of outbound reach outs or number of targets identified if this is a large part of the process. Using these assumptions you can then build back a map of what should be the activity levels. Remember, this is just setting initial targets. Trends are likely more interesting that actual values and Results are the ultimate calibrator, so there is no reason to over emphasize these values..
Focus on key metrics that will be consistent. First customer meetings or a responsive customers are relatively simple to define while a “interested customer” is far more fuzzy.
As momentum builds and the sales process gels, the focus will move to optimizing the ratios (eg. first meetings to won deals) and looking to make sure there is balance in the sales funnel. One tip is to look at funnel flow rather than funnel size. Deals have a bad habit of staying in a funnel too long and distorting reality. A healthy funnel has regular movement into, out of, and between the funnel stages. Flow in (new prospects), Flow out (lost or won deals), and percentage of deals that have not changed state in the last x days are three KPIs I almost always use in one form or another.